Written by JiJi Bahhur, Director of Regulatory Compliance
NAFCU continues to receive TILA/RESPA Integrated Mortgage Disclosures questions from its members. As someone who has been digging through this rule for over a year, I must say these questions are not easy, especially since the questions become even more nitty gritty as the effective date, August 1, becomes nearer. Recently, a TILA/RESPA question was posed at a compliance roundtable that NAFCU attended. When the question was posed, I said to myself that it sounded awfully familiar . . . maybe something I recently read . . . and I was right.
The question was as follows: Is it permissible to use the TILA/RESPA disclosures instead of the currently-required Good Faith Estimate (GFE) and HUD-1 disclosures for those loans that are not under the scope of the TILA/RESPA rule? If so, this would prevent some credit unions from having to utilize two parallel systems.
The Short: No. Creditors originating transactions that are not covered under the TILA/RESPA rule must continue to use, as applicable, the GFE, HUD-1, and TIL disclosures required under current law.
The Long: While the TILA/RESPA rule applies to most mortgage loan transactions, there are certain categories of loans that are excluded from the rule. The TILA/RESPA rule does not apply to:
- Home-equity lines of credit (HELOCs);
- Reverse mortgages;
- Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property; and
- Mortgage loans made by a person or entity that is not a “creditor” under Regulation Z.
For transactions not covered under the TILA/RESPA rule, as listed above, creditors originating these types of mortgages must continue to use, as applicable, the GFE, HUD-1, and TIL disclosures required under current law. In other words, creditors cannot use the new integrated disclosure forms instead of the GFE, HUD-1, and TIL forms for non-covered transactions, thus requiring the use of two systems/platforms to generate applicable forms.
Now, the bigger question (at least for me): Why did the original question sound familiar? That’s right, the CFPB’s Small Entity Compliance Guide briefly makes mention of it. From the Compliance Guide:
“4.2 What are the disclosure obligations for transactions not covered by the TILA-RESPA rule, like HELOCs and reverse mortgages?
The new Integrated Disclosures will not be used to disclose information about reverse mortgages, HELOCs, chattel-dwelling loans, or other transactions not covered by the TILA-RESPA rule. Creditors originating these types of mortgages must continue to use, as applicable, the GFE, HUD-1, and Truth-in-Lending disclosures required under current law.”
Cookie Break. Imagine this – a family with over a dozen sets of twins, three sets of which are 8 to 10 months apart in age and live within a 2-block radius of each other. Yep, no imagination needed here – that’s my family. And this is what a cookie break looks like on a warm Saturday afternoon after tons of running around the yard!
If you don’t normally follow my blogs, my twins – Ava and Kyse – are, from left to right, third and fifth on the bench.