June 25, 2015
Clients and Friends,
I am emailing to inform you that the CFPB issued its proposed rule to delay the effective date of the TILA-RESPA Integrated Disclosure (TRID) rule on its website yesterday. The CFPB proposed to delay TRID’s effective date to October 3, 2015, but it also specifically sought comment on a shorter delay to August 15, 2015. The scope of the proposal is limited to the rule’s effective date. Comments are due July 7, 2015.
Summary of the Proposal
The CFPB acknowledged in the proposal that, because of its administrative error, the rule cannot take effect until August 15, 2015. The CFPB explained that it neglected to file a report required under the Congressional Review Act (CRA). It should have submitted this report to Congress and the Government Accountability Office at least 60 days prior to the original August 1, 2015 effective date, but it did not. The CFPB discovered its error and then submitted the report on June 16. Under the CRA, TRID cannot take effect until 60 days after this submission, and that is why the earliest possible effective date is now August 15.
The CFPB is seeking comment on a two-month delay to October 3. It stated that it decided to seek comment on a longer delay than August 15 for two reasons. First, it was concerned that a mid-August effective date could pose operational challenges. Second, it learned of delays in software updates from technology vendors, which resulted in industry having a limited amount of time for testing. The CFPB expressed concern that these issues could pose risks to the smooth implementation of the rule. Also, it moved from the October 1 date in its recent announcement to October 3, because it decided to select a Saturday effective date. The CFPB stated it believed a Saturday would be consistent with the original Saturday, August 1 effective date, and that it would be easier for industry to launch the new software systems over the weekend.
But, as noted above, the CFPB is considering finalizing the minimum two-week delay. And it is also unlikely to finalize a delay past October 3. The CFPB specifically sought comment on “the prospect of allowing the new rules to take effect on [August 15, 2015].” It stated that the rule’s “earliest practically feasible implementation remains essential….” The CFPB also stated that a delay past October 3 would impose “unnecessary costs” on those in industry that have worked to implement the rule on time. It also stated that a longer delay would be inconsistent with its intent to benefit consumers.
My Sage Advice
You may recall that in my email after the CFPB’s announcement, I advised that we should keep our foot on the gas, because the CFPB can finalize an effective date earlier than October 1. Considering the CFPB is specifically seeking comment on an August 15 effective date, I think it would be prudent to keep the train on schedule and the crew on board (apologies for using another transportation analogy). It may be a good idea to hold off on project planning based on the October 3 date just yet.
Also, I recommend submitting a comment letter. You may think that your letter won’t make a difference, or maybe that it won’t even be read. But I can tell you from experience that a real person at the CFPB will read your comment letter and it will be considered. The CFPB would benefit from the unique perspective of your company or organization on this important issue.
On a final note, the CFPB’s other recent announcement regarding it being “sensitive” in its oversight to “good-faith efforts” to comply with TRID is still an open issue. What does “good-faith efforts” mean? How long will Cordray remain “sensitive?” Is Cordray going to group therapy with the other regulators? These are questions that I hope the CFPB will answer as it works on how to ensure an efficient and smooth transition to TRID. And given their relation to the implementation of TRID, these are valid issues to raise in a comment letter on the delay issue.
Please let me know if you would like any assistance with drafting a comment letter, or if you have any questions.