Request for Information Regarding the Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) Rule Assessment, 64436-64441 [2019-25260]
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Proposed Rules
Federal Register
Vol. 84, No. 226
Friday, November 22, 2019
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Parts 1024 and 1026
[Docket No. CFPB–2019–0055]
Request for Information Regarding the
Integrated Mortgage Disclosures
Under the Real Estate Settlement
Procedures Act (Regulation X) and the
Truth In Lending Act (Regulation Z)
Rule Assessment
Bureau of Consumer Financial
Protection.
ACTION: Assessment and request for
public comment.
AGENCY:
The Bureau of Consumer
Financial Protection (Bureau) is
conducting an assessment of the
Integrated Mortgage Disclosures Under
the Real Estate Settlement Procedures
Act (Regulation X) and the Truth In
Lending Act (Regulation Z) Rule and
certain amendments in accordance with
section 1022(d) of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (Dodd-Frank Act). The Bureau is
requesting public comment on its plans
for assessing this rule as well as certain
recommendations and information that
may be useful in conducting the
planned assessment.
DATES: Comments must be received on
or before: January 21, 2020.
ADDRESSES: You may submit comments,
identified by Docket No. CFPB–2019–
0055, by any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: 2019-RFI-TRID@cfpb.gov.
Include Docket No. CFPB–2019–0055 in
the subject line of the email.
• Mail/Hand Delivery/Courier:
Comment Intake—TRID Assessment,
Consumer Financial Protection Bureau,
1700 G Street NW, Washington, DC
20552.
Instructions: The Bureau encourages
the early submission of comments. All
submissions must include the document
title and docket number. Because paper
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SUMMARY:
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mail in the Washington, DC area and at
the Bureau is subject to delay,
commenters are encouraged to submit
comments electronically. In general, all
comments received will be posted
without change to https://
www.regulations.gov. In addition,
comments will be available for public
inspection and copying at 1700 G Street,
NW, Washington, DC 20552, on official
business days between the hours of 10
a.m. and 5 p.m. Eastern Time. You can
make an appointment to inspect the
documents by telephoning 202–435–
9169.
All submissions in response to this
request for information, including
attachments and other supporting
materials, will become part of the public
record and subject to public disclosure.
Proprietary information or sensitive
personal information, such as account
numbers or Social Security numbers, or
names of other individuals, should not
be included. Submissions will not be
edited to remove any identifying or
contact information.
FOR FURTHER INFORMATION CONTACT:
Dustin Beckett, Economist; Pedro De
Oliveira, Senior Counsel; Alan Ellison,
Small Business Program Manager;
Division of Research, Markets, and
Regulations at 202–435–7700. If you
require this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
Background
Section 1022(d) of the Dodd-Frank
Act requires the Bureau to conduct an
assessment of each significant rule or
order adopted by the Bureau under
Federal consumer financial law. The
Bureau must publish a report of the
assessment not later than five years after
the effective date of such rule or order.
The assessment must address, among
other relevant factors, the rule or order’s
effectiveness in meeting the purposes
and objectives of title X of the DoddFrank Act and the specific goals stated
by the Bureau. The assessment also
must reflect available evidence and any
data that the Bureau reasonably may
collect. Before publishing a report of its
assessment, the Bureau must invite
public comment on recommendations
for modifying, expanding, or
eliminating the rule or order.1
1 12
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U.S.C. 5512(d).
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In November 2013, the Bureau issued
a final rule titled ‘‘Integrated Mortgage
Disclosures under the Real Estate
Settlement Procedures Act (Regulation
X) and the Truth In Lending Act
(Regulation Z)’’ to implement sections
1098 and 1100A of the Dodd-Frank Act
and, as amended, the rule took effect on
October 3, 2015.2 This document refers
to this rule as the ‘‘2013 TILA–RESPA
Final Rule.’’ The Bureau amended the
2013 TILA–RESPA Final Rule on two
occasions before its effective date.3 This
document refers to the rule as amended
when it took effect on October 3, 2015
as ‘‘the TRID Rule’’ or ‘‘the Rule.’’ As
discussed below, the Bureau has
determined that the TRID Rule is a
significant rule and it will conduct an
assessment of the Rule.
The Bureau also amended the TRID
Rule after the October 3, 2015 effective
date, in amendments issued in July 2017
and April 2018.4 While such
amendments are not intended to be the
subject of this assessment, the Bureau
may consider certain of the amendments
to the extent that doing so will facilitate
a more meaningful assessment of the
TRID Rule and data is available.
Furthermore, the Bureau acknowledges
that certain information, such as data
focused on current mortgage practices,
may reflect these 2017 and 2018
amendments and therefore it may be
difficult to isolate the effects of the TRID
Rule during this assessment. This
assessment will treat and discuss the
challenge of distinguishing between the
effects of the TRID Rule and the effects
of the 2017 and 2018 amendments to it
as a factor that makes it difficult to
evaluate the effectiveness of the TRID
Rule. In this document, the Bureau is
requesting public comment on the
issues identified below as part of the
planned assessment.
Assessment Process
Assessments pursuant to section
1022(d) of the Dodd-Frank Act are for
informational purposes only and are not
part of any formal or informal
rulemaking proceedings under the
Administrative Procedure Act. The
2 78 FR 79730 (Dec. 31, 2013), 80 FR 43911 (July
24, 2015).
3 See 80 FR 8767 (Feb. 19, 2015) (January 2015
Amendments); 80 FR 43911 (July 24, 2015) (July
2015 Amendments).
4 See 82 FR 37656 (Aug. 11, 2017) (July 2017
Amendments); 83 FR 19159 (May 2, 2018) (April
2018 Amendments).
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Bureau plans to consider relevant
comments and other information
received as it conducts the assessment
and prepares an assessment report. The
Bureau does not, however, expect that it
will respond to each comment received
pursuant to this document in the
assessment report. Furthermore, the
Bureau does not anticipate that the
assessment report will include specific
proposals by the Bureau to modify any
rules, although the findings made in the
assessment will help to inform the
Bureau’s general understanding of
implementation costs and regulatory
benefits for future rulemakings.5 Upon
completion of the assessment, the
Bureau anticipates that it will issue an
assessment report not later than October
3, 2020.6
The TILA–RESPA Integrated Disclosure
Rule
For more than 30 years, Federal law
required creditors and settlement agents
to provide two different sets of
disclosure forms to consumers applying
for and consummating consumer
mortgage transactions. Two different
Federal agencies, the Department of
Housing and Urban Development and
the Board of Governors of the Federal
Reserve System, developed these
disclosure forms separately, under two
distinct Federal statutes: the Truth in
Lending Act (TILA) and the Real Estate
Settlement Procedures Act of 1974
(RESPA). In 2010, under the DoddFrank Act sections 1032(f), 1098, and
1100A, Congress directed the Bureau to
integrate TILA and RESPA mortgage
loan disclosures.7 At the same time,
Congress also enacted a number of other
new provisions governing disclosures
related to origination and servicing of
consumer mortgages, including several
new disclosure requirements added to
TILA. Many of these requirements were
implemented by the Bureau in the TRID
Rule.8 The major provisions of the TRID
Rule are summarized below.
A. Major Provisions of the TRID Rule
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The TRID Rule contains six major
elements.
5 The Bureau announces its rulemaking plans in
semiannual updates of its rulemaking agenda,
which are posted as part of the Federal
government’s Unified Agenda of Regulatory and
Deregulatory Actions. The current Unified Agenda
can be found here: https://www.reginfo.gov/public/
do/eAgendaMain.
6 Section 1022(d)(2) of the Dodd-Frank Act
requires the Bureau to publish a report of
assessment of a significant rule or order not later
than five years after the rule or order’s effective
date.
7 Public Law 111–203, 124 Stat. 1376, 2007,
2103–04, 2107–09 (2010).
8 See 78 FR at 79750–53.
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1. Integration of Certain Mortgage
Disclosures
The TRID Rule implemented the
Dodd-Frank Act’s directive to combine
certain disclosures that consumers
received under TILA and RESPA in
connection with applying for and
closing on a mortgage loan. Specifically,
the TRID Rule’s Loan Estimate form
integrated RESPA’s Good Faith Estimate
(GFE) and TILA’s initial disclosure,
while the TRID Rule’s Closing
Disclosure form integrated RESPA’s
HUD–1 settlement statement and TILA’s
final disclosure.
2. Disclosure Redesign
The TRID Rule not only combined
previous TILA and RESPA disclosures
but also required that all creditors use
standardized forms (i.e., the Loan
Estimate and the Closing Disclosure) for
most transactions, so that consumers get
information in the same way across
multiple applications, including
applications to different creditors or for
different loan products, thereby making
it easier for consumers to comparison
shop.9 While Regulation X already
required a standard form for RESPA
disclosures,10 TILA section 105(b)
explicitly provides that nothing in TILA
may be construed to require a creditor
to use any model form or clause
prescribed by the Bureau under that
section.11 Section 1100A (5) of the
Dodd-Frank Act amended TILA section
105(b) to require that the Bureau
publish a single, integrated disclosure
for mortgage loan transactions
(including real estate settlement cost
statements) which includes the
disclosure requirements of TILA in
conjunction with the disclosure
requirements of RESPA that, taken
together, may apply to a transaction that
is subject to both or either provisions of
law.12 Unlike prior TILA mortgage
disclosure requirements, the TRID Rule
generally does not permit creditors to
make changes to the standardized
forms.13 The redesigned and
standardized disclosures display key
loan features in a manner intended to
enable consumers to locate the features
quickly through headings and labels.
