CFPB Gives Grace Period for TRID Mortgage Rule Enforcement

The Consumer Financial Protection Bureau (CFPB) announced Wednesday that while it will not delay the implementation of its long-awaited “Know Before You Owe” mortgage rules, the agency has offered a grace period for servicers making “good-faith efforts” to comply with the regulations slated to take effect August 1. 

Also known as the TILA-RESPA Integrated Disclosure rule, or “TRID,” the Know Before You Owe regulations have been a subject of interest among mortgage industry stakeholders as well as Congress, who have been urging the CFPB to delay the implementation of the rule. 

In a letter to Congress members Wednesday, CFPB Director Richard Cordray stated that the Bureau will be “sensitive to the progress made” by companies that “have squarely focused on making good-faith efforts” to come into compliance with the rule on time. 

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“My statement here of this approach is intended to ease some of the concerns we have heard about this transition to new processes in the coming months and is consistent with the approach we took to implementation of the Title XIV mortgage rules in the early months after the effective dates in January 2014, which has worked out well,” Cordray stated in the letter.

Cordray’s letter arrives a week after a bipartisan coalition of 252 Congress members wrote to the CFPB chief, requesting a grace period for lenders from August 1 through the end of 2015, citing the complexity of the TRID regulation and a lack of time to prepare under the rule’s new forms and processes.

“Even with significant advance notice, understanding how to implement and comply with this regulation will only become clear when the industry gains experience using these new forms and processes in real-life situations,” stated the letter spearheaded by U.S Representatives Andy Barr (R-KY) and Carolyn Maloney (D-NY).

Although the grace period does not signal a delay to the upcoming rules, mortgage industry stakeholders have applauded Director Cordray’s sensitivity to compliance efforts.

The American Bankers Association (ABA) expressed appreciation for the CFPB’s action, but it was “disappointed” that the statement falls short of a “hold harmless period,” which ABA and Congress had asked for initially, according to a letter from ABA President and CEO Frank Keating.

“While the bureau acknowledged the implementation challenges of this rule, CFPB’s decision will only provide limited assurances to bankers in their efforts to comply,” Keating said in a written statement.

Some lawmakers who were less than satisfied with Cordray’s announcement shared in this sentiment.

“Nearly 300 Senators and House Members have written to Director Cordray asking for a formalized hold harmless period,” said U.S. Reps. Blaine Luetkemeyer (R-MO) and Randy Neugebauer (R-TX) in a joint statement. “Anything short of that is unacceptable.”

Written by Jason Oliva

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