Mixed Responses to TRID Regulatory Relief

Established in 2013 under the Truth in Lending Act and the Real Estate Settlement Procedures Act, the CFPB’s Integrated Disclosure rule requires use of new loan disclosure forms in less than 60 days — at the apex of the prime-home buying season.

Several mortgage industry groups appealed to Congress for help with the Aug. 1 deadline. The groups raised concerns about unforeseen issues that could arise, especially since the 1,888-page rule did not allow for early implementation.

Technology and training issues were listed. As well, the associations worried that strict implementation enforcement might potentially harm, delay or even halt the home loan process altogether—affecting both consumer and industry alike.

Thus, last month, lawmakers issued a letter to the CFPB that cited the affected entities’ concerns and asked for a stay of enforcement until Jan. 1, 2016.

As a result, CFPB Director Richard Cordray drafted a response to Congress that said the agency would consider good-faith compliance efforts once the new regulation takes effect.

“I have spoken with our fellow regulators to clarify that our oversight of the implementation of the rule will be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the Rule on time,” Cordray’s June 3 letter stated. “My statement here of this approach is intended to ease some of the concerns we have heard about this transition to new processes in the coming months.”

Upon Cordray’s published response, most mortgage industry groups publicly supported the CFPB’s decision.

“I believe the bureau has listened to the input of MBA as well as other stakeholders about how best to enforce TRID,” said Mortgage Bankers Association Chief Executive Officer and President David Stevens in a written media statement. “This enforcement grace period is a win/win for the industry and consumers alike.”

A National Association of Federal Credit Unions press release said its CEO and president, Dan Berger, applauded Cordray’s announcement and appreciated bipartisan Congressional support on the matter.

“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,” Berger said in the release.

Despite this support, other related associations, though asked for more clarification.

While he appreciated the CFPB’s statement, American Bankers Association CEO and President Frank Keating’s Twitter response said Cordray’s statement failed to confirm the formal time frame they requested.

“We are disappointed that the statement falls well short of a ‘hold harmless’ period, which ABA and nearly 300 members of Congress asked for,” Keating’s tweet said. “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.”

Likewise, the Independent Community Bankers of America also mirrored the ABA’s stance.

ICBA CEO and President Camden Fine’s released statement said the organization preferred “a more defined” grace period.

“Community banks will continue to face challenges in complying with the regulation, especially those banks that have not yet received the necessary software updates to their loan processing and closing systems from service providers,” Fine said. “These banks will face the prospect of completing installation, testing and employee training in a too-short period of time.”

The American Land Title Association also was critical of Cordray’s stance indicating sensitivity to company’s making good faith efforts with integrated disclosure compliance. ALTA also said it needed a specified transition or “hold-harmless” time frame from the CFPB.