Moreover, the TRID Rule requires that
creditors use a standardized format for
most consumer mortgage transactions,
so that consumers are presented
information in the same manner across
multiple loan types and multiple
9 78
FR at 80079.
CFR 1024.8.
11 15 U.S.C. 1604(b).
12 Id.
13 12 CFR 1026.37(o); 12 CFR 1026.38(t)(3).
10 12
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creditors.14 The TRID Rule also requires
consistent formatting in the Loan
Estimate and Closing Disclosure forms,
to facilitate consumer understanding to
aid in consumers’ ability to identify
discrepancies or changes that occurred
in loan terms or costs after a Loan
Estimate is provided.15
3. Disclosure Provision Responsibility
The TRID Rule changed how certain
required information was disclosed. For
example, the TRID Rule changed who
was responsible for disclosing title
insurance premiums for federally
related mortgage loans.16 Whereas TILA
required the creditor to provide the
Truth in Lending disclosures and
RESPA required settlement agents to
provide the final HUD–1 settlement
statement, the TRID Rule reconciled
these statutory differences by making
the creditor, rather than the settlement
agent, ultimately responsible for
providing the integrated Closing
Disclosure.17 While creditors were
coordinating with settlement agents to
provide existing TILA and RESPA
disclosures before the TRID Rule, by
reallocating legal responsibility to
creditors to provide disclosures, the
TRID Rule also reallocated to them some
of the risks of liability for regulatory
violations.
4. Definition of an Application
The TRID Rule revised the regulatory
definition of a consumer mortgage loan
‘‘application.’’ 18 Under the Rule, an
‘‘application’’ consists of six specific
items: The consumer’s name, income,
social security number, property
address, estimated property value, and
the mortgage loan amount.19
5. Timing Requirements
The TRID Rule changed the timing of
when consumers receive certain
information. The TRID Rule requires
that within three business days of
receiving an application, as defined by
14 78
FR at 80079.
FR at 80074.
16 78 FR at 79964. Previously, the simultaneous
title insurance premiums would be disclosed in
accordance with State law allocations. The TRID
Rule mandated disclosure of the full cost of the
creditor’s title insurance policy when such
insurance is required by the creditor and of the
incremental cost of the optional owner’s title
insurance policy. The Bureau decided that benefit
of clearly disclosing a required cost outweighed the
benefit of disclosing the lender’s and owner’s
nominal title insurance premiums since such a
nominal disclosure may result in confusion about
what the consumer would actually pay if the
consumer did not obtain an owner’s title insurance
policy.
17 78 FR at 79731.
18 78 FR at 80083–84.
19 12 CFR 1026.2(a)(3)(ii).
15 78
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the Rule, a creditor must provide a Loan
Estimate to a consumer.20 The Rule also
integrated the timing requirements of
the TILA final disclosure and RESPA
HUD–1 by generally requiring that
consumers receive Closing Disclosures
no later than three business days before
consummation.21
For applications submitted to a
mortgage broker, prior to the TRID Rule,
Regulation X had already permitted a
mortgage broker on a creditor’s behalf to
provide a RESPA GFE not later than
three business days after a mortgage
broker received information from a
consumer sufficient to complete an
application. Regulation X also assigned
creditors the responsibility for
ascertaining whether mortgage brokers
had provided GFEs to consumers.22
However, the TILA disclosure
requirements under Regulation Z did
not apply to mortgage brokers.23 The
TRID Rule reconciled these differences
by making creditors responsible for
ensuring that mortgage brokers provide
Loan Estimates to consumers within
three business days of mortgage brokers
receiving the six specific application
items (i.e., the three-business-day period
begins even if creditors have not yet
received the six specific application
items from mortgage brokers).
The three-business-day period may
facilitate consumers identifying whether
and how the terms of their loans or of
their transactions may have changed
from what creditors or mortgage brokers
previously disclosed to them.24 To
prevent closing delays, the TRID Rule
allows creditors to update Closing
Disclosures in certain circumstances
without triggering an additional threebusiness-day waiting period.25
20 12
CFR 1026.19(e)(1).
FR at 80086. TILA, as implemented by
Regulation Z, generally provides that, if the early
TILA disclosures contain an APR that becomes
inaccurate, the creditor shall furnish corrected TILA
disclosures so that they are received by the
consumer not later than three business days before
consummation. On the other hand, RESPA and
Regulation X generally require that the RESPA
settlement statement be provided to the borrower at
or before settlement.
22 78 FR at 79799–801.
23 Id.
24 78 FR at 80086.
25 12 CFR 1026.19(f)(2)(i); see also 78 FR at 80086.
If, between the time the Closing Disclosure is first
provided and consummation, the loan’s APR
becomes inaccurate (over and above the specified
tolerance level), the loan product changes, or a
prepayment penalty is added, a corrected Closing
Disclosure must be issued with an additional threebusiness-day period to review the transaction. All
other changes to the Closing Disclosure may be
made without an additional three-business-day
waiting period, but a corrected Closing Disclosure
must be provided at or before consummation. See
12 CFR 1026.19(f)(2)(ii).
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6. Tolerance Rules
The TRID Rule also tightened the
tolerance rules that limit creditors and
third party service providers charging
consumers settlement costs that exceed
the estimates that had been previously
disclosed.26 Absent timely revised
disclosures from the creditor based on
certain valid justifications such as a
borrower-requested change, the TRID
Rule subjects a larger category of
charges to a ‘‘zero tolerance’’
prohibition on cost increases than was
the case under RESPA. Specifically, the
TRID Rule expands that ‘‘zero
tolerance’’ category to also include fees
charged by affiliates of creditors and
fees charged by service providers
selected by the creditor and fees for
services for which the Rule does not
permit consumers to shop.27
B. Significant Rule Determination
The Bureau has determined that the
TRID Rule is a significant rule for
purposes of Dodd-Frank Act section
1022(d).28 The Bureau made this
determination based on a number of
factors, including the following. First,
the Bureau considered the TRID Rule’s
effect on the features of consumer
financial products and services, that is,
mortgages, and the scale of operation
changes caused by the Rule. The major
elements of the TRID Rule described in
the preceding section have caused
significant changes in business
operations.
Second, while generally creditors
were already responsible for the GFE, by
reallocating responsibility for
completing and providing settlement
disclosures to the consumer, the TRID
Rule reallocated from settlement agents
to creditors some of the risks of liability
for regulatory violations. Such legal risk
in turn may increase the risk to creditors
that those who purchase their loans in
the secondary market will demand that
creditors repurchase the loans if they
were not originated in compliance with
26 78 FR at 80084. The preexisting RESPA GFE
tolerance rules generally place charges into three
categories: The creditor’s charges for its own
services, which cannot exceed the creditor’s
estimates unless an exception applies (‘‘zero
tolerance’’); charges for settlement services
provided by third parties, which cannot exceed
estimated amounts by more than ten percent unless
an exception applies (‘‘ten percent tolerance’’); and
other charges that are not subject to any limitation
on increases (‘‘no tolerance limit’’).
27 Id.
28 For more information on how the Bureau
determines a rule’s significance for purposes of
section 1022(d) of the Dodd-Frank Act, see U.S.
Gov’t Accountability Office, Dodd-Frank
Regulations: Consumer Financial Protection Bureau
Needs a Systematic Process to Prioritize Consumer
Risks, December 2018, https://www.gao.gov/assets/
700/696200.pdf.
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the TRID Rule. To avoid or mitigate this
risk, creditors may have increased the
resources they devote to quality control
to eliminate or reduce such defects in
the disclosures they provide to
consumers during origination.
Third, the TRID Rule may have also
affected quality control operations
because, as described above, the Rule
requires that all creditors use
standardized forms for most consumer
transactions,29 which can alter the risk
of formatting-related regulatory
violations whether that is risk
increasing due to the change from
model forms under TILA to prescribed,
standard forms consistent with RESPA,
or risk decreasing associated with
providing fewer number of forms per
mortgage transaction under TRID.
Moreover, quality control operations are
affected because the TRID Rule subjects
a larger category of charges to a ‘‘zero
tolerance’’ prohibition on cost
increases,30 and implemented several
new disclosure requirements added to
TILA by the Dodd-Frank Act, including
some disclosures that, if creditors did
not give accurate ones, can give
consumers private rights of action
against creditors.31
Finally, the Bureau considered the
costs of the TRID Rule. In the 1022(b)(2)
cost-benefit analysis that accompanied
the 2013 TILA–RESPA Final Rule, the
Bureau estimated that the major costs of
the Rule would be one-time
implementation costs, primarily labor
costs, which creditors, settlement agents
or third-party providers would incur to
update systems and procedures to
comply with the Rule. Specifically, the
Bureau estimated that the Rule would
impose one-time costs of approximately
$1 billion on creditors and
approximately $340 million on
settlement agents. In its analysis, the
Bureau amortized all costs over five
years, using a simple straight-line
amortization, resulting in an estimate of
approximately $275 million per year of
cost for each of the five years. The
Bureau also stated that the ongoing costs
of the Rule would be ‘‘negligible’’
relative to the baseline of existing
regulatory requirements.32
Taking these factors and others into
consideration, the Bureau concluded
that the TRID Rule is ‘‘significant’’ for
purposes of section 1022(d) of the DoddFrank Act. Section 1022(d) therefore
requires the Bureau to conduct an
assessment of the TRID Rule.
