United States: CFPB Refuses To Delay Enforcement Of TILA-RESPA Integrated Disclosure Rule; Pending Legislation Would Provide Safe Harbor Through End Of 2015

In an April letter to Congressman Blaine Luetkemeyer (R-Mo.), the Consumer Financial Protection Bureau refused to provide a grace period for enforcement of the TILA-RESPA Integrated Disclosure Rule ("the Integrated Disclosure Rule"), which has an effective date of August 1, 2015.

Director Richard Cordray's letter provides information about the CFPB's work to support implementation of the Integrated Disclosure Rule, including webinars, but concluded that "evaluating the scope of potential implementation challenges and appropriate responses prior to the effective date is unnecessarily speculative."

There is still hope for the industry, however. On May 1, Reps. Steve Pearce (R-N.M.) and Brad Sherman (D-Calif.) introduced H.R. 2213, which would provide lenders with a temporary safe harbor from enforcement of the Integrated Disclosure Rule. Under this pending legislation, lenders making good faith efforts to comply with the Integrated Disclosure Rule would be immune from private lawsuits and regulatory enforcement actions through December 31, 2015.

The Dodd-Frank Act directs the CFPB to publish rules and forms that combine certain disclosures that consumers receive in connection with applying for and closing a mortgage loan under TILA and RESPA. The Integrated Disclosure Rule establishes new disclosure requirements and forms in TILA for most closed-end consumer credit transactions secured by real property, revamping all federal requirements relating to residential mortgages. At present, effective August 1, 2015, all lenders will be required to update their systems and procedures to ensure compliance with the new Integrated Disclosure Rule.

The new mandates and additional disclosures pose difficult challenges for compliance professionals and system technicians. Because banks will need to have a broad understanding of the new requirements and all of the accompanying changes to ensure compliance, as well as the major challenges of implementing the new disclosures and the absence of an opportunity for lenders to comply before August 1, many industry participants are urging the CFPB to offer a "grace period" to improve the likelihood of a smooth implementation.

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