Written by JiJi Bahhur, Director of Regulatory Compliance
After more than two years of research and testing, the Consumer Financial Protection Bureau (CFPB) issued – this past Wednesday – the long-anticipated Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) rule. Among several highlights from the rule, it provides for new, easier-to-use integrated disclosures, also known as the “Know Before You Owe” mortgage forms, that clearly lay out the terms of a mortgage for a homebuyer. The purposes of these new integrated disclosures are to provide improved consumer understanding, better comparison shopping, and avoid costly and unexpected surprises at the closing table.
Currently, credit unions are required to provide two separate disclosures – “early” TILA Statement and Good Faith Estimate (GFE) – within three business days after receiving a mortgage application. Under the final rule, these disclosures would be combined into one early disclosure document, the Loan Estimate, which borrowers must receive within three days after application.
Also, credit unions are currently required to provide two separate closing disclosures – final TILA Statement and HUD-1 Settlement Statement – three business days before closing on a loan. The final rule combines the final TILA and HUD-1 disclosures into one closing form, the Closing Disclosure, which borrowers must receive three days before closing.
The TILA/RESPA rule (and mandatory use of the new integrated forms) is set to take effect on August 1, 2015. While this extended implementation time is a win for credit unions – and something NAFCU pushed the CFPB for – it is important to note that the rule is 1,888 pages long and will require your credit union to make significant changes to how it conducts a mortgage transaction.
For a quick look at some of the other highlights from the rule, take a look at this message from Carrie Hunt, NAFCU’s Senior Vice President of Government Affairs/General Counsel. Also note, NAFCU will issue a Final Regulation providing a summary of the final rule. When it is available, you can find it here (NAFCU log-in required).
For further information on these new integrated mortgage disclosures, check out these CFPB resources:
- CFPB Press Release
- Factsheet about the “Know Before You Owe” Mortgage Disclosures
- The TILA/RESPA Mortgage Disclosure Rule
On a lighter note, I’d love to share the group photo from NAFCU’s Regulatory Compliance Seminar that took place this past October in Nashville, Tennessee. It was a great crowd and we look forward to seeing you all next year in Baltimore, Maryland.
Have a fabulous weekend!