By Lisa M. Goolik
If you haven’t already heard, the Consumer Financial Protection Bureau is delaying the effective date of its TILA-RESPA Integrated Disclosures rule, also referred to as the Know Before You Owe rule, until Oct. 1, 2015. The rule combines certain disclosures that consumers receive in connection with applying for and closing on a mortgage loan. CFPB Director Richard Cordray blamed the delay on a newly-discovered “administrative error,” which would have delayed the effective date of the rule by two weeks. Which begs the question, what was the “administrative error”?
There is some speculation that the CFPB failed to file timely notice of the rule with Congress and the Government Accountability Office. Under the Congressional Review Act, federal agencies promulgating rules must submit a copy to both houses of Congress and GAO before the rules can take effect. According to the GAO, federal agencies must file notice of “major rules” at least 60 days prior to the required effective date.
Cordray’s comments indicate that the administrative error “would have delayed the effective date of the rule by two weeks.” With an effective date of Aug. 1, 2015, the notice would have been required by June 2, 2015. If the error was not discovered until Wednesday, the effective date would have been delayed until Aug. 16, 2015, at least two weeks past the effective date.
Under the CRA, Congress would also have the opportunity to disapprove the rule. The Act provides that Congress may pass a joint resolution of disapproval relating to a “major rule,” resulting in the rule having no force or effect. However, Congressional disapproval rarely occurs. The GAO reports that, since 1996, 43 resolutions of disapproval have been introduced in the Senate or House of Representatives and only one rule, a Department of Labor rule on ergonomics, has been disapproved by Congress.
Regardless of cause, Rep. Blaine Luetkemeyer (R-Mo), Chairman of the House Subcommittee on Housing and Insurance, had comforting words for whoever was responsible, stating, “The need for this extension is a reminder to all of us that we are human beings and mistakes are made, and I appreciate Director Cordray’s actions to remedy the situation.”
If the overwhelmingly positive reaction to the announcement is any indication, a number of industry groups would like to thank the human responsible for the error.
For more information about the TILA-RESPA Integrated Disclosures rule, subscribe to the Banking and Finance Law Daily.
