NAR Meets with CFPB, Sends Letter Asking for TRID Guidance

Earlier this month, the National Association of Realtors (NAR) sent a letter to the Consumer Financial Protection Bureau (CFPB) asking for additional guidance on the controversial TILA-RESPA Integrated Disclosure Rule, commonly known as TRID or “Know Before You Owe.”

As the NAR notes in its letter, the “Know Before You Owe” rule increases errors on closing disclosures (CD) since lenders refuse to provide information to real estate agents for fear of violating the financial privacy of borrowers. In addition, the new rule confuses lenders about whether or not changes can be made to the CD form after being sent to the consumer. Lastly, the rule causes investors to reject loans due to potential compliance problems and minor document errors, which are in many cases irrelevant to the merits of the loan.

The rocky implementation of the “Know Before You Owe” rule is negatively impacting the real estate community and consumers. The confusing and short-sighted rule is leading to higher loan costs, less access to credit, and lengthening the time it takes to close on a mortgage loan.

As the NAR correctly notes in its letter, “the increased cost of manufacturing these loans (containing minor errors) will ultimately trickle down to the consumer and impact access to credit, especially for lower-income and first-time homebuyers.”

Instead of asking the CFPB to get rid of these burdensome rules entirely, the NAR has asked for additional guidance and clarity, but there is a larger problem.

Since its creation under the Dodd-Frank Act, the CFPB has created deep uncertainty within the financial and housing markets. The CFPB has unprecedented Congressional independence and possess the power to make up lending rules that restrict consumer choice and access to credit. Consumers in the housing market would be better off without federal agencies playing mom and dad.

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