It will take a decade or more to work out all the kinks in the forthcoming merger of the Truth in Lending and Real Estate Settlement Procedures Act into a single, integrated disclosure, a top banking industry official said.
Rod Alba, vice president of mortgage finance at the American Bankers Association and the group's senior regulatory counsel, said it will be a good 10 to 15 years for lenders to become comfortable with the new disclosure and for consumers to reach the point where they eventually stop challenging the changes in court.
"We're going to remove the system we have now and replace it with an entirely new one," Alba explained at the ABA's annual Real Estate lending Conference in Baltimore.
"If they truly put the two laws together, it's going to have to be a ground-up restructuring," he said. "It can't be simply putting new makeup on an old face."
Under the Dodd-Frank Act, the new Consumer Finance Protection Bureau is directed to combine the disclosures required under the two consumer protection laws, and must put forth its proposal for public comment by Jan. 12 of next year.
If there is good news on the pending merger, Alba told the meeting, it's that the Treasury Department is beginning the process of collecting information on which to base the proposed rule. Treasury will transfer that task to the CFPB when it officially becomes an agency on July 1.
The ABA staffer also noted that Elizabeth Warren, the new agency's current head honcho, has indicated the CFPB will not stray outside the boundaries of the two old laws in writing the new rules.
Both of those items fit into ABA's advocacy position, which, among other things, calls on regulators to recognize that Dodd-Frank is "a major industry restructuring," and to stop any reform efforts that are not based on Dodd-Frank's mandates.
