I am not one to typically follow a bill’s progression through the legislative process, but HR 3192, the Homebuyer’s Assistance Act, is certainly one to watch. The Act is short and simple; it provides a grace period for compliance with the new TILA-RESPA Integrated Disclosure (TRID) rules that went into effect October 3, 2015. The Act would also protect creditors from civil liability as it proposes that no suit may be filed against any person for a violation of such requirements occurring before February 1, 2016. In both instances, the person (which includes any covered creditor) has made a good faith effort to comply with the TRID rules.
Why is such an Act even needed? The protections are necessary not only for the lenders but also for the consumers. There is a multitude of information creditors are required to provide to consumers under the TRID rules. Unfortunately, there are numerous gaps, ambiguities and errors not only in the rule itself, but also when compared to the so-called helpful documents that the CFPB has issued to both the financial services industry and the consumer.
When the initial Title XIV Regulatory Reform rules were finalized, the CFPB had no problem issuing an amendment what seemed like on a monthly basis to fix the clumsy writing. Yes, maybe lessons were learned – the industry could not plant feet on the ground with such a constant moving target. But, take those lessons and issue appropriate corrections in groups, or better yet, issue Frequently Asked Questions that are actual regulatory guidance, like HUD did back in 2010 with the RESPA FAQs and RESPA Roundups, on which creditors and software vendors may rely. Without such formal clarifications, amendments or guidance, creditors, vendors and, most importantly, the consumers that the CFPB is supposed to be out there protecting, are left prey to regulations that are inadequately drafted.
HR 3192 passed the House on Wednesday, October 7th, 2015 and is pending in the Senate. However, the Office and Management and Budget (OMB) recently issued an unattributed press statement stating that this bill “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.” Hogwash!
Creditors should not have to be held accountable for the inept writings of the CFPB staff. Likewise, consumers should not be caught as “piggy in the middle” due to the CFPB’s errors and the creditor’s good faith attempt to comply with the TRID rules. Nor should consumers be able to pursue litigation against a creditor who has, in good faith, attempted to comply with such confounded rule writing. The net-net effect is that the lack of sufficient rulemaking will harm the consumer, not protect the consumer.
The Homebuyer’s Assistance Act is not just an opportunity for creditors and software vendors to get things right, but it is a chance for the CFPB to correct their mistakes. What everyone needs to keep in mind is that, at the end of the day, whether you are Democrat or Republican, politician or not, you are also a consumer. You, a family member, a friend, could fall victim to the very issue you vote against.