I think this question came up every time I did a panel on behalf of the CFPB. The answer I always gave was a firm “no,” and that directive came from up high. I think Rich Cordray has said the same thing several times when he’s been out speaking as well. And, to give a little flavor to this, the thinking at the CFPB has always been that yes, they do appreciate TILA-RESPA is a massive implementation effort. I’ve heard it described as five times of all of Title 14 and I don’t think that’s wrong. The CFPB gets that. But the prevailing viewpoint has always been that normally a year is enough time to implement a new rule, even a big one. The CFPB gave 18 months for TRID and even started the 18 month clock after Title 14 had taken effect. So basically, they gave the industry time to finish up all of the last round of rules and then gave an additional six months to do TILA-RESPA. The Bureau has always viewed that as more than enough time, and I would not expect that they will delay the effective date, no matter how many times they’re asked.
There have been discussions of some alternatives. One idea that’s been kicked around is delayed enforcement of the final rule, or basically, a good-faith compliance standard for examinations and enforcement where the CFPB will say they’re not going to come after everyone for technical violations of the rule. That may well be where they ultimately land, but the caution that I always give is the concept of private liability. If the Bureau were to do that, if the Bureau were to say, we’re not going to start examining you for X number of months, and when we do, we’re only looking for good-faith compliance. In the meantime, our enforcement people aren’t going to come after you unless you’re doing something willful or knowledgeable. That’s all well and good from the CFPB. But there’s still the possibility that someone files a civil lawsuit and you just go before a court and you’re litigating in court over a TILA violation. I think the Bureau would have to do something formal – something through an amendment of the rule – or there would have to be some kind of legislative act in order to stop that from happening. I don’t mean to say that I think people are going to start filing lawsuits on day one, but it’s possible, there’s exposure there, there’s risk. And if anyone is banking on the Bureau not coming after them as a green light for non-compliance, they would still be at risk of someone filing a civil lawsuit. And I think that would be the worst-case scenario: someone files a TILA lawsuit and you’re not complying with TILA and then you lose a case in court. I think that’s probably worse than getting dinged by an examiner. So I always caution people that that question is still going to be out there regardless of what the Bureau does, unless the Bureau does what I think they’ve been very clear that they won’t, and that’s delay the effective date. So, moral of the story is that there’s no choice but to be ready by August 1.
This transcript has been edited from the May 2015 round table discussion for clarity and completeness.
Answered By: Andy Arculin