29 78
FR at 79993–94.
supra note 23.
31 See supra note 8.
32 78 FR at 80076.
30 See
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The Assessment Plan
Pursuant to section 1022(d) of the
Dodd Frank Act, this assessment must
address, among other relevant factors,
the Rule’s effectiveness in meeting the
purposes and objectives of title X of the
Dodd-Frank Act and the specific goals
of the TRID Rule as stated by the
Bureau.
Purposes and Objectives of Title X.
Section 1021 of the Dodd-Frank Act
states that the Bureau shall seek to
implement and, where applicable,
enforce Federal consumer financial law
consistently for the purpose of ensuring
that all consumers have access to
markets for consumer financial products
and services and that markets for
consumer financial products and
services are fair, transparent, and
competitive.33 Section 1021 also sets
forth the Bureau’s objectives, which are
to exercise its authorities under Federal
consumer financial law for the purposes
of ensuring that, with respect to
consumer financial products and
services:
(a) Consumers are provided with
timely and understandable information
to make responsible decisions about
financial transactions;
(b) Consumers are protected from
unfair, deceptive, or abusive acts and
practices and from discrimination;
(c) Outdated, unnecessary, or unduly
burdensome regulations are regularly
identified and addressed in order to
reduce unwarranted regulatory burdens;
(d) Federal consumer financial law is
enforced consistently, without regard to
the status of a person as a depository
institution, in order to promote fair
competition; and
(e) Markets for consumer financial
products and services operate
transparently and efficiently to facilitate
access and innovation.34
Specific goals of the TRID Rule.
Sections 1098 and 1100A of the DoddFrank Act set forth two goals for the
TRID Rule: ‘‘to facilitate compliance
with the disclosure requirements of
[TILA and RESPA]’’ and ‘‘to aid the
borrower or lessee in understanding the
transaction by utilizing readily
understandable language to simplify the
technical nature of the disclosures.’’ 35
The Bureau stated a number of goals
in the final TRID Rule, the preamble to
the final TRID Rule, and in public
statements surrounding the release of
the Rule. Generally, these goals reflect
the goals set forth in the Dodd-Frank
Act. In promulgating the Rule, the
Bureau sought to: Aid consumers in
U.S.C. 5511(a)
U.S.C. 5511(b)(1)–(5).
35 12 U.S.C. 2603(a), 15 U.S.C. 1604(b).
understanding their mortgage loan
transactions, facilitate cost comparisons,
and assist consumers in making
decisions regarding their mortgage
loans, including helping consumers
decide whether they can afford a loan as
offered.36
By combining the TILA and RESPA
disclosures, the TRID Rule also sought
to identify and reconcile inconsistencies
between TILA and RESPA requirements
to reduce regulatory burdens.37
Scope and approach. To assess the
effectiveness of the TRID Rule in
meeting these goals and the purposes
and objectives of the Dodd-Frank Act,
the Bureau’s current assessment plan is
informed by a cost-benefit perspective.
While section 1022(d) of the DoddFrank Act does not expressly require
cost-benefit analysis, the Bureau
believes such a cost-benefit perspective
could be helpful in conducting this
assessment, as a consideration of
benefits and costs will assist the Bureau
in evaluating the effectiveness of the
TRID Rule. In particular, such an
approach to evaluating the TRID Rule is
consistent with the fact that the Bureau
issued the TRID Rule after conducting a
benefit cost analysis under section
1022(b)(2) of the Dodd-Frank Act.
Research questions under the Bureau’s
assessment plan seek to quantify the
costs and benefits of the TRID Rule as
implemented, to the extent that
available data and resources allow, with
a focus on the: (i) Effects on consumers;
(ii) effects on firms, particularly
creditors, settlement service providers
(including title agents), mortgage
brokers, consumers, and others; and (iii)
effects on markets related to mortgage
origination. The Bureau believes that
studying this set of effects will provide
the most useful information for
stakeholders, including potential future
policymakers.
To the extent possible, the assessment
will associate Rule requirements with
observed outcomes of interest. In certain
cases, data may be available that will
allow the Bureau to identify effects
caused by the Rule. However, more
generally, the presence of multiple other
factors that affect the mortgage market
independently of the Rule may make it
challenging to identify exact measures
of the effects of the Rule. In general, any
association between observed outcomes
and requirements of the Rule, while
informative as to the effectiveness of the
Rule, does not necessarily prove the
Rule caused that outcome. In
conducting this assessment, the Bureau
will consider existing mortgage data and
33 12
34 12
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37 78
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FR at 79730.
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data that the Bureau may reasonably
collect, including third-party sources
(see more detail below regarding the
Bureau’s research activities, data
sources, and comment requests).
The Bureau has been conducting, and
will continue to conduct, external
outreach meetings with industry
(including trade associations), other
government agencies, and consumer
groups (including housing counselors).
The primary goal of this outreach is for
the Bureau to become better informed of
the potential effects of the Rule on
various market segments.
Other research activities in addition
to those described in the remainder of
this section may also be considered as
appropriate, and the Bureau is
interested in suggestions from
stakeholders regarding additional
research activities that the Bureau could
conduct to better assess the Rule.
1. Assessing Consumer Effects
The approach to examining the TRID
Rule’s effect on consumers is shaped by
four broad research questions based on
the aforementioned goals of the Rule,
namely, how the TRID Rule affected
consumers’: (i) Understanding of their
mortgage disclosures; (ii) mortgage and
settlement service shopping behaviors;
(iii) satisfaction with their mortgage
disclosures, mortgage products, and
settlement services; and (iv) ability to
compare and choose among mortgages
and settlement services. Internal Bureau
data can provide insight on many of
these research questions. The TRID
disclosure testing, conducted during the
process that resulted in the 2015 TRID
Rule, can provide causal estimates of
the effect of the new disclosures on
consumer understanding and on
consumers’ ability to compare mortgage
terms across different mortgage
products. In addition, analysis of the
National Survey of Mortgage
Originations (NSMO) can provide
correlational estimates of how much
consumers’ knowledge, shopping, and
satisfaction changed after the Rule took
effect.
2. Assessing Firm Effects
The approach to assessing the TRID
Rule’s effect on firms is shaped by four
broad research questions: (i) What were
the TRID Rule’s implementation costs to
firms; (ii) what are the TRID Rule’s
ongoing costs and cost savings to firms;
(iii) how did the TRID Rule affect
creditor’s ability to sell mortgages to
others on the secondary market; and (iv)
how did the TRID Rule affect the way
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creditors disclose information to
consumers? 38
To address these questions, the
Bureau envisions conducting structured
interviews and surveys with industry
participants as well as using relevant
data the Bureau already possesses and
third-party information that may be
useful. Surveying and interviewing
creditors and settlement agents will
help the Bureau to assess firms’
implementation costs, ongoing costs,
and cost savings, and allow the
assessment to assess how the accuracy
and timing of disclosures changed as a
result of the TRID Rule and where
creditors faced particular difficulties, if
any, with respect to disclosures
creditors provided.
The Bureau anticipates that
interviewing creditors and quality
control providers will provide insight
on potential difficulties the TRID Rule
may cause for creditors seeking to sell
mortgage loans in the secondary market.
In addition, the Bureau may use loanlevel securities data from the Bloomberg
Terminal and aggregate secondary
market data from Inside Mortgage
Finance (IMF) to assess the TRID Rule’s
effect on creditors selling loans on the
secondary market.
Additional data that would be
informative to the Bureau in
understanding the effects of the Rule on
creditors providing disclosures to
consumers include a consumer-level
dataset. Such a dataset would be most
informative if it covered a period before
and after the effective date of the TRID
Rule and if it included all or most TILA
and RESPA related mortgage loan
disclosures that creditors provided to
consumers in the process of obtaining a
mortgage loan. The ideal fields
contained in this dataset would include
the type of disclosure, the date it was
disclosed, if the creditor re-disclosed
forms, the reason for the creditor’s redisclosure, and fields for information
contained on the forms (i.e., loan terms,
loan structure, loan fees, closing costs,
etc.). This dataset would help the
Bureau understand how the Rule
affected the information consumers
received from creditors (e.g., have initial
disclosures become more accurate? Or
timelier?).
3. Assessing the Effects on Markets
Related to Mortgage Origination
Consumer demand and firm supply
interact in markets. This interaction can
be measured in transaction prices,
38 In assessing the effects of the Rule on firms, the
Bureau will also strive to identify outdated,
unnecessary, or unduly burdensome aspects of the
TRID Rule. See 12 U.S.C. 5511(b)(3).
