WASHINGTON — The Consumer Financial Protection Bureau
The agency said that its examiners would be sensitive to institutions that made a "good faith effort" to comply with the new disclosures. The notice, however, fell short of a more formal grace period that lenders and lawmakers from both parties had been seeking.
The CFPB "will be sensitive to the progress made by those entities that have been squarely focused on making good-faith efforts to come into compliance with the rule on time," wrote Diane Thompson, a CFPB official, in a blog post primarily aimed at addressing consumer concerns about the new disclosures. "We have spoken with our fellow regulators to clarify this approach."
Thompson noted that the approach is similar to the one taken by the agency when it implemented the new ability-to-repay and qualified mortgage rules in 2014.
"This is consistent with our approach in the implementation of the [Qualified Mortgage rule]," she wrote. "Over the last couple of years, we've taken many steps to support industry implementation of the Know Before You Owe mortgage rule so that lenders and financial institutions can effectively comply with the rule."
The fact sheet also clarified the few event changes in which a lender must reissue closing documents to a consumer and give an additional three-day review period. Lenders fear a re-disclosure could delay closings, harming the mortgage market.
But CFPB officials have said it will have a very limited impact. The blog post said a re-disclosure is triggered when the annual percentage rate increases more than 1/8 of a percentage point on a fixed mortgage or more than 1/4 a percentage point on an adjustable-rate mortgage. The closing can also be delayed if a prepayment penalty has been added or the loan product itself changes, like going from a fixed- to adjustable-rate mortgage.
"No other changes require a delay for re-disclosure," wrote CFPB Director Richard Cordray in a separate letter sent to members of Congress on Wednesday in response to their earlier bipartisan demands for the CFPB to offer an implementation grace period.
The industry has had two years to comply with the rule that combines the Truth in Lending Act with the Real Estate Settlement Procedures Act into one mortgage disclosure, called TRID. Still, industry advocates have pushed heavily for a deadline extension. More than 290 lawmakers have signed a letter backing an extended grace period.
"As you have suggested, the bureau's work to support the implementation of the rule does not end on the effective date of August 1, as we continue to work with the industry, consumers, and other stakeholders to answer questions, providing guidance, and support a smooth transition for the mortgage market," Cordray wrote in the letter directed to Republican Rep. Andy Barr of Kentucky and Democratic Rep. Carolyn Maloney of New York. "As we do so, and 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 the rule will be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the rule on time."
