WASHINGTON (5/8/15)--A bill that would provide a temporary delay in enforcement and a liability safe harbor period for a new mortgage disclosure rule has the support of CUNA and a number of other financial and housing trade organizations.
CUNA and its coalition partners sent a letter to the bill’s chief sponsors, Reps. Steve Pearce (R-N.M.) and Brad Sherman (D-Calif.), thanking them for their leadership in addressing complications associated with the implementation of the Consumer Financial Protection Bureau’s (CPFB) Truth in Lending Act-Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosures rule.
The Pearce-Sherman bill would provide temporary relief in enforcement actions and a liability safe harbor period until Jan. 1, 2016, as long as a “good faith” effort is made to comply with the one-thousand-plus pages of the rule.
CUNA and the other organizations support the CFPB’s goal that the new disclosures help consumers better understand mortgage terms. However, stakeholders are unable to test the processes used to develop the new disclosure in real-life transactions before the rule's Aug. 1 implementation date.
That, combined with the fact that covered loans originated before Aug. 1 will be subject to the old rules and forms, lead the organizations to believe the safe harbor period is needed.
“We know from implementing past regulations that unforeseen issues will arise in actual transactions,” the letter reads. “Therefore, a formal hold-harmless period through Dec. 31 will allow stakeholders to make a good-faith effort to comply with the TILA-RESPA integrated disclosure regulation without the fear of potential enforcement actions or lawsuits.”
The hold-harmless period will allow the CFPB to work with stakeholders to gather data about implementation and provide written guidance to address common implementation hurdles that emerge between now and the end of the year.
“Without more clarity, the result is likely to leave homebuyers with less flexibility to buy and close on a home on their terms and potentially fewer companies to work with,” the letter reads.
In addition to CUNA, the letter was signed by the American Bankers Association, American Escrow Association, American Land Title Association, Appraisal Institute, Community Home Lenders Association, Consumer Bankers Association, Consumer Mortgage Coalition, Community Mortgage Lenders of America, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Home Builders, National Association of Realtors and Real Estate Services Providers Council Inc.