Pub. 3 2015 Issue 2

27 Summer 2015 The Community Banker T he Consumer Financial Protection Bureau responded to ICBA’s calls for a relaxed enforcement and liability “grace pe- riod” for implementing the bureau’s TILA-RESPA Integrated Disclosure Rule, known as TRID, taking effect Aug. 1. But it wasn’t exactly the re- sponse the industry was looking for. Responding to ICBA’s calls for a grace period, through the end of the year, the CFPB announced it will be “sensitive” to the progress of entities making good-faith efforts to comply with the rule on time. The bureau also indicated it had shared this enforcement approach with all of the prudential banking regulators. While ICBA appreciates the CF- PB’s announcement, we continue to advocate a more defined grace pe - riod through 2015. The fact is that community banks will continue to face challenges complying with the TILA-RESPA regulation. This is espe- cially true for banks that receive de- layed software updates to their loan processing and closing systems from their service providers. As ICBA has noted in letters to andmeetings with the CFPB and members of Congress, the grace period we’re advocating would allow the bureau to address several issues, such as liability provisions under the RESPA-TILA integration, and provide additional written guidance to the industry. However, after seeing the CFPB’s less-than-ad- equate response, ICBA is continu- ing to advocate a better-defined grace period. We support H.R. 2213—House legislation that would provide a grace period for banks making a good-faith effort to comply. Unless Congress acts or the CFPB changes course, however, the regulatory deadline is still on track for Aug. 1. At the same time, the controversy over this regulation won’t disappear in August. ICBA is urging community bankers to let us know how implementation is going. Please sendme an email, at ron.haynie@icba.org, and provide real-life examples of issues that delayed closings or resulted inmul- tiple reissuance of the disclosures. These stories will help ICBA show both the CFPB and Congress the problems with the rule as written and its effect on consumers. In its announcement on TRID implementation, the CFPB also clari- fied provisions requiringmortgage lenders to provide new disclosures three business days before closing. The CFPB has noted that three changes would require revised disclosures and a new three-day review period: • an increase in the annual percentage rate by more than one-eighth of a percentage point for a fixed-rate loan or one-fourth of a percentage point for an adjustable-rate loan; • adding a prepayment pen- alty; and • changing the loan product, such as from a fixed-rate to an adjustable-rate loan. If there is a change to any one of these three items, lenders must give borrowers another three busi- ness days to review the updated disclosure. Again, feedback from community bankers about what really causes closing delays will help as this implementationmoves forward. TILA-RESPA integration remains a regulatory burden on the commu- nity banking industry. Hearing from community bankers on the ground about the complexity of implemen- tation will be essential tomaking substantive reforms to this overly complex regulation. RonHaynie (ron.haynie@icba. org) is ICBA’s senior vice president of mortgage finance policy. NO SAVING GRACE: CFPB REJECTS TILA-RESPA GRACE PERIOD IN FAVOR OF ‘SENSITIVITY’ Washington Watch Information Resource Learn more about the TILA-RESPA Integrated Disclosure Rule on the Consumer Financial Protection Bureau’s website, www. consumerfinance.gov/ knowbeforeyouowe. By Ron Haynie