CFPB Allows for Grace Period for TRID Enforcement
TILA-RESPA Integrated Disclosure requirements go into effect August 1, 2015, but now there will be a good-faith enforcement grace period. The CFPB will be allowing for a TRID enforcement grace period. Stevens said that the grace period allows for institutions that are working in good faith to implement the rule, “the regulatory framework in this country will use what they can to provide instructive guidance during this delay period.” This goes beyond lenders, including “service companies, real estate companies, and third-party vendors” who need to make their systems compliant according to Stevens. This grace period is open-ended and will go to at least the end of 2015. However, this grace period timeline could be extended if needed, depending on how disruptive the new regulatory implementation is.
Cynthia Lowman, president of United Bank Mortgage Corp., pointed out the impact these new rules will have on the entire mortgage-lending industry, and if it is not approached the right way that it “will have a negative impact on consumers, banks, and the recovery of the housing industry.” The main concern with this new rule is the lack of time to “test the new closing process in real-time.” The TRID rule does not provide lenders an opportunity to start using disclosures before August 1, and the fact that lenders are not able to test their systems and procedures ahead of time increases the risks of unanticipated disruptions. This argument leads to the TRID enforcement grace period. This grace period is to ensure that there is a successful implementation of the Rule.
According to Housing Wire, “in May, the House passed H.R. 2213, introduced by Congressman Steve Pearce, R-N.M., and co-sponsored by Congressman Brad Sherman, D-Calif., which prevents enforcement of the integrated disclosure requirements and the filing of any related lawsuit if (1) the person has made a good-faith effort to comply with the requirements, and (2) the conduct alleged to be in violation of the requirements occurred on or before Dec. 31, 2015, thus allowing stakeholders and the CFPB to test the effective operation of the rule.”
Garrison, Trey “It’s official: CFPB will grant grace period on TRID enforcement.” Housing Wire., 3 June 2015.
(note: this is an older blog entry and has been edited since originally posted.)