Fitch Ratings published updated criteria this week for rating residential MBS. The new criteria include adjustments to due diligence grades relating to the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule and evaluations of firms serving as a deal agent. Fitch said the new criteria include a “realignment” of items that prompt C grades and D grades on mortgages reviewed by third-party due diligence firms. The changes incorporate the Structured Finance Industry Group’s recently issued RMBS 3.0 TRID Compliance Review. The rating service acknowledged...

Given the extensive and uncertain administrative, civil and contractual liabilities mortgage lenders are confronted with under the new TRID disclosure regime, anxiety about the inevitable mistakes that will occur remain high. But there are a few remedies available to lenders. During a presentation at the recent American Bankers Association regulatory compliance conference in San Diego, Rich Horn, founding attorney at Rich Horn Legal in Washington, DC, spelled out just what options exist for mortgage lenders to “cure” loans with defects under the Consumer Financial Protection Bureau’s integrated-disclosure rule. “If you have liability for a TRID violation, how do...

Given the high stakes associated with the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule, commonly known as TRID, the mortgage lending industry perhaps can be forgiven for being hyper-sensitive to minute, incremental change, whether it be another clarifying rulemaking or a change in enforcement.Sometimes, these developments could be a matter of perception or semantics; at other times, facts on the ground may actually be changing. “Uncertainty about enforcement on TRID mirrors the uncertainty on the rule itself. TRID has been an extremely complex regulation for the industry to implement,” American Land Title Association CEO Michelle Korsmo told Inside the CFPB. “ALTA has continuously encouraged the CFPB to provide more written guidance on the 1,888-page ...

There is plenty of speculation in the mortgage industry these days about which issues are going to be addressed in the CFPB’s pending proposed rule to clarify many of the uncertainties associated with its Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule, commonly known as TRID. During a panel discussion at the American Bankers Association’s annual regulatory compliance conference in San Diego earlier this month, Rodrigo Alba, senior vice president and senior regulatory counsel with the ABA, speculated that one of the main areas the bureau will address is the codification of the informal guidance CFPB officials have provided since the rule was released. As he sees it, the bureau will take all of the content and ...

Late last week, the Structured Finance Industry Group, a securitization trade association, put out its long-awaited compliance review documentation related to the CFPB’s integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. SFIG said its RMBS 3.0 TRID Compliance Review Scope documentation was put together by representatives of third-party review firms across the industry and its own RMBS 3.0 Due Diligence, Data and Disclosure Working Group.The material addresses TRID compliance issues on non-agency mortgages uncovered during reviews by due diligence providers. Under the standards, loans that would have received grades of C or D due to TRID exceptions can sometimes receive B grades if errors are corrected. The document was created to ...

Mortgage lenders throughout the land are justifiably anxious about complying with the CFPB’s TRID integrated disclosure rule. But compliance professionals at Treliant Risk Advisors recently provided a number of key checkpoints that lenders can use to prepare themselves and examine their own degree of compliance. During a presentation at the American Bankers Association’s recent regulatory compliance conference in San Diego, Lyn Farrell, a managing director at Treliant, rattled off a list of TRID technical compliance testing criteria for attendees. First, lenders should “ensure that the testing scope includes all covered products from all applicable channels,” Farrell said. They also should check that their institution provides all disclosures by the appropriate deadlines, including, of course, all loan estimates and closing disclosures....

The Structured Finance Industry Group late last week published a final draft of the standards for due diligence firms to use when testing loans for compliance with the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule. “The underlying premise of this documentation is to establish a best practices approach to pre-securitization testing logic that will drive the due diligence conducted by third-party review firms,” SFIG said. The RMBS 3.0 TRID Compliance Review Scope documentation addresses...

Late last week, news broke of a conversation from a closed session at the American Bankers Association conference in San Diego that the “sensitive” approach by regulators to respect lenders’ good-faith efforts to comply with the Consumer Financial Protection Bureau’s integrated disclosure rule may have come to an end. According to one well-placed source, the CFPB and the other regulators – the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency – have decided that they will start examining banks for technical compliance with TRID, begin requiring restitution to affected borrowers, and start citing banks that are in non-compliance. “Apparently, the message is...

The housing market has been fairly stable in 2016, but industry insiders say decreased affordability and credit access could impede the multiyear housing recovery. With interest rates lower than expected, the Mortgage Bankers Association raised its 2016 origination forecast to $1.60 trillion in May from its January projection of $1.38 trillion. It expects purchase originations to increase in 2017 and 2018, thanks to economic growth and a strong job market. But many first-time homebuyers may be...

The mortgage industry and secondary-market investors continue to struggle with uncertainty over the degree of liability for errors in complying with the Consumer Financial Protection Bureau’s integrated-disclosure rule, commonly known as TRID. Many hope the pending TRID 2.0 rulemaking expected from the CFPB this July will clarify and resolve the exasperating ambiguity and at least let industry participants and investors know exactly where they stand and what risks they are taking on. One of the most important areas for investors is contractual liability. “Under most mortgage loan purchase agreements, there is a representation and warranty for absolute compliance [or] a signed agreement saying that you’re only liable for material violations,” said Richard Horn, a Washington, DC, attorney. Speaking at this week’s American Bankers Association conference, the former CFPB official said, “But whatever the agreement, you still have contractual liability for the loans that you sell, so keep that in mind.” Civil liability is...