VerDate Sep<11>2014
15:57 Nov 21, 2019
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transaction volume, and market
structure, among other ways. The
assessment’s approach to market effects
is thus reflected by three broad
questions: (i) Did the TRID Rule affect
the price of mortgages or the volume of
mortgage originations in the aggregate or
for particular market segments or
mortgage product types (e.g.,
construction loans, subordinate liens,
manufactured housing, etc.)?, (ii) did
the TRID Rule affect entry, exit, or
consolidation in any parts of the
mortgage market?, and (iii) did the TRID
Rule’s specific provisions affect market
structure by changing the relationship
between various providers (e.g.,
creditors and settlement agents or
creditors and their affiliates)?
To assess market effects, the
assessment will rely first on data the
Bureau already possess, such as Home
Mortgage Disclosure Act (HMDA) data
and the National Mortgage Database
(NMDB) and stress testing data from the
Federal Reserve (Y–14 data). These
datasets may be used to identify changes
in overall loan volumes, mortgage
prices, price dispersions, and the
availability of mortgage products. In
addition, the assessment will rely on the
same survey and structured interviews
with industry participants that would be
used to consider costs on the firm side.
The industry survey will allow the
Bureau to assess specific areas of the
market or mortgage product types (e.g.,
construction loans, subordinate liens,
manufactured housing, etc.). Surveying
creditors and settlement agents will
allow us to assess changes in the
relationship between creditors and
settlement agents as a result of their
changing roles under the TRID Rule.
Surveying creditors will also allow the
Bureau to assess changes in the
relationships between creditors and
other entities involved in mortgage
transactions as a result of the TRID
Rule’s changed disclosure tolerances.
Comments from the 2018 Call for
Evidence. The Bureau is considering in
its TRID Rule assessment plan the
comments received in relation to the
TRID Rule during the 2018 Call for
Evidence Requests for Information
(RFIs).39 The Bureau received
39 In January 2018, the Bureau commenced a
‘‘Call for Evidence’’ to ensure that the Bureau is
fulfilling its proper and appropriate functions to
best protect consumers. Over a number of weeks,
the Bureau published in the Federal Register a
series of Requests for Information (RFIs) seeking
comment on enforcement, supervision, rulemaking,
market monitoring, complaint handling, and
education activities. These RFIs provided an
opportunity for the public to submit feedback and
suggest ways to improve outcomes for both
consumers and covered entities. Altogether, over
88,000 comments were received across 12 dockets.
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Frm 00005
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approximately 63 comments related to
the TRID Rule. Most TRID-related
comments were submitted to the
Adopted Regulations and New
Rulemaking Authorities RFI and to the
Inherited Regulations and Inherited
Rulemaking Authorities RFI
(Rulemaking RFIs).40 Trade
associations, consumer advocacy
groups, and others from industry
provided comments relevant to the
TRID Rule. The assessment plan and
research questions reflect the
information provided to the Bureau in
response to the Calls for Evidence, to
the extent the comments highlighted
topics concerning the TRID Rule.
Comments to the Rulemaking RFIs
generally centered on topics and issues
pertaining to TRID including curing
violations, secondary market issues,
applicability to specific products,
disclosure redesign, legal liability, and
title insurance. For example, with
regard to secondary market issues, two
trade groups expressed concerns that
creditors will need to either retain in
portfolio or sell on the ‘‘scratch and
dent’’ secondary market at a steep
discount loans containing TRID errors.
Commenters indicated that this
treatment of loans results in lack of
liquidity or losses for the lender.
Commenters also indicated that lenders
can face higher risk of receiving
buyback requests, which are demands
from investors (most often GSEs) that
lenders buy back the loan from the
creditor due to documentation errors or
other irregularities. As another example,
a trade group commented that many
creditors have been hesitant to offer
more complex mortgage products,
including, among others, construction
loans, for fear of misinterpreting TRID
requirements. Four commenters
provided comments relating to the
construction loan market specifically.
Most of these commenters requested
additional guidance or simpler
disclosures for construction loans.
In March of 2018, as part of the 2018
Call for Evidence series, the Bureau also
issued the Bureau Guidance and
Implementation Support Request for
Information (Guidance RFI), a request
for comment and information to assist
the Bureau in assessing the overall
effectiveness and accessibility of its
guidance materials and activities
(including implementation support) to
40 For comments on the Adopted Regulations and
New Rulemaking Authorities Request for
Information, see https://www.regulations.gov/
docket?D=CFPB-2018-0011. For comments on the
Bureau’s Inherited Regulations and Inherited
Rulemaking Authorities Request for Information,
see https://www.regulations.gov/docket?D=CFPB2018-0012.
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Federal Register / Vol. 84, No. 226 / Friday, November 22, 2019 / Proposed Rules
members of the general public and
regulated entities.41 The comments the
Bureau received in response to the
Guidance RFI highlight the importance
of guidance and compliance aids for
regulatory implementation, specifically
for implementing highly technical rules
such as the TRID Rule.42 They also
highlighted certain aspects of guidance
that were not addressed or guidance
styles that did not work well such as
providing more guidance on what
requirements of the TRID Rule apply to
different segments of the market and
providing specific examples to facilitate
compliance. For assessment purposes of
the TRID Rule, the Bureau is interested
in learning more about any aspects of
the Rule that were confusing or on
which more guidance was needed,
whether at the time the Rule took effect
or afterwards, and the effects of this
confusion or lack of guidance (including
any unintended effects on market
liquidity in any sectors of the housing
finance system).
Request for Comment
The Bureau hereby invites members
of the public to submit information and
other comments relevant to the issues
identified above and below, information
relevant to enumerating costs and
benefits of the TRID Rule to inform the
assessment’s cost-benefit perspective,
and any other information relevant to
assessing the effectiveness of the TRID
Rule in meeting the purposes and
objectives of title X of the Dodd-Frank
Act (section 1021) and the specific goals
of the Bureau. In particular, the Bureau
invites the public, including consumers
and their advocates, housing counselors,
mortgage creditors, settlement agents,
and other industry participant, industry
analysts, and other interested persons to
submit comments on any or all of the
following:
(1) Comments on the feasibility and
effectiveness of the assessment plan, the
objectives of the TRID Rule that the
Bureau intends to use in the assessment,
and the outcomes, metrics, baselines,
and analytical methods for assessing the
effectiveness of the Rule as described in
part IV above;
khammond on DSKJM1Z7X2PROD with PROPOSALS
41 For
the full electronic docket, see https://
www.regulations.gov/docket?D=CFPB-2018-0013.
The Bureau received approximately 49 comments
on this RFI (42 that addressed the substance of the
RFI). The Bureau received a number of comments
related to guidance but for the purpose of the TRID
assessment, only comments received related to
TRID guidance are mentioned.
42 The Bureau continues to update and improve
its regulatory guidance and implementation aids.
Several materials were, and will be, published after
the implementation of the TRID Rule to provide
more guidance and clarity, and the Bureau
continues to work to identify and address
additional guidance needs.
VerDate Sep<11>2014
15:57 Nov 21, 2019
Jkt 250001
(2) Data and other factual information
that the Bureau may find useful in
executing its assessment plan and
answering related research questions,
particularly research questions that may
be difficult to address with the data
currently available to the Bureau, as
described in part IV above;
(3) Recommendations to improve the
assessment plan, as well as data, other
factual information, and sources of data
that would be useful and available to
the Bureau to execute any
recommended improvements to the
assessment plan;
(4) Data and other factual information
about the benefits and costs of the TRID
Rule for consumers, creditors, or other
stakeholders;
(5) Data and other factual information
about the effects of the Rule on
transparency, efficiency, access, and
innovation in the mortgage market;
(6) Data and other factual information
about the Rule’s effectiveness in
meeting the purposes and objectives of
title X of the Dodd-Frank Act (section
1021), which are listed in part IV above;
(7) Data and other factual information
on the disclosure dataset specified in
the Assessing Firm Effects section above
under part IV;
(8) Comments on any aspects of the
TRID Rule that were or are confusing or
on which more guidance was or is
needed during implementation
including whether the issues have been
resolved or remain unresolved; and
(9) Recommendations for modifying,
expanding, or eliminating the TRID
Rule.
Dated: November 13, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2019–25260 Filed 11–21–19; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2019–0906; Product
Identifier 2019–NE–31–AD]
RIN 2120–AA64
Airworthiness Directives; International
Aero Engines Turbofan Engines
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
The FAA proposes to adopt a
new airworthiness directive (AD) for
SUMMARY:
PO 00000
Frm 00006
Fmt 4702
Sfmt 4702
64441
certain International Aero Engines, LLC
(IAE) PW1133G–JM, PW1133GA–JM,
PW1130G–JM, PW1129G–JM,
PW1127G–JM, PW1127GA–JM,
PW1127G1–JM, PW1124G–JM,
PW1124G1–JM, and PW1122G–JM
model turbofan engines. This proposed
AD was prompted by reports of failures
of certain low-pressure turbine (LPT)
3rd-stage blades. This proposed AD
would require replacement of the
affected LPT 3rd-stage blades. The FAA
is proposing this AD to address the
unsafe condition on these products.
