Richard Horn
Legal PLLC

The Truth in Regulation Blog

CFPB Issues Final Rule Delaying TRID to October 3

July 21, 2015

Clients and Friends,

I’m writing to inform you that the CFPB this afternoon issued the final rule delaying the TRID effective date to October 3, 2015.  Please find the link to the blog post announcing the final rule here:  The press release is available here:

I plan to review the final rule and to follow up with any important information.  But I wanted you to know about the delay to October 3, 2015 as soon as possible.

Please let me know if you have any questions.

Director Cordray Testifies about TRID on Capitol Hill and the CFPB’s eClosing Forum

July 20, 2015

Clients and Friends,

Given the timing of this email on a Monday morning, let’s call this email my “bagel briefing.”  And in this bagel briefing, there are two events from last week that I wanted to highlight for you: CFPB Director Cordray’s Senate Banking Committee testimony on TRID, and the CFPB’s announcement of an eClosing Forum.


Director Cordray’s Testimony on TRID

Last week, on Wednesday, July 15, CFPB Director Cordray testified in front of the Senate Banking Committee at its hearing on the CFPB’s Semi-Annual Report to Congress. TRID came up a few times.  The testimony during the question and answer portion touched upon the rule’s effective date, the requested “good faith” period, and the length of the rule and disclosures.  Below is a summary, with some key takeaways.

Cordray faced a question about the CFPB’s response to a letter from over 200 members of Congress requesting a “hold harmless” period for TRID.  Cordray defended the original TRID effective date, stating that the CFPB “finalized the rule in November of 2013” providing “a 21-month implementation date, a long implementation date in response to what we heard from industry.”  He sounded upset as he stated despite the “long” implementation period, industry was not entirely ready for August 1, 2015.  “Nonetheless, as we get toward the end of it, some people aren’t ready,” he said.  He then noted the CFPB’s proposed delay, stating that it was evidence of Congressional oversight of the CFPB, before noting that it was caused by the CFPB’s “administrative error.”

Regarding the CFPB’s “administrative error,” Cordray stated that the CFPB had to, “in the end…due to an error on our part…back up the implementation date further out of the summer sale season.”  But he said that because of feedback, the CFPB is considering moving the effective date back to October.  He suggested that, based on the CFPB’s experience from implementation of the Title XIV rules, industry would find it inconvenient to move the date further out to January, because of other end-of-year systems work.

Cordray also discussed how the CFPB would initially approach supervision for compliance with TRID.  He stated that the CFPB has “worked with the other agencies to get an agreement, which we have, that the early examination of this will be diagnostic and corrective.”  He stated that “for the first period, which may last many months,” they would not look to be “punitive.”

Director Cordray was also asked about the length of the integrated disclosures.  He responded that, “the rule that actually implemented these forms is lengthy.  I wish it weren’t, but it is lengthy.”  He continued discussing the disclosures, stating that they were not the one-page disclosures that Senator Warren had wanted, stating that “we’re at five and three pages…it is the executive summary of the whole transaction.”  He defended the length, stating that the CFPB conducted consumer testing and that the forms are “much easier, and more accessible, and more understandable,” and that, “these are not lengthy forms.”  Interestingly, he also stated that, “we’re looking to try and do electronic closings and push the industry in that direction, which they want to go anyway, so that a lot of paper gets taken off and you can really focus on the key forms here.”

There are a few key takeaways here.  Regarding the CFPB’s proposal to delay the effective date, it appears unlikely that the TRID rule will be delayed until January, as some commenters to the proposal requested.  Cordray’s statements indicate that some in the industry have successfully convinced the CFPB that a January effective date would be disruptive to other operations.  Also, Cordray appears to believe still that the implementation period was “long,” and to fault the industry for not being ready, so he is unlikely to push the date back much further than the proposed October 3 effective date.

Significantly, Cordray’s statements provided more specificity regarding the CFPB’s announced “good faith” period.  Cordray’s statement that during this period, examinations will be “diagnostic and corrective,” rather than “punitive,” provides more information.  But, although Cordray skillfully credited the delayed effective date to Congressional oversight, it is still quite apparent that his “good faith” period does not provide industry with the “hold harmless” period Congress had actually requested.  While his reference to “punitive” likely means the CFPB will not seek civil money penalties, “corrective action” could include all of the other tools of the CFPB’s trade.  For example, this could still leave the door open to enforcement actions ordering restitution to consumers.  It would be unlike the CFPB not to seek redress for consumers, a UDAAP claim, and a strongly worded press release, if it viewed consumers as having been harmed.  Even without a civil money penalty, a TRID violation could be costly and result in reputational risk.

