Unless you have been living on a remote planet somewhere you know the new TRID (Tila-Respa-Integrated-Disclosure) is the hot topic in the mortgage industry. Originally slated to go into effect Aug. 1, 2015, it is now scheduled to go into effect on Oct. 3, 2015.
This is a completely new disclosure that replaces all current forms, and it is literally costing the industry hundreds of millions of dollars to make this required change being implemented by the Consumer Financial Protection Agency, known as the CFPB.
To be fair, the disclosure is decent, but the previously implemented system by the CFPB was working just fine, so why the major change? With reasonable certainty we know almost all of the bad actors are no longer in the industry, subprime is a foot note in history and lending standards are very high with delinquency rates at historic lows. So, once again, why the change?
The Evolving Consumer Financial Protection Agency
To answer that question, you have to understand the evolution of the CFPB and its director, Richard Cordray. The CFPB evolved out of the financial meltdown and was created by Congress with no oversight or budget controls whatsoever. In other words, it’s an entity with absolute power and no budget of oversight functioning much like a dictator.
I find it interesting that back in the early days you would hear things like the CFPB’s position is this or that. Frequently now you hear Director Cordray say I won’t tolerate this or that as opposed to the CFPB policy. As such, they continue to make up the rules as they go along and have become most arrogant and immune to critical observation.
Now, on to TRID and the why it is here.
Why Implement the New TRID
At some point in time, the CFPB discover that over 60 percent of borrowers still do not shop for a mortgage!
This is simply unacceptable to Cordray as that is not the way he wants the market to operate. So, we now have a regulator who is no longer just regulating the industry, but also wants to control how the industry actually functions while adhering to the rules and regulations. This is clearly not the directive of any regulator, but is what the CFPB has become.
Enter TRID with, among many other items, one more final disclosure just prior to close.
This adds delay and ultimately additional expense for the borrower. Remember, ultimately all costs are passed on to the borrower. The goal is to get more people to shop for a mortgage even if they are doing repeat business with a financial entity, have been referred by a trusted friend and/or a multitude of other reasons they may have had for not shopping.
Director Cordray still doesn’t understand the industry he regulates and how it functions on a day-to-day basis.
He feels people pay way too much money for mortgages and the professionals in the industry are highly overpaid. This has been the mantra of consumer activists for years. As such, they continue to add new rules and regulations, and try force the market to operate in a different manner. Yet, at the end of the day, all that has happened is the cost of compliance, and per many recent studies, is now well north of $7,000 per loan!!
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