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September 29, 2015

Cordray to lawmakers: TRID hold-harmless period to be considered

CFPB Director Richard Cordray announced on Tuesday that the bureau may consider a hold-harmless period after the Truth in Lending Act and Real Estate Settlement Procedures Act integrated mortgage disclosure rule takes effect Saturday.

Appearing before the House Financial Services Committee for his semiannual report, Cordray did not say how long the period will last but indicated that it could be "more or less than six months" and that CFPB and other regulators would be "diagnostic" rather than "punitive" in their oversight during that time. Corday suggested that more details could be released this week.

"There will be time for them to work to get it right and not have to be perfect on the first day," Cordray said.

During the hearing, Cordray told lawmakers that the growth of credit union lending, which he called "heartening,," is a sign that CFPB's work has resulted in more access to credit for consumers. "Last quarter, lending by community banks grew by 8.8 percent compared to the prior year, growing at almost twice the rate of non-community banks. Credit union lending grew at an even faster pace, and credit union membership over the past year grew at the fastest rate in over twenty years."

In response to a statement about how CFPB's regulations have disproportionately affected credit unions and community banks, Cordray said credit unions' share of the mortgage market "has increased since our rules have been put into effect."

Cordray also said the bureau is doing consumer testing on disclosure practices for overdraft fees and that it wants to ensure consumer protections on prepaid cards are similar to those for debit and credit cards.

In response to questions on payday lending, Cordray acknowledged that CFPB must be careful to not drive responsible lenders like credit unions out of the market.

Ahead of the hearing, NAFCU sent a letter to House Financial Services Chairman Jeb Hensarling, R-Texas, and Ranking Member Maxine Waters, D-Calif., urging the committee to press CFPB to provide greater regulatory relief to credit unions. NAFCU also reiterated its opposition to credit unions being under the bureau's authority.

The committee is set to mark up several regulatory relief bills today, including H.R. 1266, which would replace the CFPB director post with a bipartisan commission.