WASHINGTON — Federal examiners will expect institutions to show that they made a "good faith" effort in preparing for the implementation of the new integrated mortgage disclosures that go into effect on Oct. 3, regulators said in letters sent to industry groups on Thursday.
The letters from the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. are designed to assuage lender concerns that they will be penalized if they make mistakes in implementing the new disclosures. Yet the letters do not go as far as the industry was seeking, and institutions could still potentially face enforcement actions or private litigation if there are errors.
"During initial examinations for compliance with the rule, the agencies' examiners will evaluate an institution's compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance," CFPB Director Richard Cordray wrote in his letter. "Examiners will expect supervised entities to make good faith efforts to comply with the rule's requirements in a timely manner. Specifically, examiners will consider: the institution's implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and its handling of early technical problems or other implementation challenges."
Comptroller Thomas Curry's and FDIC Chairman Marty Gruenberg's letters expressed the same policies.
Still, the letters are unlikely to settle the debate entirely, as industry representatives continue to express fears lenders could face private lawsuits if they make errors.
"While this is certainly helpful, the industry will still be subject to litigation for errors due to the fact that the underlying rule itself is flawed," said Anne Canfield, president of Canfield & Associates, which specializes in regulatory affairs.