The Housing and Insurance subcommittee of the House Financial Services Committee has scheduled a hearing this afternoon titled "TILA- RESPA Integrated Disclosure (TRID): Examining the Costs and Benefits of Changes to the Real Estate Settlement Process."  According to the hearing memorandum, the  hearing will provide members with a better understanding of the new TRID and testimony "will focus on the impact of TRID on the real estate market, implementation and compliance costs associated with TRID, and a comparison of those costs to the benefits consumers and industry participants are expected to derive from the rule."

However, as reported here earlier this week, it appears that the hearing is actually laying groundwork for delaying enforcement of TRID implementation until January 1, 2016.  At least two subcommittee members have been advocating for such a postponement and one, Steven Pearce (R-NM) has filed legislation requiring it.

Scheduled as witnesses at the hearing are three housing industry representatives and one representative of a consumer group:

• Cynthia Lowman, President, United Bank, Mortgage Corporation, United Bank of Michigan, on behalf of the American Bankers Association
• Diane Evans, Vice President, Land Title Guaranty Company, on behalf of the American Land Title Association
• Laurie Goodman, Center Director, Housing Finance Policy Center, Urban Institute
• Chris Polychron, Executive Broker, 1st Choice Realty, on behalf of the National Association of Realtors

There are no representatives of the Consumer Financial Protection Bureau (CFPB) which is responsible for TRID implementation scheduled to appear at the hearing. 

There have been no prepared remarks from witness made available, but in advance of the hearing Richard J. Andreano, Jr. published an analysis in Ballard & Spahr's CFPB blog of some of the concerns the industry appears to be raising as they prepare for implementation.  He used as a basis a statement made by Richard Cordray, CFPB Director, to the National Association of Realtors (NAR) on Tuesday to suggest that Cordray "may not fully appreciate the implications" of the TRID rule.  

Andreano's analysis centers around the section of the rule which requires that the TRID "Closing Disclosure" be received by the borrower at least three business days before the loan is closed and that certain changes in the loan require not only a new disclosure but a new three-business-day waiting period.  Lenders apparently are concerned that problems sometimes encountered during the usually last minute buyer walk-through of the property could trigger a renewed three-day waiting period and delay some closings.

In his statement to NAR Corday noted that his agency had specifically responded to earlier concerns about such changes and had limited the reasons requiring the waiting priod to three:

• a change in the APR of more than 1/8 point for fixed-rate or ¼ point for adjustable rate loans;
• addition of a prepayment penalty;
• a change in the basis loan product.

CFPB recognizes, Cordray said, that things can and do change and the rule makes allowances for ordinary ones without delaying the closing.  An earlier version of the rule would have required a waiting period had closing costs increased more than $100.  CFPB removed that provision as an accommodation to industry concerns.   

Andreano says the Director's comment "is not consistent with industry views and experience" and that issues arising from a walk-through can result in changes that could cause the APR to become inaccurate.

Another problem he writes is that while the TRID rule limits how much lender and other fees may increase it allows them to increase based on changed circumstances and similar events.  However in most circumstances only the upfront disclosure (the Loan Estimate) may be used to increase fees and the rule does not permit a lender to issue one subsequent to issuing a Closing Disclosure.  Thus if a later change affects the transaction so as to increase fees the lender will either have to absorb the increased costs or deny the loan.

Both of these situations are matters involving the borrower and seller not the lender.  Lenders, he says, would welcome revisions to the rule that would allow them to make changes without triggering a waiting period.  This would benefit consumers as well.

Andreano also engages in a lengthy discussion as to how the 1/8 point and ¼ point tolerances for APR changes might be interpreted for regular and irregular transactions.  He concludes that the complexity of these tolerances will likely result in many delayed closings and recommends revising the rule to simplify when a new waiting period is required because of changes.