DATES: The FAA must receive comments
on this proposed AD by January 6, 2020.
ADDRESSES: You may send comments,
using the procedures found in 14 CFR
11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: Deliver to Mail
address above between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
For service information identified in
this NPRM, contact International Aero
Engines, LLC, 400 Main Street, East
Hartford, CT 06118; phone: 800–565–
0140; email: help24@pw.utc.com;
internet: https://fleetcare.pw.utc.com.
You may view this service information
at the FAA, Engine and Propeller
Standards Branch, 1200 District
Avenue, Burlington, MA 01803. For
information on the availability of this
material at the FAA, call 781–238–7759.
Examining the AD Docket
You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2019–
0906; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this NPRM, the
regulatory evaluation, any comments
received, and other information. The
street address for Docket Operations is
listed above. Comments will be
available in the AD docket shortly after
receipt.
FOR FURTHER INFORMATION CONTACT:
Kevin M. Clark, Aerospace Engineer,
ECO Branch, FAA, 1200 District
Avenue, Burlington, MA 01803; phone:
781–238–7088; fax: 781–238–7199;
email: kevin.m.clark@faa.gov.
SUPPLEMENTARY INFORMATION:
E:\FR\FM\22NOP1.SGM
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]]>Agencies
[Federal Register Volume 84, Number 226 (Friday, November 22, 2019)]
[Proposed Rules]
[Pages 64436-64441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25260]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 84, No. 226 / Friday, November 22, 2019 /
Proposed Rules
[[Page 64436]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Parts 1024 and 1026
[Docket No. CFPB-2019-0055]
Request for Information Regarding the Integrated Mortgage
Disclosures Under the Real Estate Settlement Procedures Act (Regulation
X) and the Truth In Lending Act (Regulation Z) Rule Assessment
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Assessment and request for public comment.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
conducting an assessment of the Integrated Mortgage Disclosures Under
the Real Estate Settlement Procedures Act (Regulation X) and the Truth
In Lending Act (Regulation Z) Rule and certain amendments in accordance
with section 1022(d) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act). The Bureau is requesting public
comment on its plans for assessing this rule as well as certain
recommendations and information that may be useful in conducting the
planned assessment.
DATES: Comments must be received on or before: January 21, 2020.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2019-
0055, by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include Docket No. CFPB-
2019-0055 in the subject line of the email.
Mail/Hand Delivery/Courier: Comment Intake--TRID
Assessment, Consumer Financial Protection Bureau, 1700 G Street NW,
Washington, DC 20552.
Instructions: The Bureau encourages the early submission of
comments. All submissions must include the document title and docket
number. Because paper mail in the Washington, DC area and at the Bureau
is subject to delay, commenters are encouraged to submit comments
electronically. In general, all comments received will be posted
without change to https://www.regulations.gov. In addition, comments
will be available for public inspection and copying at 1700 G Street,
NW, Washington, DC 20552, on official business days between the hours
of 10 a.m. and 5 p.m. Eastern Time. You can make an appointment to
inspect the documents by telephoning 202-435-9169.
All submissions in response to this request for information,
including attachments and other supporting materials, will become part
of the public record and subject to public disclosure. Proprietary
information or sensitive personal information, such as account numbers
or Social Security numbers, or names of other individuals, should not
be included. Submissions will not be edited to remove any identifying
or contact information.
FOR FURTHER INFORMATION CONTACT: Dustin Beckett, Economist; Pedro De
Oliveira, Senior Counsel; Alan Ellison, Small Business Program Manager;
Division of Research, Markets, and Regulations at 202-435-7700. If you
require this document in an alternative electronic format, please
contact [email protected].
SUPPLEMENTARY INFORMATION:
Background
Section 1022(d) of the Dodd-Frank Act requires the Bureau to
conduct an assessment of each significant rule or order adopted by the
Bureau under Federal consumer financial law. The Bureau must publish a
report of the assessment not later than five years after the effective
date of such rule or order. The assessment must address, among other
relevant factors, the rule or order's effectiveness in meeting the
purposes and objectives of title X of the Dodd-Frank Act and the
specific goals stated by the Bureau. The assessment also must reflect
available evidence and any data that the Bureau reasonably may collect.
Before publishing a report of its assessment, the Bureau must invite
public comment on recommendations for modifying, expanding, or
eliminating the rule or order.\1\
---------------------------------------------------------------------------
\1\ 12 U.S.C. 5512(d).
---------------------------------------------------------------------------
In November 2013, the Bureau issued a final rule titled
``Integrated Mortgage Disclosures under the Real Estate Settlement
Procedures Act (Regulation X) and the Truth In Lending Act (Regulation
Z)'' to implement sections 1098 and 1100A of the Dodd-Frank Act and, as
amended, the rule took effect on October 3, 2015.\2\ This document
refers to this rule as the ``2013 TILA-RESPA Final Rule.'' The Bureau
amended the 2013 TILA-RESPA Final Rule on two occasions before its
effective date.\3\ This document refers to the rule as amended when it
took effect on October 3, 2015 as ``the TRID Rule'' or ``the Rule.'' As
discussed below, the Bureau has determined that the TRID Rule is a
significant rule and it will conduct an assessment of the Rule.
---------------------------------------------------------------------------
\2\ 78 FR 79730 (Dec. 31, 2013), 80 FR 43911 (July 24, 2015).
\3\ See 80 FR 8767 (Feb. 19, 2015) (January 2015 Amendments); 80
FR 43911 (July 24, 2015) (July 2015 Amendments).
---------------------------------------------------------------------------
The Bureau also amended the TRID Rule after the October 3, 2015
effective date, in amendments issued in July 2017 and April 2018.\4\
While such amendments are not intended to be the subject of this
assessment, the Bureau may consider certain of the amendments to the
extent that doing so will facilitate a more meaningful assessment of
the TRID Rule and data is available. Furthermore, the Bureau
acknowledges that certain information, such as data focused on current
mortgage practices, may reflect these 2017 and 2018 amendments and
therefore it may be difficult to isolate the effects of the TRID Rule
during this assessment. This assessment will treat and discuss the
challenge of distinguishing between the effects of the TRID Rule and
the effects of the 2017 and 2018 amendments to it as a factor that
makes it difficult to evaluate the effectiveness of the TRID Rule. In
this document, the Bureau is requesting public comment on the issues
identified below as part of the planned assessment.
---------------------------------------------------------------------------
\4\ See 82 FR 37656 (Aug. 11, 2017) (July 2017 Amendments); 83
FR 19159 (May 2, 2018) (April 2018 Amendments).
---------------------------------------------------------------------------
Assessment Process
Assessments pursuant to section 1022(d) of the Dodd-Frank Act are
for informational purposes only and are not part of any formal or
informal rulemaking proceedings under the Administrative Procedure Act.
The
[[Page 64437]]
Bureau plans to consider relevant comments and other information
received as it conducts the assessment and prepares an assessment
report. The Bureau does not, however, expect that it will respond to
each comment received pursuant to this document in the assessment
report. Furthermore, the Bureau does not anticipate that the assessment
report will include specific proposals by the Bureau to modify any
rules, although the findings made in the assessment will help to inform
the Bureau's general understanding of implementation costs and
regulatory benefits for future rulemakings.\5\ Upon completion of the
assessment, the Bureau anticipates that it will issue an assessment
report not later than October 3, 2020.\6\
---------------------------------------------------------------------------
\5\ The Bureau announces its rulemaking plans in semiannual
updates of its rulemaking agenda, which are posted as part of the
Federal government's Unified Agenda of Regulatory and Deregulatory
Actions. The current Unified Agenda can be found here: https://www.reginfo.gov/public/do/eAgendaMain.
\6\ Section 1022(d)(2) of the Dodd-Frank Act requires the Bureau
to publish a report of assessment of a significant rule or order not
later than five years after the rule or order's effective date.
---------------------------------------------------------------------------
The TILA-RESPA Integrated Disclosure Rule
For more than 30 years, Federal law required creditors and
settlement agents to provide two different sets of disclosure forms to
consumers applying for and consummating consumer mortgage transactions.
Two different Federal agencies, the Department of Housing and Urban
Development and the Board of Governors of the Federal Reserve System,
developed these disclosure forms separately, under two distinct Federal
statutes: the Truth in Lending Act (TILA) and the Real Estate
Settlement Procedures Act of 1974 (RESPA). In 2010, under the Dodd-
Frank Act sections 1032(f), 1098, and 1100A, Congress directed the
Bureau to integrate TILA and RESPA mortgage loan disclosures.\7\ At the
same time, Congress also enacted a number of other new provisions
governing disclosures related to origination and servicing of consumer
mortgages, including several new disclosure requirements added to TILA.
Many of these requirements were implemented by the Bureau in the TRID
Rule.\8\ The major provisions of the TRID Rule are summarized below.
---------------------------------------------------------------------------
\7\ Public Law 111-203, 124 Stat. 1376, 2007, 2103-04, 2107-09
(2010).
\8\ See 78 FR at 79750-53.
---------------------------------------------------------------------------
A. Major Provisions of the TRID Rule
The TRID Rule contains six major elements.
