While the House of Representatives is due to vote any day now on formalizing a hold harmless grace period for the enforcement of the Consumer Financial Protection Bureau’s new TILA-RESPA Integrated Disclosure rules, Fannie Mae and Freddie Mac are extending an olive branch to the industry, by establishing their own grace period for TRID enforcement – albeit without a designated end date.
In nearly identical letters sent to lenders and servicers this week, Fannie Mae and Freddie Mac both say the companies acknowledge that many lenders and their partners in the mortgage industry have undertaken “considerable technological and operational changes” to become compliant with the new TRID rules.
The government-sponsored enterprises also said that they “recognize and appreciate the enormous efforts” that the industry has made to date, adding that they are aware that some lenders and servicers continue to address the implementation of TRID’s requirements.
Therefore, the GSEs say, they will not conduct routine post-purchase loan file reviews for technical compliance with the TRID rules “until further notice.”
But lenders aren’t totally off the hook in the eyes of Fannie and Freddie.
The GSEs note that during the undefined grace period they will still evaluate loans to determine whether the correct forms were used in connection with the origination of the mortgage.
Both Fannie and Freddie also tell lenders that they expect them to “make good faith efforts” to comply with the TRID rules, adding that failure to do so will be deemed a violation of the good faith efforts standard, which would render the mortgage subject to “all contractual remedies,” including repurchase.
Both GSEs also state that they retain the right to require a repurchase for a lender’s violation of applicable law if the lender’s failure to comply could be expected to impair the GSE’s ability to enforce the note or mortgage, or to impose assignee liability on Freddie or Fannie.
Additionally, the GSEs note that they do not intend to exercise contractual remedies, including repurchase, for noncompliance with the newly applicable provisions of the TRID rule except in two "limited circumstances," including:
- If the required form is not used
- If a particular practice would impair enforcement of the note or the mortgage or would result in assignee liability, and a court of law, regulator or other authoritative body has determined that such practice violates the TRID Rule
The GSEs note that “after a transitional period,” they will consider whether to begin conducting post-purchase loan file reviews for TRID technical compliance, but say that any such measures will be announced before they are implemented.
HousingWire attempted to contact Fannie Mae and Freddie Mac in an attempt to ascertain a more specific timeline or end date than “until further notice.”
A Freddie Mac spokesperson said that they would not be providing any further guidance at this point, and as of publication, a representative from Fannie Mae had not responded to HousingWire’s request for clarification.
This article will be updated as appropriate.