Good News, Bad News: Enforcement 'Grace Period' For TILA-RESPA Integrated Disclosures, But Private Liability Exposure Still Begins August 1

In response to pleas from industry and Congress, the Consumer Financial Protection Bureau (CFPB) announced that it will allow a "grace period" for enforcement of the TILA-RESPA Integrated Disclosures (TRID) rule that takes effect on August 1, 2015. In a letter to Senators Joe Donnelly and Tim Scott, CFPB Director Richard Cordray stated that the Bureau, along with other federal regulators, will "be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the Rule on time." Director Cordray also tried to calm fears that the transition to the new requirements during the peak home-buying season could negatively affect access to credit and, in turn, the still-recovering real estate market: "My statement here of this approach is intended to ease some of the concerns we have heard about this transition to new processes in the coming months and is consistent with the approach we took to implementation of the Title XIV mortgage rules in the early months after the effective dates in January 2014, which has worked out well."

The Bureau released a blog post on its website echoing Director Cordray's comments and providing additional guidance on TRID's potential effects on mortgage closings.

What does a "grace period" mean for actually implementing the rule?

The CFPB's announcement is a win for industry and a sign that the Bureau appreciates the magnitude of TRID implementation. The enforcement grace period concept also is consistent with the approach the Bureau took with Ability-to-Repay/Qualified Mortgages and other mortgage origination rules that took effect in January of 2014—so how it will work should be familiar.

However, it is unclear just how lenient the Bureau and other regulators really will be—a commitment to "sensitivity" toward creditors making a good-faith effort to comply is hardly a safe harbor. And, more importantly, the announcement should not be confused with a delay of the rule's effective date: TRID's sweeping new requirements still take effect on August 1 as scheduled, and, despite any assurances from the Bureau, creditors and other industry stakeholders will still need to be ready to comply on that date.

But doesn't the Bureau's announcement mean that everyone gets a free pass if they are making an honest effort to comply with the rule?

Not exactly. While the Bureau and other regulators may be lenient in enforcements and examinations (and again, just how...