1. Integration of Certain Mortgage Disclosures
The TRID Rule implemented the Dodd-Frank Act's directive to combine
certain disclosures that consumers received under TILA and RESPA in
connection with applying for and closing on a mortgage loan.
Specifically, the TRID Rule's Loan Estimate form integrated RESPA's
Good Faith Estimate (GFE) and TILA's initial disclosure, while the TRID
Rule's Closing Disclosure form integrated RESPA's HUD-1 settlement
statement and TILA's final disclosure.
2. Disclosure Redesign
The TRID Rule not only combined previous TILA and RESPA disclosures
but also required that all creditors use standardized forms (i.e., the
Loan Estimate and the Closing Disclosure) for most transactions, so
that consumers get information in the same way across multiple
applications, including applications to different creditors or for
different loan products, thereby making it easier for consumers to
comparison shop.\9\ While Regulation X already required a standard form
for RESPA disclosures,\10\ TILA section 105(b) explicitly provides that
nothing in TILA may be construed to require a creditor to use any model
form or clause prescribed by the Bureau under that section.\11\ Section
1100A (5) of the Dodd-Frank Act amended TILA section 105(b) to require
that the Bureau publish a single, integrated disclosure for mortgage
loan transactions (including real estate settlement cost statements)
which includes the disclosure requirements of TILA in conjunction with
the disclosure requirements of RESPA that, taken together, may apply to
a transaction that is subject to both or either provisions of law.\12\
Unlike prior TILA mortgage disclosure requirements, the TRID Rule
generally does not permit creditors to make changes to the standardized
forms.\13\ The redesigned and standardized disclosures display key loan
features in a manner intended to enable consumers to locate the
features quickly through headings and labels. Moreover, the TRID Rule
requires that creditors use a standardized format for most consumer
mortgage transactions, so that consumers are presented information in
the same manner across multiple loan types and multiple creditors.\14\
The TRID Rule also requires consistent formatting in the Loan Estimate
and Closing Disclosure forms, to facilitate consumer understanding to
aid in consumers' ability to identify discrepancies or changes that
occurred in loan terms or costs after a Loan Estimate is provided.\15\
---------------------------------------------------------------------------
\9\ 78 FR at 80079.
\10\ 12 CFR 1024.8.
\11\ 15 U.S.C. 1604(b).
\12\ Id.
\13\ 12 CFR 1026.37(o); 12 CFR 1026.38(t)(3).
\14\ 78 FR at 80079.
\15\ 78 FR at 80074.
---------------------------------------------------------------------------
3. Disclosure Provision Responsibility
The TRID Rule changed how certain required information was
disclosed. For example, the TRID Rule changed who was responsible for
disclosing title insurance premiums for federally related mortgage
loans.\16\ Whereas TILA required the creditor to provide the Truth in
Lending disclosures and RESPA required settlement agents to provide the
final HUD-1 settlement statement, the TRID Rule reconciled these
statutory differences by making the creditor, rather than the
settlement agent, ultimately responsible for providing the integrated
Closing Disclosure.\17\ While creditors were coordinating with
settlement agents to provide existing TILA and RESPA disclosures before
the TRID Rule, by reallocating legal responsibility to creditors to
provide disclosures, the TRID Rule also reallocated to them some of the
risks of liability for regulatory violations.
---------------------------------------------------------------------------
\16\ 78 FR at 79964. Previously, the simultaneous title
insurance premiums would be disclosed in accordance with State law
allocations. The TRID Rule mandated disclosure of the full cost of
the creditor's title insurance policy when such insurance is
required by the creditor and of the incremental cost of the optional
owner's title insurance policy. The Bureau decided that benefit of
clearly disclosing a required cost outweighed the benefit of
disclosing the lender's and owner's nominal title insurance premiums
since such a nominal disclosure may result in confusion about what
the consumer would actually pay if the consumer did not obtain an
owner's title insurance policy.
\17\ 78 FR at 79731.
---------------------------------------------------------------------------
4. Definition of an Application
The TRID Rule revised the regulatory definition of a consumer
mortgage loan ``application.'' \18\ Under the Rule, an ``application''
consists of six specific items: The consumer's name, income, social
security number, property address, estimated property value, and the
mortgage loan amount.\19\
---------------------------------------------------------------------------
\18\ 78 FR at 80083-84.
\19\ 12 CFR 1026.2(a)(3)(ii).
---------------------------------------------------------------------------
5. Timing Requirements
The TRID Rule changed the timing of when consumers receive certain
information. The TRID Rule requires that within three business days of
receiving an application, as defined by
[[Page 64438]]
the Rule, a creditor must provide a Loan Estimate to a consumer.\20\
The Rule also integrated the timing requirements of the TILA final
disclosure and RESPA HUD-1 by generally requiring that consumers
receive Closing Disclosures no later than three business days before
consummation.\21\
---------------------------------------------------------------------------
\20\ 12 CFR 1026.19(e)(1).
\21\ 78 FR at 80086. TILA, as implemented by Regulation Z,
generally provides that, if the early TILA disclosures contain an
APR that becomes inaccurate, the creditor shall furnish corrected
TILA disclosures so that they are received by the consumer not later
than three business days before consummation. On the other hand,
RESPA and Regulation X generally require that the RESPA settlement
statement be provided to the borrower at or before settlement.
---------------------------------------------------------------------------
For applications submitted to a mortgage broker, prior to the TRID
Rule, Regulation X had already permitted a mortgage broker on a
creditor's behalf to provide a RESPA GFE not later than three business
days after a mortgage broker received information from a consumer
sufficient to complete an application. Regulation X also assigned
creditors the responsibility for ascertaining whether mortgage brokers
had provided GFEs to consumers.\22\ However, the TILA disclosure
requirements under Regulation Z did not apply to mortgage brokers.\23\
The TRID Rule reconciled these differences by making creditors
responsible for ensuring that mortgage brokers provide Loan Estimates
to consumers within three business days of mortgage brokers receiving
the six specific application items (i.e., the three-business-day period
begins even if creditors have not yet received the six specific
application items from mortgage brokers).
---------------------------------------------------------------------------
\22\ 78 FR at 79799-801.
\23\ Id.
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The three-business-day period may facilitate consumers identifying
whether and how the terms of their loans or of their transactions may
have changed from what creditors or mortgage brokers previously
disclosed to them.\24\ To prevent closing delays, the TRID Rule allows
creditors to update Closing Disclosures in certain circumstances
without triggering an additional three-business-day waiting period.\25\
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\24\ 78 FR at 80086.
\25\ 12 CFR 1026.19(f)(2)(i); see also 78 FR at 80086. If,
between the time the Closing Disclosure is first provided and
consummation, the loan's APR becomes inaccurate (over and above the
specified tolerance level), the loan product changes, or a
prepayment penalty is added, a corrected Closing Disclosure must be
issued with an additional three-business-day period to review the
transaction. All other changes to the Closing Disclosure may be made
without an additional three-business-day waiting period, but a
corrected Closing Disclosure must be provided at or before
consummation. See 12 CFR 1026.19(f)(2)(ii).
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6. Tolerance Rules
The TRID Rule also tightened the tolerance rules that limit
creditors and third party service providers charging consumers
settlement costs that exceed the estimates that had been previously
disclosed.\26\ Absent timely revised disclosures from the creditor
based on certain valid justifications such as a borrower-requested
change, the TRID Rule subjects a larger category of charges to a ``zero
tolerance'' prohibition on cost increases than was the case under
RESPA. Specifically, the TRID Rule expands that ``zero tolerance''
category to also include fees charged by affiliates of creditors and
fees charged by service providers selected by the creditor and fees for
services for which the Rule does not permit consumers to shop.\27\
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\26\ 78 FR at 80084. The preexisting RESPA GFE tolerance rules
generally place charges into three categories: The creditor's
charges for its own services, which cannot exceed the creditor's
estimates unless an exception applies (``zero tolerance''); charges
for settlement services provided by third parties, which cannot
exceed estimated amounts by more than ten percent unless an
exception applies (``ten percent tolerance''); and other charges
that are not subject to any limitation on increases (``no tolerance
limit'').
\27\ Id.
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B. Significant Rule Determination
The Bureau has determined that the TRID Rule is a significant rule
for purposes of Dodd-Frank Act section 1022(d).\28\ The Bureau made
this determination based on a number of factors, including the
following. First, the Bureau considered the TRID Rule's effect on the
features of consumer financial products and services, that is,
mortgages, and the scale of operation changes caused by the Rule. The
major elements of the TRID Rule described in the preceding section have
caused significant changes in business operations.
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\28\ For more information on how the Bureau determines a rule's
significance for purposes of section 1022(d) of the Dodd-Frank Act,
see U.S. Gov't Accountability Office, Dodd-Frank Regulations:
Consumer Financial Protection Bureau Needs a Systematic Process to
Prioritize Consumer Risks, December 2018, https://www.gao.gov/assets/700/696200.pdf.
