Lending

Bipartisan coalition in Congress wants grace period for TRID enforcement

CFPB should allow good faith period to work out bugs

Congress

Democrats and Republicans in Congress came together to encourage the Consumer Financial Protection Bureau to enact a grace period for enforcement of the TILA-RESPA Integrated Disclosure rule, which takes effect on Aug. 1, and for which much of the industry is not prepared.

The 255 Congress members want a good faith grace period through the end of 2015.

Earlier this month, the House passed H.R. 2213, introduced by Congressman Steve Pearce, R-N.M., and co-sponsored by Congressman Brad Sherman, D-Calif., which prevents enforcement of the integrated disclosure requirements and the filing of any related lawsuit if (1) the person has made a good-faith effort to comply with the requirements and (2) the conduct alleged to be in violation of the requirements occurred on or before Dec. 31, 2015, thus allowing stakeholders and the CFPB to test the effective operation of the rule.

That measure still faces Senate and White House approval. In the meantime, the congress members hope the letter will be enough to influence the CFPB.

CFPB Director Richard Cordray said, however, that it will take an act of Congress to delay the implementation of TRID. The Dodd-Frank Wall Street Reform and Consumer Protection Act transferred rulemaking authority for both RESPA and TILA to the CFPB.

Key figures in the housing industry testified before the House Subcommittee on Housing and Insurance Thursday, urging members to support a good-faith grace period.

A recent survey conducted by Capsilon Corp., found that 41% of mortgage lenders report that they are not prepared to meet the August deadline to comply with TRID.

Regulatory implementation is further complicated by the fact that most banks – and particularly smaller community banks – rely on vendors for regulatory compliance needs and the accompanying software updates and system upgrades. An ABA survey found that while 74% of banks are using a vendor or consultants to assist with TRID implementation, only 2% of the compliance systems had been delivered by the month of April.

Nearly eight in 10 banks (79%) couldn’t verify a precise delivery date or were told they wouldn’t receive systems before June. 

In their letter, which can be read here, the Congress members note that the TRID rule does not provide lenders an opportunity to start using the new disclosures before Aug. 1, and that the inability of lenders to test their systems and procedures ahead of time increases the risk of unanticipated disruptions. 

They also argue that industry can provide data to the CFPB on issues that arise after they start implementation, which might allow the CFPB and industry to work together to improve TRID.

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