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Recently, I responded to some questions posed by one of our trade publication, Mortgage.Orb, about CFPB’s proposed changes to the Know Before You Owe, rules (TRID).
One of these questions asked about CFPB’s decision to not address the current ‘cure’ options under the new rule. This is of major concern to many lenders and understandably so.
CFPB believes in trying to define further procedures to affect cures for disclosure accuracy and/or timing would not be practicable without substantially undermining incentives for rule compliance. In other words, there needs to be a penalty for not following the rules. Otherwise, why have them? Do the crime, do the time.
Prior to TRID, TILA offered cure provisions for errors made under Section 1640 (b) & (c). These are still in effect today, in addition to new cures allowable under the TRID rules for tolerance fee violations and certain clerical errors. So lenders have more cure options today than they did prior to TRID.
Think about it, to allow additional cure options could put the consumer at a disadvantage and in some cases at great expense. The intent of the rule is to ensure a consumer is made aware of what they’re getting right up front and that they get what was promised at the end.
An error in the timing of a disclosure or in loan information that gets corrected after closing through some cure provision may surely benefit the lender. But, what the consumer? After all, the law is meant to protect them.
If you’re caught speeding, you don’t get an opportunity for a cure by saying I’ll go back to where I started and I’ll drive more slowly to my destination. You break the law, you pay the fine.
All the more reason to have the technology, systems and processes in place to ensure your Loan Estimates and Closing Disclosures are issued timely when required, and accurately, in accordance with the provisions of the rule.
CFPB has made it quite clear there will be no do-overs when it comes to timing and accuracy errors under the Know Before You Owe rules. So, lenders need to know before they disclose to avoid unnecessary penalties.
