“Administrative error” prompts agency to propose the delay of new closing documents and timelines mandated by the rule
The Consumer Financial Protection Bureau (CFPB) released a statement from Director Richard Cordray saying the agency would issue a “proposed amendment” delaying the effective date of the new regulations affecting consumers and lenders from August 1 to October 1.
The new regulations stipulate that all lenders must submit final closing documents to consumers at least three days prior to closing; and new closing documents are intended to help consumers understand the associated costs and risks of their loan.
An “administrative error” prompted the decision after the agency realized their failure to report the rule to Congress at least sixty days prior to its effective date.
The proposed delay comes amid objections from industry groups surrounding the removal of the “optional” owner’s title insurance language in the new closing document. Industry groups argue that it encourages homebuyers to opt out of purchasing the additional coverage without proper counsel, resulting in inadequate protection for homeowners.
The proposal will be issued for public comment and “a final decision is expected shortly thereafter,” according to the CFPB.