| The U.S. House of Representatives passed a bill Wednesday that will delay the enforcement of the new TILA-RESPA Integrated Disclosure (TRID) rules that went into effect last week until Feb. 1, 2016.
The Homebuyer’s Assistance Act (H.R. 3192), creates a “hold harmless” period between Oct. 3, 2015, and Feb. 1, 2016, during which lenders will not be penalized for non-compliance with the new TRID regulations, as long as they can demonstrate a “good faith” effort to comply.
The bill will next be considered by the Senate. If it passes there, President Barack Obama’s Office of Management and Budget said Obama’s senior advisors will recommend he veto it.
“The administration strongly opposes H.R. 3192 as it would unnecessarily delay implementation of important consumer protections designed to eradicate opaque lending practices that contribute to risky mortgages, hurt homeowners by removing the private right of action for violations and undercut the nation’s financial stability,” according to a memo from the OMB.
The TRID rules took effect on Oct. 3, and the bill would effectively extend the compliance date four months. TRID was previously scheduled to go into effect Aug. 1, 2015, but was delayed two months to give stakeholders additional time to prepare for the implementation of the new rules.
Marc Israel, president and chief counsel of MiT National Land Services, a title insurance company in New York, has been training attorneys, lenders and real estate agents from all over the country in the 1,800-page TRID regulations for the last six months. He supports the House vote and thinks a presidential veto would be unfair.
“The CFPB itself doesn’t even have answers to a lot of questions that the industry has been posing,” Israel said. “They’re being honest about that. If they don’t know, why should be organizations who are making a good faith effort be penalized for doing things that may turn out later to be non-compliant?”
Israel thinks the lending industry should be given the next four months as a trial run. He said that even a set of rules as large and complex as TRID can’t capture every quirky situation that will arise. He thinks lenders should be given the time to learn how to apply TRID to those situations without being subject to CFPB penalties, which can go up to a $1 million per day.
“This is a situation where the industry has really responded to the call from government to comply with the new rules, but we all recognize there’s going to be bumps,” he said. “We should hold off penalizing people who make mistakes because everything is different when you’re closing real deals on the ground.”
