FHA Offers TRID Grace Period Through April 16, 2016

October 20, 2015

In a letter to the industry, the Federal Housing Authority (FHA) announced it established a grace period until April 16, 2016 for the enforcement of the Consumer Financial Protection Bureau’s (CFPB) Know Before You Owe TILA-RESPA Integrated Disclosures (TRID) rule.

The FHA indicated it is aware of the significant efforts taken by lenders, vendors and service providers to meet the Oct. 3 implementation date for TRID.

“In recognition of these challenges, and the recent announcements by the CFPB and the Government Sponsored Enterprises regarding compliance monitoring of the new rule, (Single Family Housing) is announcing that it will not include technical TRID compliance as an element of its routine quality control reviews,” the FHA wrote in its letter. “(Single Family Housing) does expect mortgagees to make good faith efforts to comply with TRID, which, at a minimum requires the use of the TRID required forms. Consistent with current practices, (Single Family Housing) will evaluate whether the correct forms were used in connection with the origination of FHA mortgages.”

The announcement by the FHA follows similar guidance about good-faith efforts to comply released by Fannie Mae and Freddie Mac. Meanwhile, CFPB Director Richard Cordray said that during initial examinations for compliance, the bureau’s examiners “will evaluate an institution's compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance." The Office of the Comptroller of the Currency issued a letter with similar language regarding TRID compliance.

On Oct. 7, the U.S. House of Representatives passed legislation driven by ALTA that would create an official hold-harmless period through Feb. 1, 2016 for companies making good-faith efforts to comply with TRID. Sponsored by Reps. French Hill (R-Ark.) and Brad Sherman (D-Calif.), the Homebuyers Assistance Act (HR 3192) also would provide companies relief from civil liability during the hold-harmless period. ALTA will continue to reach out to members of the Senate to encourage them to pass this important legislation. Our coalition will work with Sens. Tim Scott (R-SC) and Joe Donnelly (D-IN) to bring S. 1711, the Senate version of H.R. 3192, to the Senate floor as soon as possible. ALTA will provide updates on the progress of this legislation.

The FHA’s letter reminded mortgagees that they “remain responsible for ensuring they are able to convey good and marketable title to FHA and meet all other requirements for FHA insurance endorsement.”

Contact ALTA at 202-296-3671 or communications@alta.org.