In a speech made on May 12 to the National Association of Realtors, Consumer Financial Protection Bureau Director Richard Cordray addressed questions surrounding the three-day requirement of the TILA-RESPA Integrated Disclosure Rule (“TRID”) and said it “should not interfere with a successful closing, as some have claimed. In fact, there has been some serious misunderstanding about what kinds of major changes would cause a delay of the closing date, so I want to take a moment to clear that up right now.”
“The timing of the closing date is not going to change based on any problems you discover with the home on the final walk-through, even matters that may change some of the sales terms or require seller’s credits. On the contrary, we listened carefully to your concerns and limited the reasons for closing delays to only three narrow sets of circumstances.” These three circumstances that would allow for closing delays are (1) any increases to the APR by more than one-eighth of a percent for fixed-rate loans or more than one-fourth of a percent for variable-rate loans; (2) the addition of a prepayment penalty; and (3) a change in the basic loan product, such as moving from a fixed-rate loan to a variable-rate loan.
Cordray did claim the CFPB “recognize[s] that various other things can and do change in the days leading up to the closing, so the rule makes allowances for those ordinary changes without delaying the closing date in ways that neither the buyer nor the seller may be able to accommodate very easily.”
Starting with a speech by Steven Antonakes, Deputy Director of the CFPB, to the Consumer Bankers Association, many industry participants believe that the CFPB would delay the Integrated Disclosure deadline. In Cordray’s speech, he once again addressed the topic and said:
This rule, though dictated by Congress, represents a major undertaking for the industry, requiring close coordination among lenders, settlement agents, vendors, and real estate professionals like you who work every day with homebuyers. We faced the same issues with our first set of mortgage rules, where the law limited us to a 12-month implementation period, yet industry worked hard to make a successful transition on time.
We learned from that experience, and so from the time this rule was finalized in November 2013, we have focused on supporting industry implementation so the market will be ready when the rule takes effect in August . We also heard extensive input from all parties and opted to provide a 21-month implementation period. All of our hard work with industry is reflected in what we are now hearing, which is that most market players have put themselves in position to be ready by August, and others are getting ready as well. Yet we continue to receive a great deal of input on this issue, and as always we are listening closely in order to consider and assess that input.
Today, May 14, the House Financial Services Committee’s subcommittee on Housing and Insurance will hold a hearing entitled “TILA- RESPA Integrated Disclosure: Examining the Costs and Benefits of Changes to the Real Estate Settlement Process.” The memorandum sent to Committee Members indicates the hearing will cover TRID’s implementation date and the pending legislation to provide lenders through December 31, 2015, with a temporary safe harbor from enforcement of the TRID if they make good faith efforts to comply.