In a Wednesday letter to the CFPB, the Consumer Bankers Association, American Bankers Association, Financial Services Roundtable and Housing Policy Council urged the watchdog to extend compliance deadlines and provide clarification on its mortgage rules.
“The most important concerns that have been consistently and repeatedly stressed throughout is the need for clear rules and more than 12 months to comply,” the associations said. “The new [mortgage] rules will significantly reshape the housing finance market, which comprises a substantial proportion of the GDP of the U.S. and touches the lives of nearly every American household. We want to work with the CFPB to get this right, for the sake of our customers, to avoid consumer confusion and to promote the nascent recovery of the housing market.”
The groups expressed concern regarding the amount of time needed to review the final rules, implement new processes and forms, train staff and test changes for quality assurance, saying that while the new rules mandate a one-year compliance period, “the actual amount of time available to financial institutions to comply is in fact much shorter.”
“In order to manage year-end regulatory and tax reporting requirements, many institutions have an information technology “freeze” between November and early January,” the groups said. “Because it may not be possible to test or revise the new mortgage compliance systems during the lock-down period, the compliance deadline will effectively be November 2013. Regulatory implementation is further complicated by the fact that banks commonly rely on vendors for software updates and systems upgrades. Many of our members report their vendors are not yet ready to provide the necessary updates to individual institutions and some vendors may not do so until late summer or early fall.”
Additionally, the associations said that financial institutions are faced with having to implement the new rules with “many significant questions yet unanswered,” adding that clarity pertaining to certain issues “is a necessary prerequisite for our members to fully implement the changes mandated by the new rules.”
“The Associations have suggested in the past, and we repeat this request now, the CFPB use its exemption authority to extend implementation of the mortgage rules to 18-to-24 months in order to facilitate an orderly compliance process,” the groups said.