Director Cordray also indicated that the CFPB has obtained agreements with other “agencies” to follow this same approach, which is positive.  However, he did not specify which agencies.  Was he referring to the federal banking agencies, or state regulators that have the authority to enforce TRID under state law?  Hopefully the CFPB will address this with more specificity at some point, perhaps in the delay final rule.

And although Cordray stated this “sensitive” period could last for “many months,” that sounded more like he was telling a fairy tale than describing a “good faith” period that could affect the operations of U.S. mortgage market.  It would be more helpful to have a fixed, defined period.  But, it appears to me that the CFPB may want to retain discretion and flexibility with respect to the length of the period, so that they can make adjustments based on what they’re seeing in examinations.

Forum on eClosing

The CFPB announced last week a “Know Before You Owe Forum on eClosing,” which will take place on Wednesday, August 5 at 1 p.m. EDT.  The forum will focus on the “Know Before You Owe initiative on eClosing.”  It will “feature remarks from Director Richard Cordray, as well as a panel discussion with consumer groups, industry representatives, and members of the public.”  It is likely that the CFPB will announce the results (or at least some) of its eClosing Pilot Project.

Notably, the date of this forum, which must have been planned well in advance of the proposed TRID delay, would have coincided with the original TRID effective date.  This timing, and Director Cordray’s testimony on the hill about looking to “push the industry” in the direction of electronic closings, shows the CFPB’s very strong interest in electronic closings.  And you may remember that the CFPB also focused on electronic closings in its field hearing back in November 2013 that announced the CFPB’s issuance of TRID.  In that field hearing, the CFPB also announced its work on electronic closings.  All of this indicates that the CFPB likely views TRID as only a step towards a larger goal, electronic closings.  It will be interesting to see if Cordray provides any information during this forum about how, and when, he plans to “push” the industry towards electronic closings, especially after such an arduous implementation of TRID.

Please let me know if you have any questions, or if you’d like to discuss.

CFPB Issues TRID Delay Proposed Rule

June 25, 2015

Clients and Friends,

I am emailing to inform you that the CFPB issued its proposed rule to delay the effective date of the TILA-RESPA Integrated Disclosure (TRID) rule on its website yesterday.  The CFPB proposed to delay TRID’s effective date to October 3, 2015, but it also specifically sought comment on a shorter delay to August 15, 2015.  The scope of the proposal is limited to the rule’s effective date.  Comments are due July 7, 2015.

Summary of the Proposal

The CFPB acknowledged in the proposal that, because of its administrative error, the rule cannot take effect until August 15, 2015.  The CFPB explained that it neglected to file a report required under the Congressional Review Act (CRA).  It should have submitted this report to Congress and the Government Accountability Office at least 60 days prior to the original August 1, 2015 effective date, but it did not.  The CFPB discovered its error and then submitted the report on June 16.  Under the CRA, TRID cannot take effect until 60 days after this submission, and that is why the earliest possible effective date is now August 15.

The CFPB is seeking comment on a two-month delay to October 3.  It stated that it decided to seek comment on a longer delay than August 15 for two reasons.  First, it was concerned that a mid-August effective date could pose operational challenges.  Second, it learned of delays in software updates from technology vendors, which resulted in industry having a limited amount of time for testing.  The CFPB expressed concern that these issues could pose risks to the smooth implementation of the rule.  Also, it moved from the October 1 date in its recent announcement to October 3, because it decided to select a Saturday effective date.  The CFPB stated it believed a Saturday would be consistent with the original Saturday, August 1 effective date, and that it would be easier for industry to launch the new software systems over the weekend.

But, as noted above, the CFPB is considering finalizing the minimum two-week delay.  And it is also unlikely to finalize a delay past October 3.  The CFPB specifically sought comment on “the prospect of allowing the new rules to take effect on [August 15, 2015].”  It stated that the rule’s “earliest practically feasible implementation remains essential….”  The CFPB also stated that a delay past October 3 would impose “unnecessary costs” on those in industry that have worked to implement the rule on time.  It also stated that a longer delay would be inconsistent with its intent to benefit consumers.

