CFPB TILA-RESPA Integrated Disclosure Final Rule

CFPB held a webinar this week on the Integrated Disclosure final rule of the Truth In Lending Act and Real Estate Settlement Procedures Act.  If you happen to be a fan of large numbers of acronyms and governmental codes being referenced like they were pop culture memes, then this was a very exhilarating experience for you. This final rule will go into effect in August of 2015, but that’s no reason to put off your understanding of its extremely detailed effect and (note CFPB’s use of capital letters here) the Official Interpretations.

CFPB, which loves to refer to itself as ‘Bureau’, has finalized amendments to Regulations X and Z. If you are still reading after that sentence alone, you can imagine our shock when this simple statement was dropped on only slide number 3 of a 30-slide presentation. In an effort to offer at least a slight chance of salvation for one’s sanity, let’s cut to the meat and potatoes, shall we?

The Rule consolidates four existing disclosures required for most closed-end consumer credit transactions secured by real estate into two forms:

  • A Loan Estimate given 3 business days after application
  • A Closing Disclosure given 3 business days prior to consummation.

The rule does not apply to reverse mortgages, home-equity lines of credits (HELOCs), chattel-dwelling loans, and a few other loan types that you can check out on slide 4.

From here on out, a loan estimate must:

  • Provide consumers with a good faith estimate of credit costs and transaction terms
  • Be in writing and contain prescribed information
  • And satisfy timing and delivery requirements set forth (in severe detail. Seriously.) in the rule.

There are also fairly stringent delivery requirements for loan estimates. If not provided to the consumer in person, creditors must place them in the mail no later than the third business day after the creditor receives the application.

CFPB likes themselves some definitions.  They like to define seemingly plain English terms so much that they made several slides letting us all know what they consider to be such arcane things as an application, a business day (it’s exactly what you think it is), a loan estimate and good faith.

One of the biggest boo boos of the housing bubble bust was how sloppy both communication and loan revisions and corrections were handled by a number of very large banking institutions. In an effort to correct this, CFPB has now created hard rules to regulate how a loan may be modified after it is created, dictating that only special circumstances such as war, natural disaster, loss of employment (or a zombie apocalypse) constitute reason to modify a loan.

The presentation goes on in full governmental glory to cover things like closing disclosures and changes before and after consummation.  If you would like to bear witness to this feat of bureaucratic engineering (in print), you can view the entire slide here.


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