The Consumer Financial Protection Bureau (CFPB) needs to clarify its Cash to Close regulations, clear up issues surrounding rounding, and provide ample time for adaptation and implementation in its next round of TILA-RESPA updates, according to Docutech, a document generation and delivery company based in Idaho.
These comments were addressed in a letter to the CFPB, which Docutech revealed excerpts of on its blog Wednesday morning. The letter was sent in regards to the CFPB’s proposed amendments to Regulation Z—the TRID amendments.
“Our primary goal in presenting a comment letter to the CFPB was to encourage a more uniform interpretation of the TRID rule,” said Fred Gooch, Docutech’s VP of Compliance, on the Docutech blog. “We believe this will benefit our lender clients, to be sure, but it will also benefit the end consumer. Ultimately, we all must keep the consumer in mind, and our comments are aimed at improving the mortgage borrowing experience.”
Overall, current TRID regulations are too vague, Gooch wrote.
“It has become clear that the current rule still has much ambiguity that has caused some confusion in our industry,” Gooch wrote. “Over the past year, we have worked very closely with LOS providers and our clients’ internal counsel to provide automation that allowed them to operate according to their own interpretations of the rule, which varied widely.”
Specifically, Gooch wrote, there is a lack of clarity on how cash to close calculations should work. Though specific guidelines have been provided on loan estimate preparations, guidelines for closing disclosures are murkier.
The CFPB letter stated, “Many lenders seemed to believe that the amounts disclosed on the Loan Estimate column of the Calculating Cash to Close table on the Closing Disclosure should be the figures that are used for tolerance, rather than using the most currently available figures for amounts that are not being reset due to tolerance events.”
It also points to ambiguities in Section 1026.19 and Comment 19(e)(3)(iv)-2, stating “This instruction did not make it clear, however, whether a lender should use updated amounts on the revised disclosures for items that were not being reset for tolerance problems.”
According to Gooch, this ambiguity has led to a “variety of interpretations which are likely to be confusing to consumers.” This—and issues surrounding rounding—need to be clarified, Gooch wrote