FHA becomes latest to extend TRID enforcement grace period

Joins CFPB, Fannie Mae, and Freddie Mac

Following the lead set by the Consumer Financial Protection Bureau, Fannie Mae and Freddie Mac, the Federal Housing Administration announced that it will also be establishing a grace period for the enforcement of the CFPB’s new TILA-RESPA Integrated Disclosure rules, which went into effect on Oct. 3.

In a letter sent to the industry on Friday, the FHA’s Office of Single-Family Housing said that it is aware of the “significant efforts” undertaken by mortgagees, vendors and service providers to meet the CFPB’s TRID deadline.

“As with any new rule of this magnitude, the FHA’s Office of Single-Family Housing understands that there will be some procedural and operational challenges during the initial implementation period,” the letter states.

In recognition of those significant efforts, the FHA said that it will be joining Fannie Mae and Freddie Mac in not conducting routine quality control reviews for technical compliance with the TRID rules.

Earlier this month, Fannie Mae and Freddie Mac announced their own indeterminate grace period for TRID enforcement, citing the “considerable technological and operational changes” the industry went through to become compliant with the new TRID rules.

Now, the FHA is establishing its own grace period, but unlike Fannie and Freddie, the FHA’s grace period has an expiration date.

According to the FHA’s letter, the FHA’s TRID compliance grace period expires on April 16, 2016.

As with Fannie and Freddie, the FHA noted that the grace period is not to be used as an excuse by lenders and others to ignore the CFPB’s new rules.

“(The FHA’s Office of Single-Family Housing) does expect mortgagees to make good faith efforts to comply with TRID, which, at a minimum requires the use of the TRID required forms,” the FHA said in its announcement. “Consistent with current practices, SFH will evaluate whether the correct forms were used in connection with the origination of FHA mortgages.”

In addition to Fannie, Freddie and now the FHA extending a grace period, an effort is underway in Congress to establish a formal grace period for TRID enforcement by the CFPB.

Earlier this month, the House of Representatives passed bipartisan legislation to formalize a CFPB grace period by a bipartisan vote of 303-121.

The bill, the Homebuyers Assistance Act, provides a four-month grace period for businesses that are working in good faith to comply with the TRID rules.

The House passed that bill despite the threat of veto from the White House, which said that the legislation would “unnecessarily delay implementation of important consumer protections designed to eradicate opaque lending practices that contribute to risky mortgages, hurt homeowners by removing the private right of action for violations, and undercut the nation's financial stability."

Despite that bureaucratic wrangling, the FHA is offering up its own olive branch.

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