In a previous blog post, we discussed an informal announcement by the Consumer Financial Protection Bureau (CFPB) of its intent to delay the effective date of the new integrated mortgage disclosure rule under Regulations X and Z (commonly referred to as the TILA-RESPA Integrated Disclosure rule or TRID rule). A proposed amendment was released today by the CFPB to delay the effective date of the TRID rule. This proposal allows the CFPB to correct its procedural error. The effective date will likely be moved to Saturday, October 3, 2015, although the CFPB has asked for comment on other possible dates.
The CFPB is soliciting comments on:
- the proposed extension of the effective date to October 3, 2015;
- alternative dates for the extension; and
- a proposed extension to August 15, 2015.
The CFPB has also proposed certain technical amendments to its Official Interpretations to Regulation Z to incorporate a proposed new effective date.
The TRID rule was scheduled to take effect on August 1, 2015. However, the CFPB did not comply with certain procedural requirements under Section 801 of the Congressional Review Act (CRA). The CRA provides that a “major rule” cannot take effect until the agency promulgating the rule submits a rule report, which includes a copy of the rule, to Congress and to the Government Accountability Office (GAO). Major rules cannot take effect until 60 days after publication in the Federal Register or receipt by Congress, whichever is later (and subject to the possibility, though remote, that Congress could pass a joint resolution disapproving of the rule). Although the CFPB has complied with Section 801 of the CRA in prior major rulemaking, the CFPB inexplicably failed to submit the TRID rule report to Congress until June 16, 2015. Due to this error by the CFPB, the TRID rule cannot take effect on August 1, 2015, as previously scheduled. The TRID rule could, however, take effect on August 15, 2015, the CRA effective date.
The CFPB noted in the proposed rule that “… in recent weeks, the Bureau has learned that delays in the delivery of system updates have left creditors and others with limited time to fully test all of their systems and system components to ensure that each system works with the others in an effective manner. These delays pose risks to the smooth implementation of the new forms mandated under the TILA-RESPA Final Rule, the Loan Estimate and Closing Disclosure, particularly given the potential challenges for institutions of stopping and restarting their progress toward implementation readiness.”
Ironically, in light of such explanation, the proposed delay in the effective date will likely create a “stop and restart” challenge for many in the industry.
The proposed rule is open for public comment until July 7, 2015. It is unclear when the CFPB will release a final rule to lock down the effective date of the TRID rule and provide much needed clarity to the industry.