Updated 6-18-15. Signing Agents across the nation could see a mixed-bag of inconsistent loan document packages — some with the new Closing Disclosure and some continuing to include the older documents — between October 1 and the new year as the federal government has granted the mortgage industry a “grace period” to fully implement the TILA-RESPA Integrated Disclosures (TRID) rule.
The new mortgage disclosure rules were originally scheduled to take effect August 1. However, CFPB Director Richard Cordray announced that the agency was proposing to push back the deadline to October 1. The delay would allow the agency to correct an administrative error, Cordray said in a statement.
The postponement follows the CFPB announcement of a “grace period” for enforcement of the new rules at the request of industry leaders. This means that agency will take into account the good faith efforts of financial institutions to implement the rules before pursuing enforcement actions for lenders which are out of compliance.
How the 'grace period' affects Signing Agents
But the grace period, which is expected to last until the end of 2015, means that NSAs could continue to see two different types of loan packages: one with the old Truth-in-Lending (TIL) disclosure and HUD-1 Settlement Statement; the other with the new Closing Disclosure form. For loan signings with the old packages, NSAs also could deal with borrowers who have had little time to go over the documents.
During this transition period, signing agents will need to be familiar with the loan packages prepared under the old rules as well as the new rules.
The TRID rule is intended to make it easier for borrowers to understand the terms of their loans by consolidating key information. The part of the rule that will affect NSAs is the Closing Disclosure, which combines information from the TIL disclosure and HUD-1 form.
TRID also mandates that borrowers receive the Closing Disclosure three days before the borrower signs the mortgage note. This is intended to give borrowers more time to review their loan terms before a closing — a change that many Notary signing agents hope will make the loan document signing process more efficient and reduce questions and issues borrowers may have with their loan documents during signing assignments.
Why new mortgage disclosure enforcement is being delayed
Lenders and financial institutions had asked the CFPB for the grace period to help companies deal with the impact of these major changes to the closing process. CFPB Director Richard Cordray stated in a letter to two U.S. senators that the new rules will still go into effect as planned on August 1. However, when it comes to enforcement actions against lenders who are out of compliance, Cordray noted that the agency “will be sensitive to the progress made by those entities that have focused squarely on making good-faith efforts to come into compliance … on time.”
“We share your desire for a smooth and successful implementation of the Rule, and we continue to work closely with all stakeholders to support that goal,” Cordray wrote.
Mortgage Bankers Association President and CEO David H. Stevens described the grace period as a “win-win” for both industry and consumers.
“With so many difficulties around integrating systems, the industry needs flexibility to ensure consumers do not incur costs or lose home sales due to unforeseen problems,” Stevens said.
NNA members can read a detailed look at the possible impact of the new TRID rules on signing agents in the June 2015 issue of The National Notary magazine.
David Thun is the Assistant Managing Editor with the National Notary Association.