CFPB delays ‘Know Before You Owe’ rule again
2015-06-25New rules designed to make the mortgage process more transparent for consumers have hit another speed bump.
That means the three-day review period and the increased rights of consumers (which allow them to walk away from a deal without penalty under some circumstances) is getting pushed back yet again. So more closings this year won’t have that protection. Given that there will be approximately 4.88 million sales this year — or 13,389 closings a day — another roughly 26,000 closings won’t have the new protections. So two days does make a significant difference.
The new rule combined the disclosures required under the Truth In Lending Act (TILA) and the Real Estate Settlement Practices Act to form the TILA-RESPA Integrated Disclosure rule or TRID. The new disclosure would also replace the HUD-1 form which lists all the costs and fees associated with the sale and purchase.
The agency originally planned to implement the Know Before You Owe disclosure rule on Aug 1, which will give home buyers three days to review financial documents to ensure loan terms and fees hadn’t changed at the last minute, a common complaint at the height of the real estate boom. But the CFPB issued a statement on June 17, pushing the release date back to October and cited an “administrative error” for the delay.
Lenders however argued that the rule could delay closings this summer by as much as a week as banks struggled to comply with the new requirements at the height of the buying season for new homes. Earlier this week, first-time buyers pushed home resales to the highest level since November 2009, the most in more than five years, the National Association of Realtors reported.
More than 300 members of Congress pushed CFPB Director Richard Cordray to delay enforcement of the rule until the end of 2015. The CFPB was created as an independent government agency in 2011 in response to the financial crisis and Great Recession of 2008.
Source：MarketWatch
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