The long-awaited and somewhat delayed TILA-RESPA Integrated Disclosure Rule took effect on October 3. The new rule requires mortgage lenders to use a new, integrated disclosure form and comply with new rules regarding disclosures and timing of the same.
Because of industry pressures, the Integrated Disclosure Rule’s implementation was delayed by two months (the original effective date was August 1). Despite industry concerns regarding the ability to comply with the new rule and possible delays that the new rule would cause for mortgage closings after October 1, the Consumer Financial Protection Bureau (CFPB) declined requests to further delay the rule. In a letter to the industry, CFPB Director Richard Cordray stated that the CFPB recognizes the “substantial resources” that the mortgage industry has had to dedicate to the conversion to the new disclosures, and in initial examinations, CFPB examiners will look for “good-faith efforts” to comply with the rule. According to Director Cordray, examiners will consider a mortgage lender’s
- implementation plan, including actions to update policies and procedures;
- training of appropriate staff; and
- handling of early technical problems and other implementation challenges.
Although apparently intended to give some flexibility and “breathing room” for the mortgage industry, the CFPB’s approach for the initial examinations gives individual examiners a great deal of discretion in the examination process and evaluation of compliance and leaves the mortgage industry unsure of how much effort would be considered a “good-faith effort.” The safest course for a mortgage provider, then, is full compliance, which has proven to be difficult, particularly for mortgages closing in the initial weeks following the rule’s implementation. Additionally, the letter implies that this implementation “grace period” is only for the first exam, and full compliance will be expected by the time of the next exam.