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Second, while generally creditors were already responsible for the
GFE, by reallocating responsibility for completing and providing
settlement disclosures to the consumer, the TRID Rule reallocated from
settlement agents to creditors some of the risks of liability for
regulatory violations. Such legal risk in turn may increase the risk to
creditors that those who purchase their loans in the secondary market
will demand that creditors repurchase the loans if they were not
originated in compliance with the TRID Rule. To avoid or mitigate this
risk, creditors may have increased the resources they devote to quality
control to eliminate or reduce such defects in the disclosures they
provide to consumers during origination.
Third, the TRID Rule may have also affected quality control
operations because, as described above, the Rule requires that all
creditors use standardized forms for most consumer transactions,\29\
which can alter the risk of formatting-related regulatory violations
whether that is risk increasing due to the change from model forms
under TILA to prescribed, standard forms consistent with RESPA, or risk
decreasing associated with providing fewer number of forms per mortgage
transaction under TRID. Moreover, quality control operations are
affected because the TRID Rule subjects a larger category of charges to
a ``zero tolerance'' prohibition on cost increases,\30\ and implemented
several new disclosure requirements added to TILA by the Dodd-Frank
Act, including some disclosures that, if creditors did not give
accurate ones, can give consumers private rights of action against
creditors.\31\
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\29\ 78 FR at 79993-94.
\30\ See supra note 23.
\31\ See supra note 8.
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Finally, the Bureau considered the costs of the TRID Rule. In the
1022(b)(2) cost-benefit analysis that accompanied the 2013 TILA-RESPA
Final Rule, the Bureau estimated that the major costs of the Rule would
be one-time implementation costs, primarily labor costs, which
creditors, settlement agents or third-party providers would incur to
update systems and procedures to comply with the Rule. Specifically,
the Bureau estimated that the Rule would impose one-time costs of
approximately $1 billion on creditors and approximately $340 million on
settlement agents. In its analysis, the Bureau amortized all costs over
five years, using a simple straight-line amortization, resulting in an
estimate of approximately $275 million per year of cost for each of the
five years. The Bureau also stated that the ongoing costs of the Rule
would be ``negligible'' relative to the baseline of existing regulatory
requirements.\32\
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\32\ 78 FR at 80076.
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Taking these factors and others into consideration, the Bureau
concluded that the TRID Rule is ``significant'' for purposes of section
1022(d) of the Dodd-Frank Act. Section 1022(d) therefore requires the
Bureau to conduct an assessment of the TRID Rule.
[[Page 64439]]
The Assessment Plan
Pursuant to section 1022(d) of the Dodd Frank Act, this assessment
must address, among other relevant factors, the Rule's effectiveness in
meeting the purposes and objectives of title X of the Dodd-Frank Act
and the specific goals of the TRID Rule as stated by the Bureau.
Purposes and Objectives of Title X. Section 1021 of the Dodd-Frank
Act states that the Bureau shall seek to implement and, where
applicable, enforce Federal consumer financial law consistently for the
purpose of ensuring that all consumers have access to markets for
consumer financial products and services and that markets for consumer
financial products and services are fair, transparent, and
competitive.\33\ Section 1021 also sets forth the Bureau's objectives,
which are to exercise its authorities under Federal consumer financial
law for the purposes of ensuring that, with respect to consumer
financial products and services:
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\33\ 12 U.S.C. 5511(a)
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(a) Consumers are provided with timely and understandable
information to make responsible decisions about financial transactions;
(b) Consumers are protected from unfair, deceptive, or abusive acts
and practices and from discrimination;
(c) Outdated, unnecessary, or unduly burdensome regulations are
regularly identified and addressed in order to reduce unwarranted
regulatory burdens;
(d) Federal consumer financial law is enforced consistently,
without regard to the status of a person as a depository institution,
in order to promote fair competition; and
(e) Markets for consumer financial products and services operate
transparently and efficiently to facilitate access and innovation.\34\
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\34\ 12 U.S.C. 5511(b)(1)-(5).
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Specific goals of the TRID Rule. Sections 1098 and 1100A of the
Dodd-Frank Act set forth two goals for the TRID Rule: ``to facilitate
compliance with the disclosure requirements of [TILA and RESPA]'' and
``to aid the borrower or lessee in understanding the transaction by
utilizing readily understandable language to simplify the technical
nature of the disclosures.'' \35\
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\35\ 12 U.S.C. 2603(a), 15 U.S.C. 1604(b).
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The Bureau stated a number of goals in the final TRID Rule, the
preamble to the final TRID Rule, and in public statements surrounding
the release of the Rule. Generally, these goals reflect the goals set
forth in the Dodd-Frank Act. In promulgating the Rule, the Bureau
sought to: Aid consumers in understanding their mortgage loan
transactions, facilitate cost comparisons, and assist consumers in
making decisions regarding their mortgage loans, including helping
consumers decide whether they can afford a loan as offered.\36\
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\36\ 78 FR at 79730.
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By combining the TILA and RESPA disclosures, the TRID Rule also
sought to identify and reconcile inconsistencies between TILA and RESPA
requirements to reduce regulatory burdens.\37\
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\37\ 78 FR at 79730.
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Scope and approach. To assess the effectiveness of the TRID Rule in
meeting these goals and the purposes and objectives of the Dodd-Frank
Act, the Bureau's current assessment plan is informed by a cost-benefit
perspective. While section 1022(d) of the Dodd-Frank Act does not
expressly require cost-benefit analysis, the Bureau believes such a
cost-benefit perspective could be helpful in conducting this
assessment, as a consideration of benefits and costs will assist the
Bureau in evaluating the effectiveness of the TRID Rule. In particular,
such an approach to evaluating the TRID Rule is consistent with the
fact that the Bureau issued the TRID Rule after conducting a benefit
cost analysis under section 1022(b)(2) of the Dodd-Frank Act. Research
questions under the Bureau's assessment plan seek to quantify the costs
and benefits of the TRID Rule as implemented, to the extent that
available data and resources allow, with a focus on the: (i) Effects on
consumers; (ii) effects on firms, particularly creditors, settlement
service providers (including title agents), mortgage brokers,
consumers, and others; and (iii) effects on markets related to mortgage
origination. The Bureau believes that studying this set of effects will
provide the most useful information for stakeholders, including
potential future policymakers.
To the extent possible, the assessment will associate Rule
requirements with observed outcomes of interest. In certain cases, data
may be available that will allow the Bureau to identify effects caused
by the Rule. However, more generally, the presence of multiple other
factors that affect the mortgage market independently of the Rule may
make it challenging to identify exact measures of the effects of the
Rule. In general, any association between observed outcomes and
requirements of the Rule, while informative as to the effectiveness of
the Rule, does not necessarily prove the Rule caused that outcome. In
conducting this assessment, the Bureau will consider existing mortgage
data and data that the Bureau may reasonably collect, including third-
party sources (see more detail below regarding the Bureau's research
activities, data sources, and comment requests).
The Bureau has been conducting, and will continue to conduct,
external outreach meetings with industry (including trade
associations), other government agencies, and consumer groups
(including housing counselors). The primary goal of this outreach is
for the Bureau to become better informed of the potential effects of
the Rule on various market segments.
Other research activities in addition to those described in the
remainder of this section may also be considered as appropriate, and
the Bureau is interested in suggestions from stakeholders regarding
additional research activities that the Bureau could conduct to better
assess the Rule.
1. Assessing Consumer Effects
The approach to examining the TRID Rule's effect on consumers is
shaped by four broad research questions based on the aforementioned
goals of the Rule, namely, how the TRID Rule affected consumers': (i)
Understanding of their mortgage disclosures; (ii) mortgage and
settlement service shopping behaviors; (iii) satisfaction with their
mortgage disclosures, mortgage products, and settlement services; and
(iv) ability to compare and choose among mortgages and settlement
services. Internal Bureau data can provide insight on many of these
research questions. The TRID disclosure testing, conducted during the
process that resulted in the 2015 TRID Rule, can provide causal
estimates of the effect of the new disclosures on consumer
understanding and on consumers' ability to compare mortgage terms
across different mortgage products. In addition, analysis of the
National Survey of Mortgage Originations (NSMO) can provide
correlational estimates of how much consumers' knowledge, shopping, and
satisfaction changed after the Rule took effect.
2. Assessing Firm Effects
The approach to assessing the TRID Rule's effect on firms is shaped
by four broad research questions: (i) What were the TRID Rule's
implementation costs to firms; (ii) what are the TRID Rule's ongoing
costs and cost savings to firms; (iii) how did the TRID Rule affect
creditor's ability to sell mortgages to others on the secondary market;
and (iv) how did the TRID Rule affect the way
[[Page 64440]]
creditors disclose information to consumers? \38\
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\38\ In assessing the effects of the Rule on firms, the Bureau
will also strive to identify outdated, unnecessary, or unduly
burdensome aspects of the TRID Rule. See 12 U.S.C. 5511(b)(3).
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To address these questions, the Bureau envisions conducting
structured interviews and surveys with industry participants as well as
using relevant data the Bureau already possesses and third-party
information that may be useful. Surveying and interviewing creditors
and settlement agents will help the Bureau to assess firms'
implementation costs, ongoing costs, and cost savings, and allow the
assessment to assess how the accuracy and timing of disclosures changed
as a result of the TRID Rule and where creditors faced particular
difficulties, if any, with respect to disclosures creditors provided.
