NASCUS urged the CFPB to push back the effective date of the new regulations flowing from the Truth in Lending Act and Real Estate Settlement Procedures Act to no earlier than Oct. 3, 2015, and, if possible, to Jan. 1, 2016.
The CFPB originally scheduled the regulation, which impacts the way credit unions handle mortgage loan disclosures and closing schedules, for Aug. 1, 2015. The agency then declared a technical problem would force it to move the effective date to Aug. 15 and asked for comment on an amendment that would push it back even further.
In its July 7 comment to the proposal, the supervisors association also argued that the CFPB should adopt a legal “safe harbor” period if it decides to make the rule effective Oct. 3, 2015. Such a provision would protect credit unions from legal liability as they implement the new regulation.
“A brief safe harbor from legal liability recognizes the magnitude of the operational changes that will accompany this rule, and gives financial institutions a good faith opportunity to manage their risk without disrupting their service to members,” NASCUS Regulatory & Public Policy Counsel Sabrina Bergen wrote.
However, NASCUS made it clear that Jan. 1, 2016 is still its most favored date.
“A January implementation date would provide for a first-of-the-month weekend implementation, and would minimize risk by moving the transition to a period of traditionally lower-volume lending,” Bergen wrote. “The additional time for training and testing should also minimize errors, which would reduce complications for borrowers, as well as potential liability for creditors.”
NAFCU offered a similar take on the CFPB's proposal. The association backed moving the date to Jan. 1, 2016, but took issue with a different part of the CFPB's rule: The lack of a period that credit unions can use to test their new mortgage systems for compliance.
NAFCU Director of Regulatory Affairs Alicia Nealon wrote the following in the association's July 7 comment letter:
“The Bureau has unnecessarily prevented them from testing their new platforms for strict compliance,” Nealon wrote. “Because the CFPB prohibited early compliance with the initial November 2013 TILA/RESPA Rule, and this proposal fails to address early compliance, NAFCU and our members believe that credit unions will still be unable to efficiently and thoroughly test their new systems. Instead, they will be forced to operate two platforms – one that supports the current Good Faith Estimate and the initial Truth-in-Lending disclosure, and another that supports the new Loan Estimate form.”
CUNA sent a comment letter on July 6 that also advocated pushing the effective date for the regulation to Jan. 1, 2016. CUNA argued the August date fell right in the middle of credit unions' busiest lending season.
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