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Politics & MoneyMortgage

Industry welcomes TRID grace period but Congress says itÕ not enough

Some members want a definitive period, more assurances

The formal confirmation Wednesday morning, first reported by HousingWire, that the Consumer Financial Protection Bureau will allow a grace period for enforcing the complex TILA-RESPA Integrated Disclosure requirements that go into effect Aug.1, was received warmly by industry trade groups but not so much by some in Congress.

The TRID rule, which was brought forth by the CFPB, has a sweeping impact on the real estate market through the implementation and compliance costs it requires.

U.S. Rep. Blaine Luetkemeyer, R-Mo., Chairman of the Housing and Insurance Subcommittee, and U.S. Rep. Randy Neugebauer, R-Texas, Chairman of the Financial Institutions and Consumer Credit Subcommittee, responded to the CFPB’s announcement letter regarding the TRID grace period, saying it was a good first step but not nearly enough.

“TILA-RESPA integration is a significant event for our nation’s mortgage and housing markets. We appreciate Director Cordray taking a first step in indicating a regulatory ‘sensitivity’ to good faith efforts to meet requirements of the new disclosure rules,” they wrote. “However, we are very disappointed the Bureau has failed to provide necessary market certainty with a formal hold harmless period – especially given the massive bipartisan Congressional interest. Nearly 300 Senators and House Members have written to Director Cordray asking for a formalized hold harmless period. Anything short of that is unacceptable. That request was reiterated during a bipartisan meeting with Director Cordray yesterday afternoon. 

“Today’s announcement falls far short of our expectations and runs contrary to the impression with which Members were left yesterday. We hope the Bureau and all banking regulators will stand by their commitment to work with consumers and market participants to ensure a seamless implementation of the rules. The Bureau should expect vigorous oversight and attention from members of Congress in how its supervision efforts play out after August 1st’s effective date,” the congressmen wrote. “To that end, we will be sending letters to all major financial trade associations asking that they keep Congress informed of any and all disciplinary actions taken by the CFPB and other financial regulators on TRID implementation.”

The finance trade associations like the Mortgage Bankers Association were more welcoming.

"MBA welcomes the news that the CFPB will recognize the good faith efforts of lenders to comply with TRID by delaying enforcement for a period after the new rules go into effect on August 1st.  After speaking with Director Cordray, I believe the Bureau has listened to the input of MBA as well as other stakeholders about how best to enforce TRID,” said MBA President and CEO David Stevens. “With so many difficulties around integrating systems, the industry needs flexibility to ensure consumers do not incur costs or lose home sales due to unforeseen problems.  This enforcement grace period is a win/win for the industry and consumers alike.

“MBA looks forward to working with all regulators and other engaged stakeholders to continue to help lenders and consumers involved in the mortgage process,” Stevens said.

One former regulator likewise noted the CFPB's move.

“We’ve seen first-hand the tremendous strain that the complexity of implementing and testing the new processes is putting on many organizations,” said Ed Kramer, EVP, Regulatory Affairs, Wolters Kluwer Financial Services. “We understand and support the CFPB’s recognition of good-faith efforts by those who have been working so diligently to be compliant by August 1.”

Meanwhile, National Association of Federal Credit Unions President and CEO Dan Berger applauded the CFPB’s actions.

“We appreciate Director Cordray’s consideration and leadership in recognizing the value of ‘good faith efforts’ by credit unions on this complex new rule,” said Berger. “We also appreciate the bipartisan support of all the members of Congress who wrote Director Cordray and met with him to urge a restrained examination period. A grace period will not only ensure a smoother implementation of the new TILA/RESPA mortgage disclosure forms, but it will also allow those who make a good-faith effort to comply with the regulation to do so without the fear of potential regulatory enforcement actions.”

Various trade associations like NAFCU, MBA, the National Credit Union Administration, the American Bankers Association, and the Credit Union National Association lobbied for the grace period.

“I thank CFPB Director Cordray for listening to the requests of CUNA, Congress and others in our call for a safe harbor period through the end of the year for the enforcement of the TRID rule,” said CUNA president and CEO Jim Nussle. “CUNA supports the CFPB’s goal for transparency with the new disclosures helping consumers better understand mortgage terms, and now credit unions will be allowed the time they need to figure out the day-to-day aspects of complying with the rule without worrying about enforcement.” 

The ABA, meanwhile, was not as generous in its praise.

“We appreciate the CFPB’s statement that it will be sensitive to industry compliance efforts with regard to TRID implementation. However, we are disappointed that the statement falls well short of a ‘hold harmless’ period, which ABA and nearly 300 members of Congress asked for,” said Frank Keating, ABA president and CEO. “While the bureau acknowledged the implementation challenges of this rule, CFPB’s decision will only provide limited assurances to bankers in their efforts to comply.

“ABA believes it is critical to establish a formal transition period for banks, and strongly advocated for restrained enforcement by providing survey data on vendor readiness to the bureau, sending letters and holding meetings, and providing the sole banking witness at a recent hearing on TRID implementation,” he said.

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