For absolutely no discernable or decent reason whatsoever, the White House is threatening to veto a wholly bipartisan House measure that would simply create a formal “hold-harmless” grace period for lenders and others in the industry operating under the new and incredibly complex TILA-RESPA Integrated Disclosure rule.
Everyone in the industry wants the grace period. That includes the National Association of Realtors, Mortgage Bankers Association, the National Association of Federal Credit Unions, and more than 25 others.
Democrats want it. Republicans want it. The industry wants it.
Why? Because there was simply no way, no matter how much lead time lenders and others in the industry had, to test out their systems for compliance until the law was in effect.
One congressman, a California Democrat mind you, regularly refers to the TRID grace period as a “shakedown” cruise, which is nautical talk for a new ship’s initial voyage to make sure everything is seaworthy. Navy captains are held to incredibly high standards for their ships, but no one faults them if there’s a problem on a new ship caused by a shipwright or construction crew mistake. You can’t be 100% sure everything is seaworthy until the ship is, you know, at sea.
That’s all that the industry wants. And they are not asking for a blanket indemnification against any problem, but rather that if a company is making a good faith effort to comply, they won’t be held liable.
And they just want four months. That doesn’t seem excessive.
You have to wonder about the White House’s motives, because even its hand-picked Consumer Financial Protection Bureau director, Richard Cordray, said repeatedly that a grace period is reasonable, even if he never formalized what the CFPB is offering.
Cordray talked about the end of 2015 as a target date. The House bill would push that to Feb. 1, 2016. One month. Big whoop.
Concerns about TRID enforcement go beyond the scope of the broader hand the CFPB has generously offered the industry.
David Stevens, President and CEO of the MBA, says there’s a domino effect to the hold-harmless policy.
“Even though the CFPB has provided greater clarity with their non-enforcement safer harbor, this may not extend to other investors, other regulators at the state or federal level, or private rights of action. It is for this reason that we support the legislation to provide absolute confidence to the housing industry regarding this most complex rule,” Stevens tells HousingWire.
Finally, the White House is looking to whitewash history here. In its statement threatening the veto, the administration accused the industry of dragging its feet, since the initial TRID implementation date was Aug. 1, but it got moved to Oct. 3. Here's what the White House says:
This summer, the CFPB extended the effective date for these requirements by two months, to last Saturday, October 3, 2015, to provide for a smooth transition and avoid unnecessary disruptions to busy families seeking to close on a new home at the beginning of the school year.
Everything in that sentence after “October 3, 2015” is absolutely, 100% false. You may need new batteries for your BS meter.
The reason for the 60-day delay was because the CFPB couldn’t comply with a basic requirement to notify Congress, which required a simple, two-page document.
“If you’re wondering what the ‘administrative error’ was that forced CFPB to delay its TRID rule, we have been informed by CFPB that the Bureau failed to comply with the Congressional Review Act’s requirement to notify Congress at least 60 days before a regulation becomes effective. The CRA is a basic tool for accountability,” said Jeff Emerson, a spokesperson for the House Financial Services Committee, at the time.
So no, that delay wasn’t the CFPB being generous to the industry. It was because despite the good faith efforts of the CFPB, they didn’t properly file legally mandated paperwork.
Anyone’s irony detector pinging like a dinner bell right now?
Pass the bill. Sign the bill. Show some grace, Mr. President.