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TILA-RESPA: New Bills Aim to Address Concerns

by James F. McClister

The House Financial Services Committee passed two bills to help ease TRID worries

TRID-TILA-RESPA-disclosure-HR3192-HR1210-CFPB

On Oct. 3, the new TILA-RESPA integrated disclosure (TRID) rule will come into affect, and the industry is struggling in preparation, despite the Consumer Financial Protection Bureau pushing back its implementation deadline.

In a move that should ease some worries about the forthcoming compliance deadline, the House Financial Services Committee last week passed a small series of CFPB-related bills, two of which address concerns regarding TILA-RESPA.

H.R.3192 – In a June article, we discussed the bevy of complaints being lodged against the CFPB, largely in response to TRID’s previous Aug. 1 deadline. Real estate businesses expressed concerns the timeline was too rushed to allow adequate preparation time, which prompted lawmakers to suggest a “temporary safe harbor” from TRID requirements. H.R. 3192, named the “Homebuyers Assistance Act,” answers calls for a more lenient grace period. The bill allows affected businesses to delay the effective date of TRID to Feb. 1, 2016, without fear of enforcement or legal reprimand, assuming the party can prove a “good faith effort to comply” has been made. The bill passed the Committee with a strong 45 to 13 majority, and is likely to pass in the House. However, in the Senate, where existing bill S. 1711 is promising a similar grace period to end on Jan 1., 2016, H.R. 3192 may not find the same support.

H.R. 1210 – The “Portfolio Lending and Mortgage Access Bill,” as it’s being called, pertains exclusively to depository institutions, or any financial institution legally able to receive monetary deposits from consumers. The bill is an attempt to provide safe harbor to such institutions in two specific circumstances. The first aims to protect depository institutions from certain compliance-related lawsuits, specifically prepayment penalties, assuming the creditor in question has, since the origination of the loan, held the loan on its balance sheet.

The second provides depository institutions safe harbor from anti-steering provisions, which currently prohibit loan originators from steering an individual away from a qualified mortgage that they’re also qualified for, to a not qualified mortgaged. The safe habor, however, would be granted only in instances where the creditor (a depository institution) has already “informed the mortgage originator that the creditor intends to hold the loan on (its) balance sheets…for the life of the loan.” The originator must also inform the consumer of the arrangement. With bi-partisan support, the bill passed committee with a 38 to 18 majority, and is likely to pass both the House and Senate.

Many in the industry have expressed concerns the CFPB is implementing TRID requirements without enough exploration into the overall effects of the new rules. If both H.R. 3192 and 1210 pass, lenders will gain at least some of the protections necessary to help them feel comfortable under the new disclosure rules.

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