WASHINGTON -- U.S. Rep. French Hill wants Congress to assure banks and title companies that the government will be lenient as they work under new rules starting Saturday that will affect people purchasing or refinancing homes.
The Consumer Financial Protection Bureau rules were proposed more than two years ago. They require that homebuyers receive easier-to-understand disclosure forms that clearly lay out the terms of a mortgage and also require title loan companies to prove they are following certain best practices.
Hill, a Republican from Little Rock, said software and forms associated with the rules have changed repeatedly in the past few months, and members of the financial industry just want assurance that they won't be fined or sued while they work out the kinks.
"The biggest banks are probably ready to go," Hill said. "But a lot of independent mortgage companies and title companies and banks have had trouble."
Hill has filed legislation that would keep the bureau from enforcing the rule until February. It was approved by the House Financial Services Committee in July, but hasn't been considered in the House. Similar Senate legislation hasn't been considered by committee.
Hill said he is working with House leadership on a path forward for the legislation. Hill said even if the bill is approved after the rules take effect, it will provide solace for the industry.
The rules apply to mortgage or refinancing applications started after Saturday, not those already being considered.
The federal Consumer Financial Protection Bureau already delayed the rule from taking effect once. Bureau Director Rich Cordray said the agency plans to give the industry some leeway in the first few months.
Cordray told the House Financial Services Committee on Tuesday that he is working with other federal agencies to provide the industry with written assurance before Saturday that as long as banks, title companies and real estate agents are making a good faith effort, there will be leniency.
"There will be time for them to work to get it right and not have to be perfect on the first day," Cordray said.
Still, spokesman for industry groups said they want Congress to ensure that the Consumer Financial Protection Bureau will be lenient if mistakes occur.
Arkansas Land Title Association President Jim Pender said he knows some companies, especially small, locally owned title companies, still aren't ready.
"We've worked hard to get ready for Oct 3. We've spent hundreds and hundreds and hundreds of man-hours to get ready for this," Pender said. "This is a total change in our industry. I'm not sure what the harm would be in giving the industry more time."
The changes will affect the more than 400,000 people who buy a home each month and the more than 230,000 people who refinance their mortgages each month, according to the American Land Title Association.
Association Vice President Justin Ailes said the mortgage industry wants time to try out what has, until now, been only practiced without the threat of lawsuits or fines.
"It may be a little bit bumpy," he said. "[Hill's legislation] makes sure that there is a scrimmage. You just don't have to go straight to your season opener without having any preseason."
Business on 09/30/2015