Fannie Mae Freddie Mac Offers Informal Grace Period to Industry

first_img Fannie Mae Freddie Mac Grace Period Mortgage Repurchase TRID 2015-10-08 Staff Writer October 8, 2015 529 Views Fannie Mae and Freddie Mac are offering lenders and servicers an informal hold harmless grace period for the Consumer Financial Protection Bureau’s (CFPB) TILA-RESPA Integrated Disclosure (TRID) Rule.In two similar letters to the industry, the Enterprises outlined that they recognize that many lenders and their partners in the mortgage industry have “undertaken considerable technological and operational changes” to meet TRID requirements, which went into effect October 3, 2015.In addition, both companies “recognizes and appreciates the enormous efforts that its lenders have made to date.”Fannie Mae and Freddie Mac will no longer conduct routine post-purchase loan file reviews for technical compliance with TRID.However, they will continue to review mortgage loans to ensure that the correct forms were used during the origination process.The letter also stated that both companies retain the right to require a repurchase in the event that a lender violates applicable law if the lender’s failed compliance could impair the Enterprise’s ability to enforce the note or mortgage, or impose assignee liability.Neither Enterprise intends to exercise contractual remedies, including repurchase, for noncompliance with TRID except:If the required form is not usedIf a particular practice would impair enforcement of the note or mortgage or would result in assignee liability, and a court of law, regulator or other authoritative body has determined that such practice violates TRID.The Enterprises “expect lenders to make good faith efforts to comply with TRID; failure to use a TRID-required form will be deemed a violation of the good faith efforts standard and will render the mortgage loan subject to all contractual remedies, including repurchase.”The Enterprises both indicated that this grace period will be held until “further notice” with no official end date.The House of Representatives voted Wednesday to pass a bipartisan bill (303-121) that will provide a “hold harmless” grace period for the Consumer Financial Protection Bureau’s (CFPB’s) TILA-RESPA Integrated Disclosure (TRID) Rule, which went into effect October 3.The Homebuyers Assistance Act (H.R. 3192) provides the mortgage industry with a grace period through February 1, 2016, by protecting them from enforcement actions if they make a good faith effort to comply with the TRID regulation.Out of the 303 who voted in favor of the bill, 239 were Republicans and 64 were Democrats. All 121 who voted nay were Democrats; 10 representatives (seven Republicans, three Democrats) did not vote.When it comes to the Consumer Financial Protection Bureau (CFPB), Democratic and Republican lawmakers are generally sharply divided with Democrats vigorously defending the Bureau or any action it takes.So why did 64 Democrats—about a third of the 188 Democrats in the U.S. House of Representatives—vote in favor of H.R. 3192, the Homebuyers Assistance Act, on Wednesday to implement a formal grace period until February 1, 2016, for compliance with the CFPB’s TILA-RESPA Integrated Disclosure (TRID) rule? Even the White House issued a statement saying that the President was advised to veto the bill if it reaches his desk.Perhaps the amount of consternation and even “angst,” as CFPB Director Richard Cordray put it in his testimony before Congress on September 29, expressed by those who work in the mortgage industry over whether they could be fully compliant with TRID in time for the October 3 effective date generated some sympathy among Democratic lawmakers and motivated them to vote in favor of the formal grace period. That was the case with Rep. Brad Sherman (D-California), co-sponsor of H.R. 3192 along with Rep. French Hill (R-Arkansas).”These new forms and regulations are complicated,” Sherman said. “Smaller lenders and title companies are complying in good faith with a 1,888 page regulation that is only now being tested in real life home closings. The Hill-Sherman bill tells these smaller lenders, title and escrow companies to implement the new forms immediately. However, if they act in good faith but make unintentional mistakes, they will not be subject to retribution for those mistakes made prior to February 1, 2016.”Click here to read Fannie Mae’s letter.Click here to read Freddie Mac’s letter. in Daily Dose, Government, Headlines, Newscenter_img Share Fannie Mae & Freddie Mac Offers Informal Grace Period to Industrylast_img

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