As the workday came to an end June 17, the Consumer Financial Protection Bureau stated that it is issuing a proposal to possibly push back the effective date for the TILA-RESPA Integrated Disclosure (TRID) rules to Oct. 1, 2015.
CFPB Director Richard Cordray said in a prepared statement: “The CFPB will be issuing a proposed amendment to delay the effective date of the Know Before You Owe rule until Oct. 1, 2015. 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. 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 public will have an opportunity to comment on this proposal and a final decision is expected shortly thereafter.
Published reports attributed the administrative error to a failure to file a Congressional Review Act (CRA) at least 60 days before the effective date. According to the Government Accountability Office, the CRA allows Congress to review “major” rules issued by federal agencies before they take effect.
Banking associations welcomed the change in timing from the CFPB.
MBA President & CEO David H. Stevens said the association welcomed 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 effected by the transition,” he said. “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.
“CFPB continues to prove itself capable of working in a transparent, constructive manner throughout this process, as was evident recently when they announced their intent to delay enforcement of lenders once the rules were to go into effect. MBA looks forward to continuing to work with the CFPB over the next several months as the agency works to fine-tune its approach towards implementing this complex rule.”
American Banking Association President and CEO Frank Keating echoed the sentiments.
“ABA is pleased that the Consumer Financial Protection Bureau is extending the effective date to Oct. 1 for the ground-breaking Know Before You Owe mortgage disclosure rule,” he said. “This extension will help protect consumers from disruptions during a traditionally busy period for home purchases. It will also help to assure new loan origination systems and compliance software under development by lenders and the vendors on whom they rely will be adequately installed and debugged, and staff training completed, before the effective date.
“ABA also thanks CFPB for their announced intent to maintain an initial supervisory and enforcement approach that takes into account good-faith efforts by lenders to comply. The TRID rules are among the most complex with which the banking industry has had to come into compliance, and the quality of compliance should be expected to improve based on the industry’s learning curve once systems go live.”
Consumer Bankers Association President and CEO Richard Hunt released a statement that said: "The director’s decision to delay the effective date of TRID will help the industry as it approaches the date for transition to the new mortgage disclosure rule. Though banks have been working with their vendors to ensure a smooth integration, this additional time will help consumers and bankers in their ongoing partnership to achieve a more streamlined consumer experience in mortgage origination.”
Finally, the Independent Community Bankers of America issued a release highlighting the work that still needs to be done by technology vendors for many community banks nationwide.
“ICBA appreciates the CFPB’s decision to propose an amendment to delay the effective date for implementation of the TILA-RESPA Integrated Disclosure rule, also known as TRID, until Oct. 1, 2015,” the ICBA said. “The proposed delay would help all industry stakeholders better prepare for this major change, which will impact the majority of home mortgage loans.
“Many community banks are still waiting for third-party vendors to provide the required software updates to their loan origination and documentation systems. A delay would enable those institutions to receive, install and test those updates in order to be better prepared for the effective date of Oct. 1.”