The Bureau anticipates that interviewing creditors and quality
control providers will provide insight on potential difficulties the
TRID Rule may cause for creditors seeking to sell mortgage loans in the
secondary market. In addition, the Bureau may use loan-level securities
data from the Bloomberg Terminal and aggregate secondary market data
from Inside Mortgage Finance (IMF) to assess the TRID Rule's effect on
creditors selling loans on the secondary market.
Additional data that would be informative to the Bureau in
understanding the effects of the Rule on creditors providing
disclosures to consumers include a consumer-level dataset. Such a
dataset would be most informative if it covered a period before and
after the effective date of the TRID Rule and if it included all or
most TILA and RESPA related mortgage loan disclosures that creditors
provided to consumers in the process of obtaining a mortgage loan. The
ideal fields contained in this dataset would include the type of
disclosure, the date it was disclosed, if the creditor re-disclosed
forms, the reason for the creditor's re-disclosure, and fields for
information contained on the forms (i.e., loan terms, loan structure,
loan fees, closing costs, etc.). This dataset would help the Bureau
understand how the Rule affected the information consumers received
from creditors (e.g., have initial disclosures become more accurate? Or
timelier?).
3. Assessing the Effects on Markets Related to Mortgage Origination
Consumer demand and firm supply interact in markets. This
interaction can be measured in transaction prices, transaction volume,
and market structure, among other ways. The assessment's approach to
market effects is thus reflected by three broad questions: (i) Did the
TRID Rule affect the price of mortgages or the volume of mortgage
originations in the aggregate or for particular market segments or
mortgage product types (e.g., construction loans, subordinate liens,
manufactured housing, etc.)?, (ii) did the TRID Rule affect entry,
exit, or consolidation in any parts of the mortgage market?, and (iii)
did the TRID Rule's specific provisions affect market structure by
changing the relationship between various providers (e.g., creditors
and settlement agents or creditors and their affiliates)?
To assess market effects, the assessment will rely first on data
the Bureau already possess, such as Home Mortgage Disclosure Act (HMDA)
data and the National Mortgage Database (NMDB) and stress testing data
from the Federal Reserve (Y-14 data). These datasets may be used to
identify changes in overall loan volumes, mortgage prices, price
dispersions, and the availability of mortgage products. In addition,
the assessment will rely on the same survey and structured interviews
with industry participants that would be used to consider costs on the
firm side. The industry survey will allow the Bureau to assess specific
areas of the market or mortgage product types (e.g., construction
loans, subordinate liens, manufactured housing, etc.). Surveying
creditors and settlement agents will allow us to assess changes in the
relationship between creditors and settlement agents as a result of
their changing roles under the TRID Rule. Surveying creditors will also
allow the Bureau to assess changes in the relationships between
creditors and other entities involved in mortgage transactions as a
result of the TRID Rule's changed disclosure tolerances.
Comments from the 2018 Call for Evidence. The Bureau is considering
in its TRID Rule assessment plan the comments received in relation to
the TRID Rule during the 2018 Call for Evidence Requests for
Information (RFIs).\39\ The Bureau received approximately 63 comments
related to the TRID Rule. Most TRID-related comments were submitted to
the Adopted Regulations and New Rulemaking Authorities RFI and to the
Inherited Regulations and Inherited Rulemaking Authorities RFI
(Rulemaking RFIs).\40\ Trade associations, consumer advocacy groups,
and others from industry provided comments relevant to the TRID Rule.
The assessment plan and research questions reflect the information
provided to the Bureau in response to the Calls for Evidence, to the
extent the comments highlighted topics concerning the TRID Rule.
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\39\ In January 2018, the Bureau commenced a ``Call for
Evidence'' to ensure that the Bureau is fulfilling its proper and
appropriate functions to best protect consumers. Over a number of
weeks, the Bureau published in the Federal Register a series of
Requests for Information (RFIs) seeking comment on enforcement,
supervision, rulemaking, market monitoring, complaint handling, and
education activities. These RFIs provided an opportunity for the
public to submit feedback and suggest ways to improve outcomes for
both consumers and covered entities. Altogether, over 88,000
comments were received across 12 dockets.
\40\ For comments on the Adopted Regulations and New Rulemaking
Authorities Request for Information, see https://www.regulations.gov/docket?D=CFPB-2018-0011. For comments on the
Bureau's Inherited Regulations and Inherited Rulemaking Authorities
Request for Information, see https://www.regulations.gov/docket?D=CFPB-2018-0012.
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Comments to the Rulemaking RFIs generally centered on topics and
issues pertaining to TRID including curing violations, secondary market
issues, applicability to specific products, disclosure redesign, legal
liability, and title insurance. For example, with regard to secondary
market issues, two trade groups expressed concerns that creditors will
need to either retain in portfolio or sell on the ``scratch and dent''
secondary market at a steep discount loans containing TRID errors.
Commenters indicated that this treatment of loans results in lack of
liquidity or losses for the lender. Commenters also indicated that
lenders can face higher risk of receiving buyback requests, which are
demands from investors (most often GSEs) that lenders buy back the loan
from the creditor due to documentation errors or other irregularities.
As another example, a trade group commented that many creditors have
been hesitant to offer more complex mortgage products, including, among
others, construction loans, for fear of misinterpreting TRID
requirements. Four commenters provided comments relating to the
construction loan market specifically. Most of these commenters
requested additional guidance or simpler disclosures for construction
loans.
In March of 2018, as part of the 2018 Call for Evidence series, the
Bureau also issued the Bureau Guidance and Implementation Support
Request for Information (Guidance RFI), a request for comment and
information to assist the Bureau in assessing the overall effectiveness
and accessibility of its guidance materials and activities (including
implementation support) to
[[Page 64441]]
members of the general public and regulated entities.\41\ The comments
the Bureau received in response to the Guidance RFI highlight the
importance of guidance and compliance aids for regulatory
implementation, specifically for implementing highly technical rules
such as the TRID Rule.\42\ They also highlighted certain aspects of
guidance that were not addressed or guidance styles that did not work
well such as providing more guidance on what requirements of the TRID
Rule apply to different segments of the market and providing specific
examples to facilitate compliance. For assessment purposes of the TRID
Rule, the Bureau is interested in learning more about any aspects of
the Rule that were confusing or on which more guidance was needed,
whether at the time the Rule took effect or afterwards, and the effects
of this confusion or lack of guidance (including any unintended effects
on market liquidity in any sectors of the housing finance system).
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\41\ For the full electronic docket, see https://www.regulations.gov/docket?D=CFPB-2018-0013. The Bureau received
approximately 49 comments on this RFI (42 that addressed the
substance of the RFI). The Bureau received a number of comments
related to guidance but for the purpose of the TRID assessment, only
comments received related to TRID guidance are mentioned.
\42\ The Bureau continues to update and improve its regulatory
guidance and implementation aids. Several materials were, and will
be, published after the implementation of the TRID Rule to provide
more guidance and clarity, and the Bureau continues to work to
identify and address additional guidance needs.
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Request for Comment
The Bureau hereby invites members of the public to submit
information and other comments relevant to the issues identified above
and below, information relevant to enumerating costs and benefits of
the TRID Rule to inform the assessment's cost-benefit perspective, and
any other information relevant to assessing the effectiveness of the
TRID Rule in meeting the purposes and objectives of title X of the
Dodd-Frank Act (section 1021) and the specific goals of the Bureau. In
particular, the Bureau invites the public, including consumers and
their advocates, housing counselors, mortgage creditors, settlement
agents, and other industry participant, industry analysts, and other
interested persons to submit comments on any or all of the following:
(1) Comments on the feasibility and effectiveness of the assessment
plan, the objectives of the TRID Rule that the Bureau intends to use in
the assessment, and the outcomes, metrics, baselines, and analytical
methods for assessing the effectiveness of the Rule as described in
part IV above;
(2) Data and other factual information that the Bureau may find
useful in executing its assessment plan and answering related research
questions, particularly research questions that may be difficult to
address with the data currently available to the Bureau, as described
in part IV above;
(3) Recommendations to improve the assessment plan, as well as
data, other factual information, and sources of data that would be
useful and available to the Bureau to execute any recommended
improvements to the assessment plan;
(4) Data and other factual information about the benefits and costs
of the TRID Rule for consumers, creditors, or other stakeholders;
(5) Data and other factual information about the effects of the
Rule on transparency, efficiency, access, and innovation in the
mortgage market;
(6) Data and other factual information about the Rule's
effectiveness in meeting the purposes and objectives of title X of the
Dodd-Frank Act (section 1021), which are listed in part IV above;
(7) Data and other factual information on the disclosure dataset
specified in the Assessing Firm Effects section above under part IV;
(8) Comments on any aspects of the TRID Rule that were or are
confusing or on which more guidance was or is needed during
implementation including whether the issues have been resolved or
remain unresolved; and
(9) Recommendations for modifying, expanding, or eliminating the
TRID Rule.
Dated: November 13, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-25260 Filed 11-21-19; 8:45 am]
BILLING CODE 4810-AM-P
