March 17, 2016

Cordray: TRID hold harmless period indefinite

CFPB Director Richard Cordray said Wednesday that the hold harmless period relating to the bureau's Truth in Lending Act/Real Estate Settlement Procedures Act integrated mortgage disclosure rule will remain open-ended due to unforeseen information technology problems.

Cordray spoke about the hold harmless period while answering questions during his testimony before the House Financial Services Committee. He said CFPB will try to provide more guidance on the rule and does not expect the bureau to take enforcement actions against noncompliance unless there are blatant violations.

When discussing CFPB's pending rulemaking on payday lenders, Cordray said that the bureau want to make sure they are protecting and accounting for payday alternative loans (PALs) in the new rules.

"Credit unions have a program now that we want to make sure we're protecting and giving latitude for," he said during an exchange with Rep. Rubén Hinojosa, D-Texas. He told Hinojosa that he cannot say what will be included in CFPB's proposed rule but that they are trying to address harm to consumers while allowing small-dollar lending to continue.

In an exchange with Rep. Lacy Clay, D-Mo., Cordray also said he expects rules on prepaid products and mortgage servicing to be finalized this year.

Several lawmakers, including Committee Chairman Jeb Hensarling, R-Texas, also raised concerns about the accuracy with which the bureau is distributing $80 million in proceeds from an enforcement action against Ally Financial. A committee report in January alleged that funds meant for the minority victims of racial discrimination are instead going to white borrowers because of a faulty algorithm.

Rep. Scott Garrett, R-N.J., raised concerns about CFPB's work concerning arbitration agreements, and Rep. Blaine Leutkemeyer, R-Mo., noted that CFPB has offered "little-to-no guidance" on how to comply with UDAAP (unfair, deceptive, or abusive acts or practices) rules under the Dodd-Frank Act. Finally, Rep. Robert Pittenger, R-N.C., voiced his support for CFPB being run by a five-person, bipartisan committee rather than a single director.

Read more about Cordray's testimony here.