It’s only been a few days since new integrated disclosures have gone live, and already a battle is brewing between the executive and legislative branches of government.
On Oct. 3, mortgage lenders were required to begin utilizing new forms required by the Integrated Disclosure Rule under the Truth in Lending Act and Real Estate Settlement Procedures Act.
The new TRID disclosures are part of the Consumer Financial Protection Bureau’s Know Before You Owe regulation and were required as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The industry has expressed concern over potential liability
and regulatory actions against lenders that make unintended mistakes despite good faith efforts.
CFPB
Director Richard Cordray has acknowledged industry concerns and testified before the House of Representatives Financial Services Committee late last month that TRID enforcement actions would be diagnostic and not punitive during the first few months of implementation.
But the industry remains wary of
potential actions and has maintained support for H.R. 3192, the Homebuyers Assistance Act, which was introduced by House representatives French Hill (R-Arkansas) and Brad Sherman (D-California).
If passed, the legislation would extend the effective date of TRID until Feb. 1, 2016, and hold lenders harmless until that time from liability for violations as long as the make a good faith effort to comply.
The bill has already been passed by a vote of 45 to 13 by the
House Financial Services Committee.
“This learning curve may be particularly steep for TRID because these new forms and systems have yet to be used in an actual homebuyer transaction,” a joint industry letter from more than two dozen industry groups — including the American Bankers Association, the Mortgage Bankers Association and the National Association of Realtors — said. “A formal hold-harmless period will help ensure the real estate settlement and mortgage lending industries can adapt their business processes and continue to meet homebuyers’ needs during the first few months following the Oct. 3 implementation.”
But the bill is opposed by the Obama administration.
In an Oct. 6 statement of administration policy,
the White House noted that the effective date of the rule has already been extended by two months in order to ensure a smooth transition and avoid unnecessary disruptions for families seeking to close on a home purchase at the beginning of the school year.
“The administration strongly opposes H.R. 3192, as it 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,” the statement said. “If the president were presented with H.R. 3192, his senior advisors would recommend that he veto the bill.”
In order to override a presidential veto, both the House and the Senate would need a two-thirds vote in each chamber — a rare feat.
