CFPB Grants Grace Period for Mortgage Rules
Realtor Magazine Daily News | June 4, 2015
The Consumer Financial Protection Bureau announced it will allow a grace period to lenders who make a good-faith effort in complying with new mortgage disclosure rules which are to take effect later this summer -- a move that has been largely lauded by the real estate industry.
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The CFPB will still implement the Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure requirements as scheduled on Aug. 1 but there will now be some leeway on enforcement. The new rules are expected to have a broad impact on real estate closings by streamlining the disclosure process for home buyers during closing by merging the Truth in Lending Act and the Real Estate Settlement Procedures Act into one form. The new form is referred to as TRID.
"The action announced today by the CFPB is a welcome first step toward clarifying the changes coming to real estate closings August 1," says Chris Polychron, the president of the National Association of REALTORS®. "NAR appreciates the 'sensitivity' offered by the CFPB to companies making a good-faith effort to comply with the new TILA-RESPA Integrated Disclosure regulation. NAR will continue to work with the CFPB to minimize any possible market disruptions or uncertainty when the rule takes effect August 1, during the busiest transaction season for real estate."
NAR has been a strong advocate for a grace period for the enforcement of the new disclosure rules.
"While NAR appreciates the CFPB’s understanding of the difficulties involved in making a change of this magnitude, we hope that continued dialog with U.S. Senate and House leaders will result in a solution that allows the lending industry and CFPB to address any implementation issues and minimize costly closing delays for home buyers and sellers," Polychron says.
Nearly 300 members of Congress signed a letter to the CFPB last week requesting a grace period for enforcement. Lawmakers argued that the TRID rule does not provide lenders an opportunity to begin using the new disclosure form until Aug. 1 and with no time to test out the system before then, there could be an increase chance for disruptions to closings.
In response, Richard Cordray, CFPB director, issued a letter Wednesday to Congress, stating: "We share your desire for a smooth and successful implementation of the Rule, and we continue to work closely with all stakeholders to support that goal. ... In response to the considerable input we have received from you and your constituents, 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 wit the Rule on time.
"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 and is consistent with the approach we took to implementation of the Title XIV mortgage rules in the early months after the effective dates in January 2014, which has worked out well."
Source: Realtor Magazine Daily News