As reported earlier this month by GoodCredit.com, new mortgage disclosure rules promulgated by the Consumer Financial Protection Bureau have been scheduled to go into effect August 1, even though many mortgage lenders are probably not ready to comply. For loan applications submitted after this date, a new closing disclosure form will replace existing consumer disclosures such as the truth-in-lending form, HUD-1 settlement statement and good faith estimate. The new form will have to be provided at least 3 days in advance of the real estate closing. Changes in closing costs may require re-disclosure and restarting of the 3-day period.
After publishing hundreds of pages of regulations dealing with this new so-called “Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosure” (TRID), the CFPB has decided to delay the effective date for these changes for two months, until October 1. Although the CFPB attributed the postponement to an “administrative error” without further elaboration, the federal Government Accountability Office (GAO) has admitted that the delay is due to the failure of the CFPB itself to file a form on time with the federal government.
Except in case of an emergency, the CFPB is required under the Congressional Review Act to submit any new rule to Congress and the GAO at least 60 calendar days prior to the rule’s effective date. Ironically, this new government agency, which is in charge of enforcing consumer finance accountability, and which possesses the power to impose penalties upon lenders and others failing to meet deadlines, neglected to file a simple notice until this week.
Theoretically, Congress could vote during the 60-day period to disapprove of the new regulations, but this is unlikely. What is likely is that all home loan borrowers, regardless of whether they have good credit, satisfactory home appraisals or sufficient income, will suffer delays, higher costs and uncertainty in their mortgage transactions once these new rules take effect.