Banks Prepare to Comply with New TILA-RESPA Integration Disclosure Rule

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More than 20 percent of banks preparing to comply with the new TILA-RESPA Integration Disclosure Rule – or TRID – will not offer certain mortgage products if the vendor’s systems are not ready, according to a recent survey from the American Bankers Association. The association sent the survey data to the Consumer Financial Protection Bureau in a recent letter and requested a “hold harmless period of enforcement and liability for those acting in good faith.”

The new rule, written by the CFPB, goes into effect on Aug. 1, yet 79 percent of surveyed banks could not verify a precise delivery date, or were told that they would not receive systems before June, ABA said in the letter to CFPB. According to the survey, only 9 percent of the compliance systems had been or were expected to be delivered by the month of April.

“The survey indicates a critical shortfall. Banks need at least three months to install, test and de-bug systems, and train staff,” said Robert Davis, an executive vice president at ABA. “We expect actual deliveries of systems to lag what bankers are being promised. If this holds true, and bankers are uncertain about the level of potential supervisory tolerance, we expect a measurable reduction in credit availability during a transition period.”

Seventy-four percent of banks are using a vendor or consultants to assist with TRID implementation.

“Community banks in particular are highly dependent on the ability of vendors to deliver technology-related services that are critical to bank compliance efforts,” said Davis. “Interestingly, though, bankers from large institutions were overrepresented in the survey which implies this is a systemic problem across banks of all sizes.”

In the letter to CFPB, Davis emphasized the potential negative impact of TRID implementation. “The rules will significantly reshape the housing-finance market, which comprises a substantial proportion of our country’s gross domestic product and touches the lives of nearly every American household,” said Davis.

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