Offer TRID Grace Period: NWCUA to CFPB

The Northwest Credit Union Association, working closely with CUNA and partner leagues, sent a letter to the Consumer Financial Protection Bureau (CFPB) asking for three things related to the upcoming TRID implementation:

  • A transitional grace period where lenders can begin using the new forms and processes risk free through the end of the year;
  • For the CFPB to offer editable model forms to help small institutions minimize costs;
  • For the CFPB to set up a revolving grant fund to assist small financial institutions with implementation and compliance of complex rules. (The CFPB defines small business as those under $500 million which include 93% of credit unions)

“While we would like the CFPB to adopt all three recommendations, the one that is of immediate concern is the transitional grace period,” said John Trull, AVP of Regulatory Advocacy for the NWCUA. “The CFPB has indicated they will take into account good faith efforts to implement the rule but that does not shield institutions from legal challenges by consumers, and there will undoubtedly be issues as lenders begin using the new forms.”

Advocacy efforts may be paying off as CFPB Director Richard Cordray said an announcement will be coming before the new mortgage rules take effect on October 3. During his semi-annual testimony before the House Financial Services Committee, Cordray said the bureau will make an announcement regarding the Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosures (TRID) rule.

Although the CFPB pushed back the original TRID effective date, CUNA, the Northwest Credit Union Association and other mortgage stakeholders and legislators have pushed for a hold harmless period that would not punish mortgage lenders for noncompliance as they adjust to the new forms and rules specified by TRID.

 “I’m pushing hard to see to it that [an announcement] is out before Oct. 3,” Cordray said, in response to a question from Rep. Brad Sherman (D-Calif.) about a safe harbor period. “It is going to happen, and it is going to be along the line of what you have asked for, and I think it will be satisfactory.”

In previous hearings, Cordray has maintained that the bureau would not look to punish mortgage participants working in good faith to adhere to the new rules. CUNA has supported legislation that would provide a concrete safe harbor from litigation and enforcement, and urged the CFPB to issue more specific guidance on how “good faith” efforts will be examined.

“We have said, and are working now to provide written guidance on this, that for some period of months, I can’t be very specific about it, there will be a diagnostic approach to this,” Cordray said. “Nobody believes that market participants are going to be trying to abuse consumers here; they’re trying to change their systems. So we’ll be diagnostic and corrective, not punitive, and there will be time for them to work to get it right and not be perfect on the first day.”

Cordray added, in response to a later question by Rep. Robert Hurt (R-Va.), that the bureau is working with federal regulatory agencies to put a period safe from enforcement and litigation into writing.

“I’ve said it verbally, I’ve made my commitment, and you’re going to see it in writing from all of the agencies that during the early period, which could be less or more than six months, we will be diagnostic and corrective, not punitive,” Cordray said. “That’s the way we’re going to handle it, and I’ve talked to the other agencies, and they agree; we’re just trying to be nuanced about it.”

“This is an important win for the CUNA/League system, and for all member credit unions.  Our message is being heard,” said Jennifer Wagner SVP of Advocacy at the Association.

Some reporting from CUNA. Questions about this story? Contact James Pearson: 206.340.4790,

Posted in Advocacy News, CUNA.