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CFPB Tries to Clarify Know Before You Owe, but Lenders Still See Glitch

July 30th, 2016 Comments off

  mortgage app  housingwire credit postedDailyBusinessNewsMHProNewsIn an attempt to provide more clarity to lenders on the Consumer Financial Protection Bureau(CFPC)’s “Know Before You Owe” mortgage disclosure rule, the agency has proposed “additional tolerance provisions, clarified a partial exemption for housing finance agencies, extended the rule’s coverage to all cooperative units, and provided more clarity about privacy and the sharing of information,” according to nationalmortgagenews.

However, the proposed rule did not clear up “technical” errors in mortgage disclosures, leading some investors earlier this year to refuse to purchase loans because the CFPB could not guide them in curing these errors. The mortgage industry has stated compliance is nearly impossible because there are hundreds of variables to consider on the disclosure form.

The CFPB, noting it cannot address every concern, said it “would not be practicable without substantially undermining incentives for compliance with the rule” and that it “would be extraordinarily complex,”according to Richard Horn, a former CFPB attorney.

CFPB Director Ricahrd Cordray stated, “Our proposed updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process.”

MHProNews understands lenders seek certainty. If there is a problem that is not addressed, causing lenders to turn away, borrowers, lenders and the economy all lose.

Public comment is open until Oct. 15 on the proposed amendments. ##

(Image credit: housingwire)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J Silver to Daily Business News-MHProNews.

Lenders Receive Reprieve on Minor Errors in Closings

December 31st, 2015 Comments off

mortgage  housingwire creditThe Consumer Financial Protection Bureau (CFPB) gave lenders a slight reprieve on the Know Before You Owe rule that provides borrowers with all the charges, fees and line items three days before closing instead of at closing, saying they will not be held accountable for most minor errors in loan processing and paperwork.

By trying to avoid the opportunity for unscrupulous lenders and real estate agents to slip in higher interest rates and hidden fees, like what happened during the housing boom, some disruptions have occurred in home lending and closings.

CFPB Director Richard Cordray, in a letter to Mortgage Bankers Association (MBA) president David Stevens, said, “We believe that the risk of private liability to investors is negligible for good-faith formatting errors and the like,” Cordray wrote to MBA president David Stevens. “We recognize that a certain level of minor errors in the early days of implementation is to be expected,” as he noted that the GSEs and the CFPB are seeking good-faith efforts to come into compliance.

Lenders, realtors and title companies have seen the average time for closing loans rise as much as a week, which has cost some borrowers more in fees to lock in specific interest rates. “Needless to say, we think this is a very positive development,” said Pete Mills, a senior vice president at the MBA. ##

(Image credit: housingwire)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Implementation of TRID Rough; Charges Fly

October 21st, 2015 Comments off

mortgage    andyenstallblog  creditThe new disclosure rule which combines the previous Truth in Lending Act (TILA) requirements with the Real Estate Settlement Practices Act (RESPA) into one Integrated Disclosure, called TRID, has not rolled out well due to mortgage software problems and Congressional inaction, said CFPB Director Richard Cordray to the Mortgage Bankers Association (MBA).

The “Know Before You Owe” rule gives borrowers three days to examine loan documents before closing, but has drawn the ire of some lenders for potentially slowing down loan closings, and requiring borrowers to pay more for the lender to hold an agreed-upon interest rate longer. This is called a loan lock, because it locks in the interest rate during the closing of a loan transaction, but for a fee, as marketwatch tells MHProNews.

Prior to the new rule, the rate was good for 30 days, for which the consumer did not pay. However, some mortgage lenders fear with an extended closing period, the loan lock may have to go as long as 45 or 60 days, with consumers possibly incurring hundreds or thousands in additional costs to hold an interest rate.

Cordray denies closings have been longer or that consumers are incurring higher costs, saying, “These claims reflect a failure or perhaps a refusal to understand what the rule actually says.

Closing delays will not show up until sometime in November when the loans made after the Oct. 3 implementation date will start closing.

TRID was enacted in response to lenders during the housing boom of the last decade who would increase the interest rate, add fees or change loan products at the last minute. Under TRID, mortgage lenders have to give consumers more time to understand any changes to the transaction.

Cordray blamed vendors of the software for the problems. “Some vendors performed poorly in getting their work done in a timely manner, and they unfairly put many of you (lenders) on the spot with changes at the last minute or even past the due date,” Cordray said. He said the CFPB will focus on how these vendors ae affecting the marketplace.

Jonathan Corr, president and CEO of Ellie Mae, which distributes about a third of the TRID compliant software, said while some lenders were not adequately prepared, they are dealing with loans made before and after the new rules took effect, which requires two sets of software. “This is the biggest change to the mortgage industry in 40 years,” said Corr, noting the process will likely iron out by mid-2016.

Still, the MBA wants Congress to provide a grace period until Feb. 2016 so that errors made in the TRID rules will not lead to enforcement sanctions. However, the White House says the mortgage industry has had enough time to understand the disclosure rule and it would veto any legislation to extend the deadline. ##

(Image credit: andyenstallblog)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.