Lawmakers want grace period for new mortgage rules

House lawmakers are asking the Consumer Financial Protection Bureau (CFPB) for a grace period to help lenders and buyers comply with new rules that aim to make buying a home easier by reducing the amount of paperwork involved. 

The Dodd-Frank Wall Street Reform Act requires the CFPB to integrate the mortgage loan disclosures under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

{mosads}The rule, set to take effect in August, consolidates four existing disclosure forms home buyers must review when buying a home into two forms: a loan estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a closing disclosure that must be provided to the consumer at least three business days prior to closing.

Because August is the peak of homebuying season, 252 lawmakers, led by Reps. Carolyn Maloney (D-N.Y.) and Andy Barr (R-Ky.), sent a letter to CFPB Director Richard Cordray asking for a grace period to give lenders and buyer through the end of 2015 to comply with the new rules.

Even with advanced notice, the lawmakers said the industry needs real-life experiences to fully understand how to use the new forms.

“As the [TILA-RESPA Integrated Disclosure] regulation does not provide lenders an opportunity to start using the new disclosure form prior to the August 1st implementation date, market participants will not be able to test their systems and procedures ahead of time, which increases the risk of unanticipated disruptions on August 1^st,” they said in their letter.