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The Consumer Financial Protection Bureau (CFPB) has issued a proposed amendment to the "Know Before You Owe" mortgage disclosure rule, aka the TILA-RESPA Integrated Disclosure Rule (TRID) Rule, which proposes to move the rule’s effective date to Oct. 3, 2015. The rule requires easier-to-use mortgage disclosure forms that clearly lay out the terms of a mortgage for a homebuyer. The Bureau is issuing the proposal to correct an administrative error that would have delayed the effective date of the rule by at least two weeks, until Aug. 15 at the earliest.
The CFPB is proposing a new effective date of Saturday, Oct. 3. The Bureau believes that moving the effective date may benefit both industry and consumers with a smoother transition to the new rules. The Bureau further believes that scheduling the effective date on a Saturday may facilitate implementation by giving industry time over the weekend to launch new systems configurations and to test systems. A Saturday launch is also consistent with existing industry plans tied to the original effective date of Saturday, Aug. 1.
Last week, CFPB Director Richard Cordray stated, "We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks. We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time."
“I am pleased that CFPB Director Cordray understands the complexity involved with the TRID rule and the effect it could have on mortgage lenders and homebuyers during the busy summer buying season," said Marcus McCue, EVP and chief business development officer of Guardian Mortgage. "With an October implementation, technology vendors and mortgage lenders will have time to complete testing on the new forms and make necessary adjustments to their loan process to accommodate the required timelines.”
The proposal will be open for public comment until July 7.
“The proposal to provide additional time before the regulation is effective is a helpful step toward helping lenders and all home purchase settlement participants implementing the process changes needed to comply fully and accurately with this new disclosure rule,” said John Dalton, president of the Financial Services Roundtable (FSR) and its Housing Policy Council. “However, we remain concerned that without a formal policy from the CFPB that outlines a grace period to adjust to the new requirements, lenders may be at risk of new penalties and other requirements which could impact the closing process for consumers seeking to purchase a home after the new regulations go into effect.”