House of Representatives to Vote on Bill to Make TRID Grace Period Official

government-rightsThe House of Representatives will vote next week on a bill that will provide a hold harmless grace period for the Consumer Financial Protection Bureau’s (CFPB‘s) TILA-RESPA Integrated Disclosure (TRID) Rule, which is set to go into effect October 3.

On Wednesday, the House Financial Services Committee passed the H.R. 3192 Homebuyers Assistance Act, which could make the grace period official.

House Majority Leader Kevin McCarthy recently released a statementannouncing that the House will vote on the Homebuyers Assistance Act next week for those putting forth a good faith effort to comply with TRID.

Kevin McCarthy

He added, “Owning a home has always been an important part of the American Dream, and government should never stop people from reaching that goal. Representative French Hill’s (AR-02) leadership on this bill means many Americans will be that much closer to achieving their American Dream.”

CFPB Director Richard Cordray once again sat before the House Financial Services Committee on Tuesday for their semi-annual report to Congress and touted the Bureau’s efforts to protect consumers in its four years of existence while taking questions from Committee members on such topics as mortgages, auto lending, payday lending, and the TRID rule.

During the report, Cordray was asked if he was willing to announce a temporary three-month “hold harmless” period for those who are making a good faith effort to comply with TRID.

Cordray

“We have said, and we’re working now to provide written guidance on this, and we’re working with the other agencies so we all provide the same written guidance on this, that for some period of months—and I’m not going to be specific about it; it might be longer—there will be a diagnostic approach to this,” Cordray said. “Nobody believes that the market participants are trying to abuse consumers here. They’re just trying to change their systems and get it right. It will be diagnostic and corrective, not punitive, and there will be time for them to get it right and not have to be perfect on the first day.”

In a letter sent to the mortgage industry, the CFPB expressed how it will handle compliance issues and efforts related to TRID.

“During initial examinations for compliance with the rule, the Bureau’s examiners will evaluate an institution’s compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance,” the letter stated. “Examiners will expect supervised entities to make good faith efforts to comply with the rule’s requirements in a timely manner.”

Examiners will consider:

  • The institution’s implementation plan, including actions taken to update policies, procedures, and processes
  • Its training of appropriate staff
  • Its handling of early technical problems or other implementation challenges

The Credit Union National Association (CUNA) showed their appreciation for the grace period notion, which they expect to be highly effective in helping credit unions navigate TRID.

“This bipartisan bill provides certainty to businesses that are trying to comply with the rule as well as an opportunity to work out any implementation issues that come up,” McCarthy said. “There is no reason that CFPB regulations should prevent homebuyers from being able to buy and close on a home.”

“We thank House Majority Leader Kevin McCarthy for his leadership on H.R.3192, the ‘Homebuyers Assistance Act.’ This legislation will be very important for credit unions as they struggle to comply with the October 3 implementation deadline of the CFPB’s TRID rule,” said Jim Nussle, CUNA president and CEO. “We strongly encourage the Senate to follow suit and pass this bill, and ask that President Obama will quickly sign it into law to ensure the rule has minimal impact on consumers and residential home mortgage closings.”

Meanwhile, the Association of Mortgage Professionals (NAMB) remained encouraged, but wary of the upcoming changes.

“While we’re encouraged by assurances made by CFPB Director Cordray to the House Financial Services Committee that there won’t be punitive actions taken against companies that make a good-faith effort to comply with TRID,” said Rocke Andrews, president-elect of NAMB, “we are still hopeful that Congress will take action to protect consumers and reduce disruption of the real estate market.”

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Repeat Foreclosures Are Driving Uptick in Foreclosure Starts

foreclosure-signAmid all the good news for housing lately, foreclosure starts were up by 7 percent in August—driven by a rise in the amount of repeat foreclosures, according to the August 2015 Mortgage Monitor released by Black Knight Financial Services on Monday.

Repeat foreclosures accounted for 57 percent of the 80,500 foreclosure starts reported in August, the largest share of repeat foreclosures for one month on record, according to Black Knight. While all foreclosure starts saw an increase of 7 percent month-over-month in August, the number of repeat foreclosures jumped by 13 percent.

Coinciding with the substantial increase in repeat foreclosure starts in August was an nearly equally substantial decline in the number of first time foreclosure starts. According to Black Knight, first time foreclosure starts totaled 35,000 in August, their second-lowest total for one month since the crisis began (only April 2015 was lower).

“The high incidence of repeat foreclosures is actually a testament to the lengths servicers have been going in terms of actively working with high delinquency loans and trying to find the best path to pursue with these borrowers,” said Ben Graboske, Chief Technology Officer for the Data and Analytics Division at Black Knight. “When this happens, loans move out of active foreclosure and back into 90+ days delinquent status, presumably to pursue loss mitigation efforts. If and/or when those fail, the loan is shifted back to foreclosure.”

“The high incidence of repeat foreclosures is actually a testament to the lengths servicers have been going in terms of actively working with high delinquency loans and trying to find the best path to pursue with these borrowers,”

The fact that the share of repeat foreclosure starts is increasing is not completely bad, according to Graboske.

“The problem today lies with a smaller and smaller group of loans that have been distressed for many years now—over half of all loans in foreclosure have been past due for two years or more—and which have often gone in and out of foreclosure many times,” Graboske said. “When repeats are making up a greater and greater share of a smaller and smaller population (the population of loans in foreclosure has been steadily declining for quite some time now, despite the occasional bump in starts), it’s actually a good thing—not for those people, of course, but in terms of a barometer of overall recovery.”

Overall, foreclosure starts were little changed over the year, seeing only a 1.3 percent decline from August 2014, according to Black Knight.

10-2 BK MM graph