My Sage Advice

You may recall that in my email after the CFPB’s announcement, I advised that we should keep our foot on the gas, because the CFPB can finalize an effective date earlier than October 1.  Considering the CFPB is specifically seeking comment on an August 15 effective date, I think it would be prudent to keep the train on schedule and the crew on board (apologies for using another transportation analogy).  It may be a good idea to hold off on project planning based on the October 3 date just yet.

Also, I recommend submitting a comment letter.  You may think that your letter won’t make a difference, or maybe that it won’t even be read.  But I can tell you from experience that a real person at the CFPB will read your comment letter and it will be considered.  The CFPB would benefit from the unique perspective of your company or organization on this important issue.

On a final note, the CFPB’s other recent announcement regarding it being “sensitive” in its oversight to “good-faith efforts” to comply with TRID is still an open issue.  What does “good-faith efforts” mean?  How long will Cordray remain “sensitive?”  Is Cordray going to group therapy with the other regulators?  These are questions that I hope the CFPB will answer as it works on how to ensure an efficient and smooth transition to TRID.  And given their relation to the implementation of TRID, these are valid issues to raise in a comment letter on the delay issue.

Please let me know if you would like any assistance with drafting a comment letter, or if you have any questions.

CFPB Proposes TRID Delay

June 18, 2015

Clients and Friends,

You may have already seen this, but I want to make sure you know that the CFPB has announced a proposed rule to delay the effective date of TRID to October 1, 2015.  They stated that their reasons for this delay were an administrative error that would have, at a minimum, delayed the effective date by two weeks, and their desire to push back the effective date past the busy closing months of August and September.  This is great news for the industry, which has lobbied for a delay, as it gives more breathing room to conduct testing, training, and tie up the loose ends before the effective date.

But don’t take your foot off the gas just yet.  This is only a proposed delay, which means it can change before it’s final.  Although I expect the two months to be finalized, it is possible that the CFPB will finalize a shorter time period.  The minimum delay based on the administrative error is only two weeks.  And I would expect the consumer advocacy groups to weigh in strongly on this proposal.  And even if it is delayed by two months, the two months will fly by very quickly.

The proposed rue has not yet been posted, though I am keeping an eye out for it.  Here is the link to the press release.

Also, many of you have asked me incredulously, “what did you do wrong?!”  I thank you for your unwillingness to believe that I could have caused this error.  I have heard that this error was a delay in filing a report to Congress, which happened after the effective date.  So, no, I did not cause this error.  Although I suppose that this means you won’t be thanking me for causing the delay with a bottle of wine or champagne, I am happy that you can continue your confidence in my ability to finalize 1,900 page rules without administrative errors.

Please let me know if you have any questions.

CFPB’s TRID “Good Faith” Announcement

June 3, 2015

Clients and friends,

I wanted you to know that the CFPB announced this afternoon that they will be “sensitive” in their oversight to “good-faith efforts” to comply with TRID.  This announcement comes in response to the significant amount of pressure the industry placed on the CFPB on this issue, including a letter from 200+ members of Congress asking for a grace period until the end of 2015.  The announcement also describes the rule for providing an additional three-business day waiting period for the Closing Disclosure.  This announcement is available at:

While it is helpful that the CFPB will take good faith efforts to comply with the rule into account, there are two issues I want to point out.  First, the announcement does not provide any certainty regarding the time period it will apply to, or what they consider “good faith.”  Reliance on the CFPB’s “sensitivity” and a standard they don’t define may not be prudent.  In addition, there are other regulatory agencies that supervise for compliance with TRID.  It’s nice that the CFPB has spoken with them to “clarify this approach,” but the CFPB does not say these agencies will take the same approach.  There have yet to be any similar announcements from other agencies.

Second, the rule will still go into effect on August 1.  Without a delay of the effective date, there is still the potential of borrower lawsuits, including class actions, starting on August 1.  As I’m sure you’ve heard me discuss many times, the TRID rule greatly expands the potential civil liability for the disclosures.  TILA has civil and assignee liability for many of its disclosure provisions, while RESPA does not.  But the TRID rule relies on and implements TILA for most of its content and regulatory requirements, including those that were previously only required under RESPA authority.  This means that requirements such as the tolerances and the disclosure of settlement charges may now be the subject of borrower lawsuits under TILA.

In sum, even though this CFPB announcement is helpful, the rule will still go into effect on August 1.  And this means that compliance is still vitally important on August 1.

I am happy to discuss if you have any questions or concerns.