CFPB proposes two-month delay in TRID implementation

The Consumer Financial Protection Bureau (CFPB) has proposed a two-month delay in implementing new consumer-disclosure rules under The Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), known as TILA-RESPA Integrated Disclosure, or TRID.

CFPB Director Richard Cordray said that the Bureau is now proposing an Oct. 1 start date for TRID, also known as the “Know Before You Owe” mortgage disclosure rules.

“We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks,” Cordray said in a statement on the Bureau’s web page.

“We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time.”

The decision comes after intense lobbying from the mortgage industry. Earlier this month, Cordray indicated that the agency would work with lenders that have shown a good-faith effort to comply with the new rules. Last week several industry trade groups pressed Congress to pass a bill that would force the CFPB to hold the industry harmless for any mistakes through the end of the year. Nearly 300 members of Congress also signed a letter in late May urging the Bureau to delay enforcement.

Mortgage industry welcomes delay

TRID mandates that the mortgage industry produce two rounds of streamlined forms for consumers that reveal mortgage costs within three days after the application and three days before the closing, making those costs easier for consumers to understand. Another major change is a mandatory waiting period of at least three days before closing. Changes to the loan within this window could also trigger another three-day waiting period.

Industry trade groups, including the Mortgage Bankers Association (MBA) and the American Bankers Association, issued statements praising the decision.

“The complexity of this rule, which impacts not just mortgage disclosures but also the business processes behind the entire real estate transaction, warrants the additional time to get it right and ensure that consumers are not adversely affected by the transition,” MBA President David Stevens said in a prepared statement. “MBA will be providing comments on this proposal to recommend the best way to implement the delay in a manner that protects consumers and mitigates disruptions for lenders in the middle of this complex conversion.”

Other industry players said that Aug. 1 deadline was particularly poorly timed because it comes at one of the busiest times for home purchases.

“I have met with many banks, and they haven’t even begun testing their software,” said Benjamin Niernberg, executive vice president of business development/operations for the Illinois-based Proper Title. “From a title side, we were ready to go, but there were still a lot of uncertainties on the lending side that were going to affect us.”]

Reference Scottsman Guide 6-19-15

Niernberg said that the two-month delay should be sufficient for the industry to adapt to the rule changes.

“It gives the CFPB a little extra time to iron out some of those details,” he said. “More importantly, the two months puts us at a time of year that it is easier to make a change.”