this course for the same reason. Better to wait a
few months and hope the PHH court’s ruling makes
removal a nonissue.
Is your head spinning yet? Well, there’s more.
Aside from the all the scenarios involving
Cordray’s removal by the president, there’s also
the possibility Congress could abolish the bureau’s
single-director structure entirely and replace it with
a bipartisan commission. This is a key feature of
CHOICE, as well as the subject of a separate Senate
bill introduced in January, so the presumption is that
Republicans will aim to make it part of any eventual
Dodd-Frank reform bill.
Finally, there’s the possibility Cordray may even
resign. His name has been thrown in the mix for the
2018 Ohio gubernatorial race (where Republican
incumbent John Kasich is barred from running due
to term limits), and sources close to the Democratic
leadership have suggested that the nomination is
his if he wants it. While Cordray has stated recently
that he will not resign and intends to finish out his
term as director, one has to wonder whether all of
this turmoil and uncertainty about his future may be
enough to change his mind at some point.
Ultimately, there is one thing we do know:
Cordray’s days at the CFPB are numbered. Whether
it is at the end of his current term (in July 2018) or
sometime sooner—it is not a question of if Cordray
will be replaced, but when and how.
What does this mean for TRID and those
responsible for complying with it?
As the adage goes: Personnel is policy. The
bureau’s new leadership will likely adopt enforcement
priorities that more closely match those of the
Republican party and the Trump administration.
For instance, there has been much criticism from
the right regarding Dodd-Frank’s lopsided impact
on community lenders, with some in Congress and
the Trump administration suggesting smaller banks
should be exempt from certain aspects of the Act’s
requirements. Perhaps as an alternative to legislative
action—or at least a stopgap—the bureau will use
its broad discretion to limit enforcement actions
primarily, or exclusively, to larger banks.
A change in the bureau’s leadership could bring
about substantive changes to TRID as well. While
any amendment to the legislation, itself, would of
course require congressional action, the CFPB is
responsible for TRID’s implementing regulations.
We already saw the CFPB under Cordray
propose a number of changes to TRID’s
implementing regulations in its 2016 Notice of
Proposed Rulemaking (aka “TRID 2.0”). Those
changes were generally well received by the
industry, but there are a number of areas the bureau
declined to address, which are still seen as pain
points by many.
One such area is TRID’s treatment of
simultaneous issue rates. Currently, the way the
regulations require these fees to be disclosed on
Loan Estimates is (aside from being potentially
misleading to consumers) directly inconsistent with
many state laws. Thus, lenders and service providers
in these states are being forced to create additional
disclosure documents, with conflicting information,
in order to comply with both the federal and state
laws. This has led to significant confusion among
consumers, and continues to be a strong point of
contention for many in the industry.
Other changes the industry wanted to see
included in TRID 2.0, but weren’t, include the
introduction of additional cure mechanisms for
Loan Estimate defects; clarification of secondary
market liability for TRID violations; and resolving
the so-called “black hole” issue (this one actually
is addressed in TRID 2.0, but not in a way that
completely resolves the concern).
Of course, TRID 2.0 is yet another unknown. The
commentary period on the rule ended October 18,
2016, but it has yet to be finalized.
While there’s a great deal of regulatory
uncertainty right now, there’s one thing we know
for sure: No matter what regulation is passed or
leadership is in place at the CFPB, the mortgage
industry is resilient and will continue to evolve to
originate mortgages and provide Americans with
homeownership opportunities. We’ve weathered
so much already in the way of regulatory turmoil, at
least it appears that the forecast is clearing up a bit
for the foreseeable future.
As corporate counsel of ClosingCorp, Michael
Cremata is in charge of all legal and compliance
related functions. He can be reached at