CFPB's Cordray Fires Back Over Ongoing Mortgage Disclosure Concerns

Consumer Financial Protection Bureau Director Richard Cordray reiterated in a recent letter to Sen. Bob Corker, R-Tenn., that lenders are allowed to fix non-numerical clerical errors for up to 60 days after the issuance of a corrected mortgage disclosure form.

The letter was a four-page response to Corker's request for clarity on the "Know Before You Owe" mortgage disclosure rule, known in the industry as TRID, which went into effect on Oct. 3. Corker had written in March, citing fears about "the lack of clarity around what constitutes a technical error and the curability of those errors by the CFPB has led to confusion throughout the market."

But in his April 7 response, which was posted on the CFPB Monitor blog by the law firm Ballard Spahr, Cordray reiterated that the rule and the Truth-in-Lending Act have cure provisions.

"TILA has long permitted creditors to cure violations, provided that, within 60 days of discovering an error, the creditor notifies the borrower of the error and makes appropriate adjustments to the account before the creditor receives notice of the violation from the borrower," Cordray wrote. "Similarly, TILA provides an exception from civil liability for unintentional errors subject to certain conditions." Early this year, some investors were refusing to purchase loans without further guidance from the CFPB about curing technical errors. Because there are hundreds of variables to account for on the disclosure forms, the mortgage industry has claimed that compliance has become a near-impossible task.

The rule places responsibility for the accuracy and delivery of the disclosures squarely on creditors, Cordray wrote, though creditors and settlement agents can divvy up the responsibilities. However, "creditors cannot unilaterally shift their liability to third parties…and alone remain liable for errors," he wrote.

Cordray listed seven regulatory efforts by the CFPB to implement the new disclosure rule, which was finalized more than two years ago and was a requirement of the Dodd-Frank Act.

The bureau's staff has addressed questions about the rule at more than 70 formal events, 80 informal stakeholder meetings and 300 general meetings with stakeholders, Cordray wrote. The CFPB also published in-depth exam procedures and a "readiness" guide to help industry come into and maintain compliance, he said.

And the bureau also has conducted six free webinars "that provide guidance on how to interpret and apply specific provisions of the rule," Cordray wrote.

The CFPB has an internal team that meets weekly to discuss industry concerns and "will continue to evaluate how we can best provide further guidance," Cordray wrote.