WASHINGTON (10/8/15)--The U.S. House passed a bill to establish a hold-harmless period for the Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosure (TRID) rule through Feb. 1, 2016 by a 303-121 vote. All Republicans and 64 Democrats supported it, and the bill passed by a much wider margin than some anticipated.
The CUNA-supported bill would protect mortgage stakeholders making a good faith effort to comply with TRID from enforcement and litigation during the hold harmless period.
“This legislation is important for credit unions as they work in good faith to comply with the TRID rule, which became effective Oct. 3,” said Ryan Donovan, CUNA chief advocacy officer. “CUNA and other stakeholders repeatedly asked the CFPB to provide a formal hold-harmless period to ensure the rule has minimal impact on consumers and residential home mortgage closings. We thank the House for their quick action on this important issue and urge the Senate to do the same.”
CFPB Director Richard Cordray has said on multiple occasions before Congress that initial examinations into TRID compliance would be “diagnostic and corrective,” and the Federal Financial Institutions Council issued letters through its member regulators last week saying the same thing.
However, the lack of anything more specific regarding a grace period led legislators to introduce the bill, and CUNA to advocate heavily for its passage.
The bill’s sponsor, Rep. French Hill (R-Ark.), said the bill was introduced because of a lack of clear guidance from the CFPB; the stories he and his colleagues have heard regarding efforts to comply; and lingering uncertainty on several aspects of the rule.
In addition, though stakeholders in many cases have spent more than a year putting in place new systems and procedures, they could not become compliant, nor test their systems to gauge their compliance, before the effective date.
Rep. Brad Sherman (D-Calif.), co-sponsor of the bill, said the bill would help ensure access to mortgage credit during the hold-harmless period, because it would allow small lenders to work toward full compliance without penalty.
“Let us make sure that the smaller mortgage lenders and smaller companies can continue to operate if they try in good faith,” Sherman said. “Let us not hand a huge competitive advantage to those players in the industry that have the most lawyers and the most sophisticated computer programmers.”
CUNA's Donovan noted after the strong vote, ""We at CUNA, in cooperation with our league partners, worked tirelessly throughout the year to help Congress understand why this bill is necessary and important. Credit union advocates talking about this on Hike the Hill visits helped carry this across the line in the House."