WASHINGTON — Hundreds of lawmakers from both sides of the political aisle are pushing for the Consumer Financial Protection Bureau to grant a grace period for credit unions. banks and other lenders to comply with a new mortgage disclosure rule.
Bipartisan letters from both the House and Senate were sent to the CFPB last week urging it to allow lenders until Dec. 31 instead of the current Aug. 1 deadline before enforcing the new rule, so long as institutions make a "good faith effort" to start compliance.
Trade groups — including CUNA and NAFCU — have long been pushing for such an extension and CFPB officials have refused to grant one.
More than 290 lawmakers asked the CFPB to offer a grace period.
"As you know, August is a traditionally busy month in the real estate industry. Many real estate agents, lenders, and others who help our constituents buy or refinance homes are concerned about implementation of the new TRID disclosure forms, with no grace period, during the peak home buying season," said one bipartisan letter issued May 21 and signed by 41 senators, including Republican Sen. Tim Scott and Democratic Sen. Joe Donnelly of Indiana.
Several members of the Senate Banking Committee also signed the letter, including Sen. Mark Warner of Virginia. "As such, we urge the CFPB to implement a grace period covering lenders who demonstrate a good faith effort to comply with TRID " through December.
The CFPB was required by Congress to integrate the Truth in Lending Act and the Real Estate Settlement Procedures Act into one form, now called TRID. The integration is meant to create a more seamless disclosure process when consumers close on a home purchase.
Both credit union trade groups responded favorably to the most recent congressional intervention.
"NAFCU appreciates the bipartisan efforts shown by lawmakers to urge the CFPB to allow credit unions and other financial institutions a grace period for enforcement and liability for institutions striving to make good-faith efforts to comply with the new TILA/RESPA regulations," said Senior Vice President of Government Affairs and General Counsel Carrie Hunt. "A grace period will allow those who make a good-faith effort to comply with the regulation without the fear of potential enforcement actions or lawsuits without creating any delays in implementation."
A CUNA spokesperson said the trade group shares the lawmakers concerns and support the latest letters.
"We are particularly appreciative given that credit unions are unable to comply early," she added.
Lenders and Realtors also argue the implementation timeframe is daunting, and they need more time to integrate all of the changes to disclosures and processes. The CFPB first issued the integrated rule in late 2013 and finalized several key amendments this January.
The agency has given the industry a longer implementation period on TRID than it did on the "qualified mortgage" rule that went into effect last year. However, the industry and lawmakers argue that TRID is far more complicated.
The CFPB "has done significant work on the TILA-RESPA Integrated Disclosure (TRID) regulation. Nevertheless, this complicated and extensive rule is likely to cause challenges during implementation that could negatively impact consumers," said more than 250 members of the House in another letter sent on May 20.
"We therefore encourage the bureau to announce and implement a 'grace period' for those seeking to comply in good faith from August 1st through the end of 2015," said the letter signed by House lawmakers, including Democrat Maxine Waters of California, who's been a long-standing supporter of the CFPB.
The CFPB declined to comment on the letters.
Marian Raab contributed to this article.