Richard Horn
Legal PLLC

Consumer Finance Regulation Blog

CFPB Issues TRID Delay Proposed Rule

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.

CFPB Proposes TRID Delay

June 18, 2015

Clients and Friends,

You may have already seen this, but I want to make sure you know that the CFPB has announced a proposed rule to delay the effective date of TRID to October 1, 2015.  They stated that their reasons for this delay were an administrative error that would have, at a minimum, delayed the effective date by two weeks, and their desire to push back the effective date past the busy closing months of August and September.  This is great news for the industry, which has lobbied for a delay, as it gives more breathing room to conduct testing, training, and tie up the loose ends before the effective date.

But don’t take your foot off the gas just yet.  This is only a proposed delay, which means it can change before it’s final.  Although I expect the two months to be finalized, it is possible that the CFPB will finalize a shorter time period.  The minimum delay based on the administrative error is only two weeks.  And I would expect the consumer advocacy groups to weigh in strongly on this proposal.  And even if it is delayed by two months, the two months will fly by very quickly.

The proposed rue has not yet been posted, though I am keeping an eye out for it.  Here is the link to the press release.  http://www.consumerfinance.gov/newsroom/statement-by-cfpb-director-richard-cordray-on-know-before-you-owe-mortgage-disclosure-rule/

Also, many of you have asked me incredulously, “what did you do wrong?!”  I thank you for your unwillingness to believe that I could have caused this error.  I have heard that this error was a delay in filing a report to Congress, which happened after the effective date.  So, no, I did not cause this error.  Although I suppose that this means you won’t be thanking me for causing the delay with a bottle of wine or champagne, I am happy that you can continue your confidence in my ability to finalize 1,900 page rules without administrative errors.

Please let me know if you have any questions.

CFPB’s TRID “Good Faith” Announcement

June 3, 2015

Clients and friends,

I wanted you to know that the CFPB announced this afternoon that they will be “sensitive” in their oversight to “good-faith efforts” to comply with TRID.  This announcement comes in response to the significant amount of pressure the industry placed on the CFPB on this issue, including a letter from 200+ members of Congress asking for a grace period until the end of 2015.  The announcement also describes the rule for providing an additional three-business day waiting period for the Closing Disclosure.  This announcement is available at: http://www.consumerfinance.gov/blog/know-before-you-owe-youll-get-3-days-to-review-your-mortgage-closing-documents/

While it is helpful that the CFPB will take good faith efforts to comply with the rule into account, there are two issues I want to point out.  First, the announcement does not provide any certainty regarding the time period it will apply to, or what they consider “good faith.”  Reliance on the CFPB’s “sensitivity” and a standard they don’t define may not be prudent.  In addition, there are other regulatory agencies that supervise for compliance with TRID.  It’s nice that the CFPB has spoken with them to “clarify this approach,” but the CFPB does not say these agencies will take the same approach.  There have yet to be any similar announcements from other agencies.

Second, the rule will still go into effect on August 1.  Without a delay of the effective date, there is still the potential of borrower lawsuits, including class actions, starting on August 1.  As I’m sure you’ve heard me discuss many times, the TRID rule greatly expands the potential civil liability for the disclosures.  TILA has civil and assignee liability for many of its disclosure provisions, while RESPA does not.  But the TRID rule relies on and implements TILA for most of its content and regulatory requirements, including those that were previously only required under RESPA authority.  This means that requirements such as the tolerances and the disclosure of settlement charges may now be the subject of borrower lawsuits under TILA.

In sum, even though this CFPB announcement is helpful, the rule will still go into effect on August 1.  And this means that compliance is still vitally important on August 1.

I am happy to discuss if you have any questions or concerns.