The Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure Rule “appears to have created sizable implementation costs for lenders,” the bureau concluded in its five-year lookback assessment of the 2015 rule. The CFPB said it “will evaluate what it learned in this assessment to identify the need for and scope of future rulemaking or guidance activities.”
Regarding the one-time cost of implementation, the median response from lenders was roughly $146 per mortgage originated in 2015. (The bureau’s benefit-cost analysis estimated the average implementation cost to be around $135 per mortgage.) Lenders reported that their implementation costs were largely driven by new information technology systems, policies and training, as well as costs related to third parties including closing agents, software vendors, mortgage brokers and correspondents.
The bureau also found that TRID may have affected mortgage origination costs for several reasons. These include: lenders’ absorption of costs as a result of changes in tolerance rules; the hiring of more staff to ensure compliance with the rule; changes in coordination with third parties, the timing of closings, the number of questions from consumers, the efficiency of the origination process or the need for ongoing legal advice; and changes in the costs of pre-closing quality control and post-closing audit and verification.
In addition, lenders may have faced indirect costs related to compliance risk, the CFPB said. “Compliance risk of lenders may have increased because of the [transfer]of responsibility for providing certain disclosures under RESPA to them, and further, some of the rule’s disclosure requirements can give rise to a private right of action. . . . Compliance risk, in turn, may have indirectly affected origination through the secondary market,” the bureau concluded.