• CFPB Responds to MBA Concerns Over TRID
  • January 19, 2016 | Author: Neal C. Wise
  • Law Firm: Jones Walker LLP - Jackson Office
  • On December 21, 2015, the Mortgage Bankers Association (MBA) sent aletter to the CFPB seeking guidance on industry concern that secondary market purchasers of mortgage loans were rejecting a high rate of these loans due to technical violations of the TILA/RESPA Integrated Disclosure (TRID) rule. In response, the CFPB issued a December 29, 2015, letter responding to the MBA.

    The CFPB letter provides useful guidance for mortgage loan originators, although it stops short of providing a safe harbor or protection from any TILA/RESPA liability. Perhaps most importantly, Director Richard Cordray stated that "consistent with existing Truth in Lending Act (TILA) principles, liability for statutory and class action damages would be assessed with reference to the final closing disclosure issued, not to the loan estimate, meaning that a corrected closing disclosure could, in many cases, forestall any such private liability." The TRID rules allow, as pointed out by Director Cordray, certain non-numerical and other clerical errors to be corrected post-closing.

    Additionally, Director Cordray points out that the TRID rules further integrate fundamental principles of liability under TILA and RESPA such that, for non-high-cost mortgages:
    • There is no general TILA assignee liability unless the violation is apparent on the face of the disclosure documents and the assignment is voluntary.
    • TILA limits statutory damages for mortgage disclosures, in both individual and class actions, to failures to provide a closed-set of disclosures.
    • Formatting errors and the like are unlikely to give rise to private liability unless the formatting interferes with the clear and conspicuous disclosure of one of the TILA disclosures listed as giving rise to statutory and class action damages.
    • The disclosures listed in TILA section 130(a) that give rise to statutory and class action damages do not include either RESPA disclosures or the new Dodd-Frank Act disclosures, including the Total Cash to Close and Total Interest Percentage.
    Director Cordray concluded his letter reassuring secondary market purchasers that "[the CFPB] believe[s] that the risk of private liability to investors is negligible for good-faith formatting errors and the like" and "if investors were to reject loans on the basis of formatting and other minor errors . . . they would be rejecting loans for reasons unrelated to potential liability associated with the [TRID rules]."