News on Wednesday showed that REALTORS®’ efforts to get clarification into new truth in lending rules and some consideration for worries about the delays these changes might cause appear to have been heeded, at least partially.
While the Consumer Financial Protection Bureau held to an Aug. 1, 2015 deadline for implementing the new rules, there are several key things to know.
1. There are clarifications as to what triggers the need to re-start a three-day period allowed for review of documents. From Credit Union Times, the triggers would be:
“First, if the lender increased the annual percentage rate by more than 12.5 basis points on a fixed rate loan or 25 basis points on an adjustable rate loan (decreases in APR do not trigger delay); second, if the lender adds a prepayment penalty; or, third, if the lender changes the loan from a fixed rate loan to an adjustable loan.”
The triggers for the three-day review are a key concern since they could cause additional closing delays. The worry was that even small deviations in information provided might start a chain reaction of delays.
2. There is a TRID grace period that has been established. How long is the grace period? Apparently it might not be through the end of the year. Richard Cordray, director of the Consumer Financial Protection Bureau, said the agency will be sensitive to progress made by those working to meet the new requirements. (Scotsman Guide)
3. While the agency will consider the good faith efforts of those involved in transactions to meet the letter of the law, there’s no “hold harmless” guarantee. (Housing Wire) Note the letter from U.S. Reps Blaine Luetkemeyer, R-Montana, and Randy Neugebauer, R-Texas:
“TILA-RESPA integration is a significant event for our nation’s mortgage and housing markets. We appreciate Director Cordray taking a first step in indicating a regulatory ‘sensitivity’ to good faith efforts to meet requirements of the new disclosure rules. However, we are very disappointed the Bureau has failed to provide necessary market certainty with a formal hold harmless period – especially given the massive bipartisan Congressional interest.”
4. There’s still a lot to worry about when it comes to real-time testing of the new system. The CFPB was not open to having the new disclosure process tested in advance, and banks are struggling to make sure they are ready for the changes. (Housing Wire)
An American Bankers Association survey found that while 74% of banks are using a vendor or consultants to assist with TRID implementation, only 2% of the compliance systems had been delivered by the month of April. Nearly eight in 10 banks (79%) couldn’t verify a precise delivery date or were told they wouldn’t receive systems before June.
Regardless, the added clarity was a step forward according to NAR President Chris Polychron. REALTORS® had worried about how the rules would delay closings. Illinois REALTORS® and their colleagues from across the nation made getting changes to the rules a centerpiece of visits to Capitol Hill in May.
“The action announced today (Wednesday, JUne 3, 2015) by the CFPB is a welcome first step toward clarifying the changes coming to real estate closings August 1. NAR appreciates the “sensitivity” offered by the CFPB to companies making a good-faith effort to comply with the new TILA-RESPA Integrated Disclosure regulation.