TRID Improvement Act Passes House Committee

Since the post below was first published, The House has passed a version of the TRID Improvement Act of 2017. I’ve read the amendments, you can read them here, and they are indeed an improvement. It takes Congress so long to develop or improve anything that I hesitate to point out that it could use a few more changes. Now we wait to see what the Senate will do.

TRID affects the Truth in Lending Act and Real Estate Settlement Procedures Act and changes the way that mortgage and title fees are disclosed to consumers on their mortgage Settlement Statement. In a knee-jerk response to the financial crisis of the mid 2000’s, TRID was instituted as blanket protection for home buyers and sellers. It was unquestionably necessary, it does protect consumers, and it should not be abandoned completely. But because it was hurried through congress at a time when they were pressured to do something… to do anything… it contained both unnecessarily restrictive language, and incomplete interpretation of existing law resulting in redundant requirement. Congress is working on fixing that.

TRID Improvement Act Passes House Committee

If a journey of a thousand miles begins with a single step, then the effort to amend federal law to mirror state requirements on the disclosure of discounted title premiums just took a few big steps forward. Recently, with a strong bi-partisan vote of 53-5, the House Financial Services Committee passed the TRID Improvement Act of 2017, “to require the CFPB [Consumer Financial Protection Bureau] to allow for the calculation of the discounted rate title insurance companies may provide to consumers when they purchase a lenders and owners title insurance policy simultaneously.”*

Congress created the CFPB as part of the effort to reform banking following what many call the Great Recession. Among other things, the CFPB was tasked with amending the rules regarding real estate purchases. Those new regulations, often referred to as “TRID,” changed how consumers were told about discounts being offered for purchasing both a lender’s and an owner’s title insurance policy.

Prior to TRID, disclosures of these discounts generally showed the premiums filed with the state. TRID changed that. TRID established that regardless of what premiums were filed with the state or how the state required the premiums be disclosed, the disclosure had to recalculate the premiums to show pricing following a formula the CFPB created. This resulted in consumers often being given two sets of disclosures – the TRID forms and a form disclosing the fees as required by a specific state law. The TRID Improvement Act would eliminate the requirement.

The TRID Improvement Act still has many more steps to go before becoming law. The lopsided vote in favor of the bill (53-5) is a good indication that if it were brought to the House floor alone, or as part of a larger bill, it would likely pass the house. However, even if it does pass the House, it would still need to pass the Senate as well, and it is too early to tell how it might fare there. But with the recent passage by the committee, it is something that real estate professionals should keep an eye on to see if it can complete its long journey.