On June 3, 2015, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray responded to Congressional requests and industry pleadings for a grace period in enforcing the new TILA-RESPA Integrated Disclosures (TRID), which is set to take effect August 1, 2015. In a letter addressed to members of Congress, Director Cordray reviewed the steps taken by the CFPB since the November 2013 publication of the TRID Final Rule to assist the mortgage industry in its implementation of the new disclosure rules and forms. More significantly, Director Cordray also indicated in his letter that “in response to considerable input we have received from you and your constituents, I have spoken with our fellow regulators to clarify that our oversight of the implementation of [TRID] will be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with [TRID] on time.”
The quoted statement above has been read and understood as the granting of an undefined grace period for enforcement of the new TRID disclosure requirements, which the CFPB indicates will be similar to the approach it took with respect to implementation of the Title XIV mortgage rules in the months after the January 2014 effective date. However, industry should consider that the statement here appears to be qualified. The statement assumes that the entities who will enjoy such a grace period are those that have actively been pursuing full compliance for the August 1 effective date. Therefore, to the extent that any industry participants have not been focused on TRID implementation, there are less than 60 days to do so in a meaningful way in order to enjoy the apparent benefits of this grace period for enforcement. There will likely be no leniency for industry participants who have not prepared for TRID implementation on August 1.
Also included in the letter, as well as in a separate CFPB blog posting titled “Know Before You Owe: You’ll get 3 days to review your mortgage closing documents”, the CFPB offers a clarification (in the form of a fact sheet) explaining the limited circumstances in which a consumer must be provided with an additional three-day review period under TRID. In its fact sheet, the CFPB indicates that only three changes require a new three-day waiting period: (1) the APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans (a requirement for lenders since 2009). A decrease in the APR will not require a new three-day waiting period if it is based on changes to interest
rate or other fees; (2) a prepayment penalty is added, making it expensive to refinance or sell; and (3) the basic loan product changes, such as switching from a fixed-rate to an adjustable rate product or to a loan with interest-only payments.
The CFPB blog post, including a reference to the letter sent to Congress and the fact sheet discussed above, can be found here.