WASHINGTON — Two House Financial Services subcommittee chairmen are urging the Consumer Financial Protection Bureau to delay enforcement of a new disclosure regime due to take effect this summer until Jan. 1.
The agency has said its combined Real Estate Settlement Procedures Act and Truth in Lending Act mortgage disclosure forms will go into effect Aug. 1.
But Reps. Blaine Luetkemeyer, R-Mo., and Randy Neugebauer, R-Texas, said in a March 27 letter to CFPB Director Richard Cordray that the deadline is right in the middle of one of the busiest times of year for mortgages, and it could disrupt home sales and closings.
"We encourage you to make the August 1, 2015 to December 31, 2015 timeframe a 'hold harmless' period and help ensure consumer confidence and stability in the nation's housing market," the joint letter says.
CFPB Deputy Director Steven Antonakes suggested last month that the agency might consider delaying the timeline for the new disclosures, but a spokesman later clarified that no plans had been made to do so.
Lenders are clearly worried about the transition to the new disclosure regime, including having all the necessary systems in place.
"It would be very irresponsible, we think, to have to go into August 1 without having the systems adequately tested," said Rob Alba, a senior regulatory counsel for the American Bankers Association, during a discussion of the issue at a conference in Baltimore.
The ABA is working with other industry groups, CFPB officials and lawmakers to find some level of an accommodation.
The CFPB and other government agencies could provide a grace period and refrain from enforcement actions until Jan. 1.
However, the new RESPA/TILA regime creates a private right of action and lenders can be held liable for any errors in the new closing disclosure document by private litigants, according to Joseph Reilly, a partner at Buckley Sandler.
"If the rule goes live on Aug. 1, there is nothing the CFPB can do stop private lawsuits," Reilly said at the ABA conference.
