BLOG VIEW: The Consumer Financial Protection Bureau (CFPB) last week sent a letter to mortgage industry trade groups indicating that the bureau will be going easy on lenders and their partners during the initial implementation phase of the new TILA-RESPA Integrated Disclosures (TRID) rules that took effect Oct. 3.
Although a press release from the bureau does not mention anything about a formal grace period for enforcement of the new rules, the bureau acknowledges that lenders have had to make significant changes to their processes and systems in order to comply and further that the complex new set of rules ‘requires extensive coordination with third parties.’
Thus, the bureau acknowledges that lenders will probably have additional technical and other questions once the new disclosures are in use.
‘During initial examinations for compliance with the rule, the bureau's examiners will evaluate an institution's compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance,’ the CFPB says in its release. ‘Examiners will expect supervised entities to make good faith efforts to comply with the rule's requirements in a timely manner. Specifically, examiners will consider: the institution's implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and, its handling of early technical problems or other implementation challenges.’
The bureau says this is ‘similar to the approach’ it took when it implemented its qualified mortgage rules in January 2014, in that it took into account lenders' ‘good faith efforts’ to comply.
The bureau's letter is in response from pressure from industry trade groups as well as a coalition of elected federal officials that were pushing for a more formal grace period for enforcement of the new rules. Some industry groups have also been pushing the CFPB for more information as to how it will carry out enforcement of the new rules.
MortgageOrb agrees with those industry professionals who feel that the bureau should have implemented a more definitive grace period because it would have given the industry a chance to test the new disclosures and related processes in the real mortgage environment, as opposed to a simulated environment. However, because it is unlikely that any lender or vendor will be violating the rules intentionally – in effect, that most will be making a ‘good faith effort’ to comply – an informal grace period should be enough so that lenders can avoid any harsh penalties out of the gate.