Can You Be Sued For Violating TRID? It Depends
I haven’t been able to get all that excited about legislation (HR 3192) postponing the date on which the TRID regulations would be fully enforced until February 1, 2016. The bill was passed by the house but you have a better chance of seeing Hilary Clinton become a provider of IT services than you do of seeing the bill passed in the Senate over the objection of the CFPB’s Birth Mother, Elizabeth Warren. And if the bill manages to get through the Senate the President has already announced that he would veto it.
And let’s be honest. Institutions have had close to two years to get ready for the TRID and the CFPB has done as good as any agency ever has of instructing stakeholders on how to get ready for a major new regulation. The same institutions that truly need the extra time probably will never have enough time to comply.
All this being said, the legislation underscores an important point: Dodd Frank not only increased the power of regulators to implement and enforce consumer protection regulations; it increased the scope of legal liability that lenders face; and by increasing penalties for violations it provided incentives for more consumer litigation. While it’s helpful that regulators have signaled they expect credit unions to make a good faith effort to comply with TRID in the early stages of its implementation, only legislation can shield lenders from private lawsuits and regulatory enforcement, which is what this proposal would do.
This distinction is particularly important when it comes to TRID. Dodd Frank mandated the integration of disclosure requirements under RESPA and the TILA. Specifically section 1100A(5) amended TILA to provide that ‘‘The Bureau shall publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which includes the disclosure requirements of this title in conjunction with the disclosure requirements of the Real Estate Settlement Procedures Act of 1974 that, taken together, may apply to a transaction that is subject to both or either provisions of law.”
The tricky part is, that while RESPA has never authorized private lawsuits, TILA has. For example you could be fined by a regulator for messing up (That’s a legal term) a Good Faith Disclosure but not be sued. But in integrating these two laws Congress didn’t explain how their liability provisions would be impacted. As the CFPB further explained in the TRID preamble “the final regulations and official interpretations do not specify which provisions relate to TILA requirements and which relate to RESPA requirements,(but) the section-by-section analysis of the final rule contains a detailed discussion of the statutory authority for each of the integrated disclosure provisions.” Whether this approach provides enough guidance is debatable and will be litigated.
Bottom-line: While regulators might be patient your friendly neighborhood attorney might not be. There is blood in the water and on this and many other Dodd Frank issues. By design the courts and not regulators will play an increasingly important role in delineating the contours of consumer protections.