White House Says It Would Veto Bill Formalizing TRID Grace Period

Posted by Patrick Barnard on October 07, 2015 No Comments
Categories : Residential Mortgage

The Obama administration on Tuesday issued a statement that the president would likely veto any legislation approved by Congress that would create a formal ‘grace period’ and safe harbor for mortgage lenders in connection with the Consumer Financial Protection Bureau's (CFPB) new TILA-RESPA Integrated Disclosures (TRID) rules, which took effect Oct. 3.

Despite the fact that the new regulations are already in effect, H.R.3192, The Homebuyers Assistance Act, which has strong support from the mortgage industry, continues to make its way through Congress, having already been approved by key committees in the House.

Introduced by Rep. French Hill, R-Ark., and Brad Sherman, D-Calif., the bill would help ensure smooth implementation of TRID rules by providing a temporary legal safe harbor for lenders who make a good-faith effort to comply with the regulations through Feb. 1, 2016.

The full House is expected to vote on the measure by sometime next week. The bill reportedly has strong bipartisan support and appears to have a good chance passing in the Senate, as well. A similar bill introduced in the Senate calls for a similar legal safe harbor through Jan. 1, 2016. That bill, introduced by Sen. Tim Scott, R-S.C., has yet to be considered.

‘The administration strongly opposes H.R.3192, as it would unnecessarily delay implementation of important consumer protections designed to eradicate opaque lending practices that contribute to risky mortgages, hurt homeowners by removing the private right of action for violations and undercut the nation's financial stability,’ the White House says in a statement issued late Tuesday. ‘If the president were presented with H.R.3192, his senior advisors would recommend that he veto the bill.’

Basically, the White House says the informal, open-ended grace period already offered by the CFPB should be enough to allay lenders' concerns.

‘This summer, the CFPB extended the effective date for these requirements by two months â�¦ to provide for a smooth transition and avoid unnecessary disruptions to busy families seeking to close on a new home at the beginning of the school year,’ the White House says in its statement. However, the CFPB, in an earlier statement, says the delay in the implementation date from Aug. 1 to Oct. 3 is due to an ‘administrative error’ in the filing of paperwork.

‘H.R.3192 would revise the effective date for the Know Before You Owe rule to February 1, 2016, and would shield lenders from liability for violations for loans originated before Feb. 1, so long as lenders made a good-faith effort to comply,’ the White House statement reads. ‘The CFPB has already clearly stated that initial examinations will evaluate good-faith efforts by lenders.

‘Americans deserve clear and easy-to-understand disclosures of the cost of buying and financing a home, which is why the Dodd-Frank Wall Street Reform and Consumer Protection Act directed the CFPB to streamline conflicting disclosures that were required under the Truth in Lending Act and the Real Estate Settlement Procedures Act,’ the statement adds. ‘The Know Before You Owe regulation issued by the CFPB almost two years ago fulfills this mandate by requiring mortgage lenders and settlement agents to provide home buyers with simpler forms that explain the true cost of buying their home at least three days before closing.’

The Homebuyers Assistance Act naturally has strong support from industry trade groups, including the Mortgage Bankers Association (MBA). The Mortgage Action Alliance, the grassroots advocacy arm of the MBA, has issued a call to action to its membership, urging support of the bill.Â

‘A temporary legal safe harbor for lenders will ensure the new requirements are implemented in an orderly manner and that consumers are not confused or, worse yet, impaired in their ability to purchase a home or refinance a loan,’ the MBA adds.

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