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The latest assurances from federal regulators that they will initially take a soft approach to enforcing the new TRID consumer-disclosure rules have not satisfied mortgage and banking trade groups.

With the rules effective since Oct. 3, the industry continues to support a bipartisan bill passed in July in the House Financial Services Committee that would extend a safe harbor on enforcement through Feb. 1.

The House bill, which was co-sponsored by Rep. French Hill, R-Ark., and Rep. Brad Sherman, D-Calif., is expected to be debated in the full House on Wednesday, Oct. 7, and could be put to a vote that day or on Thursday, Oct. 8. 

Late last week, CFPB Director Richard Cordray sent a letter to the American Bankers Association (ABA) and 17 other mortgage and housing trade groups saying that regulators expect “a good-faith effort” to comply. Cordray indicated that the bureau recognizes the technical hurdles in implementing TRID and will use the same flexible standard as when the qualified-mortgage rules and other regulations went live in January 2014.

Cordray also assured members of the House Financial Services Committee last week that examiners would initially be corrective and diagnostic, not punitive, in enforcing TRID during the transition period. 

The letter says regulators will evaluate a company’s compliance-management system, and the scope and scale of the required changes for companies. Examiners will specifically look at a company’s implementation plan, its policies and procedures, and monitor its handling of technical problems. Other banking regulators also have issued the same statement. 

Industry trade groups said the letter was useful, but does not go far enough to protect lenders and other industry participants in this transitional period.

"For a short letter, it covers a lot of important points," ABA Executive Vice President Bob Davis said. "I think it clearly indicates what institutions need to document."

Davis said that lenders remain concerned about private lawsuits, and also so-called put-back risk where lenders are forced to repurchase troubled loans over errors.

Davis said that proposed House bill would take care of both concerns during the transitional period. He said that regulators can't shield lenders from private litigation, and so the industry needs Congress to pass a bill that amends the law. He predicted the proposed House bill would pass this week, but the measure has an uncertain future afterwards. It could be attached to an appropriations bill or larger regulatory relief bill, however. 

"That is all up in the air," Davis said. "There is bipartisan support for regulatory reform of certain types. It is just difficult to find a vehicle to get it done in this Congress."  

TRID requires the industry to produce new forms to disclose the initial rates and the final disclosures during the closing process. The rule also requires a mandatory cooling-off period, during which, under most circumstances, rates and fees are locked in for a minimum of three days before the closing.

TRID stands for The Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure rules. It is also known as the “Know Before You Owe” rule.

Earlier this week, lenders told Scotsman Guide News that they were ready for the Oct. 3 deadline, but acknowledged that the new rules required overcoming huge technical hurdles that took months of preparation.

This week, the Mortgage Bankers Association's advocacy arm, the Mortgage Action Alliance, urged its members to support the House bill, saying that it would ensure “a smooth transition.”

The industry is also supporting a similar bill in the U.S. Senate proposed by Sen. Tim Scott, R-S.C. That bill has yet to be considered. 

Other trade groups also urged Congress to pass a defined safe period.  

“As welcome as this guidance is, it is not a substitute for a specific enforcement moratorium for both regulatory-enforcement actions and private-party lawsuits as is contained in the pending Congressional legislation,” said Glen Corso, executive director of the Community Mortgage Lenders of America.