Mortgage bankers preparing for the implementation of the TILA-RESPA integrated disclosures are uncertain that they and their vendors will be ready for the switchover to the new disclosure regime, which takes place for all mortgage applications starting Aug. 1, according to an ABA survey released today.
Nearly three-quarters of banks are using a vendor or consultant to assist with TRID implementation. Of those using a vendor, only 9 percent had received their completed systems by the end of April. A full 58 percent said they expected to receive their systems in July or later — or that they had not yet received a delivery date — leaving little to no time to test systems and train staff before Aug. 1.
Further complicating implementation, just one-third of banks expect systems to be delivered all at once, and 42 percent said they would be delivered in stages, pushing back the date at which a bank can test its full system. For nearly a quarter of banks using vendors, the final software system will not cover every type of loan the bank offers, requiring it to produce specialty disclosures in house, switch vendors at short notice or, as one if five respondents said they would consider, stop offering the mortgage product.
“The survey indicates a critical shortfall. Banks need at least three months to install, test and de-bug systems, and train staff,” said ABA EVP Bob Davis. “If bankers are uncertain about the level of potential supervisory tolerance, we expect a measurable reduction in credit availability during a transition period.”
ABA shared the survey results with the Consumer Financial Protection Bureau today as part of its advocacy for a short “grace period” in which lenders may be held harmless for TRID implementation errors made in a good-faith effort to comply. ABA also supports legislative proposals to provide this grace period and will testify tomorrow on the subject before the House Financial Services Committee.