CFPB Releases Compliance Guide for Integrated Mortgage Disclosures
April 1, 2014
The Consumer Financial Protection Bureau (CFPB) has released an 89-page compliance guide for its regulations to combine federal mortgage disclosure forms required by the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).
A new five-page Closing Disclosure will replace the HUD-1 and final Truth-in-Lending (TIL) disclosure, while a three-page Loan Estimate will replace the GFE and early TIL. The final rule and new disclosures apply to most consumer mortgages, but does not apply to commercial transactions, home-equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to land. (See “CFPB Releases Final Regulation for Integrated Mortgage Disclosures”)
The CFPB said the purpose of the guide is to provide an easy-to-use summary of the TILA-RESPA rule and highlight issues that small creditors, and those that work with them such as settlement agents, might find helpful to consider when implementing the rule. This guide meets the requirements of Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, which requires the Bureau to issue a small-entity compliance guide to help small entities comply with the new regulations. According to the CFPB, the compliance guide may be helpful to settlement service providers, software providers and other companies that serve as business partners to creditors.
“You may want to review your processes, software, contracts with service providers, or other aspects of your business operations in order to identify any changes needed to comply with this rule,” the CFPB stated in the guidance. “Changes related to this rule may take careful planning, time, or resources to implement. This guide will help you identify and plan for any necessary changes.”
The compliance guide contains several sections that address:
- The rule’s effective date
- What transactions are covered by the rule
- Delivery of the Loan Estimate
- Good faith requirement and tolerances
- Revising and correcting the Loan Estimate
- Timing for revisions to Loan Estimate
- The Closing Disclosure
- Delivery of the Closing Disclosure
- Revising and correcting the Closing Disclosure
- Additional requirements and prohibitions
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