Now that the mortgage industry is beginning to function more smoothly under TRID (TILA-RESPA Integrated Disclosure Rule, also known as the Know Before You Owe Rule), and with proposed changes to TRID hanging in the balance since October 2016, industry experts are left wondering what will happen next, regarding TRID, under the Trump administration with Republicans controlling Congress.
President Trump’s Executive Order on reducing regulation and controlling regulatory costs, issued January 30, 2017, states that all rules that are already published in the Federal Register, but not yet in effect will have their enactment postponed by 60 days from the date they were set to go into effect, “for the purpose of reviewing questions of fact, law, and policy they raise.” Furthermore, no new regulations can be sent to the Office of the Federal Register until it has been reviewed and approved by an agency or department head approved by the president. The proposed changes to TRID have not been announced in rule final form yet, which means, according to the Executive Order, it will now have to be reviewed and approved before being sent to the Federal Register.
The unanswered question is whether the CFPB, as an independent regulatory agency, is actually subject to Trump’s Executive Order. The memorandum cites another Executive order, E.O. 12866, signed by President Clinton in 1993, by saying that “regulation” is defined as “regulatory action” under E.O. 12866, which the order states, is, ” “any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advances notices of proposed rulemaking, and notices of proposed rulemaking.” Executive Order 12866 also specifically exempts those considered to be independent regulatory agencies from its definition of “agency.” In other words, if, in fact, independent regulatory agencies are exempt from Trump’s E.O., TRID can be submitted and published as soon as it’s issued as a final rule, which could put it on track to be enacted later this year.
But wait! There’s more! In September 2016, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) introduced H.R. 5983, also known as the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs) Act. Among other massive changes, the Financial CHOICE Act, if enacted, would roll back the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in 2010. The Dodd-Frank Act established the Consumer Finance Protection Bureau (CFPB) and gave it enforcement power, and the Mortgage Reform and Anti-Predatory Lending Act was another provision of Dodd-Frank.
Passage of the Financial CHOICE Act will likely result in both the Federal Housing Finance Agency and the CFPB undergoing a complete overhaul, if not complete dissolution. The Financial CHOICE Act proposes to replace the current CFPB director, Richard Corday, with a five-member, bi-partisan commission which would fall under congressional oversight and appropriations. The CFPB is currently not subject to the appropriations process, which leaves it able to act in a more autonomous manner with less Congressional oversight. The Financial CHOICE Act has already passed through the House and needs 60 votes in the Senate to pass. A vote has not yet been scheduled.
What happens next with TRID? It’s too soon to call it, but whatever happens next may not be the end of the story. Buckle up, folks, we’re in for an interesting and bumpy ride.