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From Banking and Finance Law Daily, September 10, 2014

CFPB provides timeline example for integrated disclosure rule, updates guidance

By Lisa M. Goolik, J.D.

The Consumer Financial Protection Bureau has updated its guidance intended to help assist small entities in complying with the bureau’s Truth in Lending Act-Real Estate Settlement Procedures Act integrated mortgage disclosure rule that takes effect Aug. 15, 2015. The TILA/RESPA Integrated Disclosure Rule Small Entity Compliance Guide, originally issued in April 2014, has been revised to reflect updates to information on where to find additional resources on the rule, additional clarification on questions relating to the loan estimate and the 7-day waiting period, and additional clarification on questions relating to timing for revisions to loan estimates. The bureau has also issued a revised guide to the Loan Estimate and Closing Document forms, as well as new disclosure timeline example.

Integrated disclosure rule. In November 2013, the bureau adopted a final rule to implement the integrated TILA-RESPA disclosure requirement as mandated by the Dodd-Frank Act (see the Banking and Finance Law DailyNov. 20, 2013). Under the integrated rule, the Good Faith Estimate and the initial TILA disclosure were combined into a new form called the Loan Estimate. The new form is intended to provide disclosures that will assist consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application.

In addition, the HUD-1 and final TILA forms were combined into another new form, the Closing Disclosure, intended to provide disclosures that will help consumers understand all of the costs of the transaction. This form must be provided to consumers at least three business days before consummation of the loan.

Updated rule guidance. In April 2014, the bureau issued the TILA/RESPA Integrated Disclosure Rule Small Entity Compliance Guide for the purpose of providing an easy-to-use summary of the TILA-RESPA integrated disclosure rule (see the Banking and Finance Law DailyApril 1, 2014). The guide also highlights issues that small creditors, and those that work with them, might want to consider when implementing the rule.

The updated guidance contains revisions to the following sections:

  • Section 1.3 contains updated information on where to find additional resources on the rule;

  • Sections 6.1 and 6.2 contain additional clarification on questions relating to the Loan Estimate and the 7-day waiting period; and

  • Section 9 contains additional clarification on questions relating to Timing for Revisions to Loan Estimate.

Updated forms guidance. To complement the compliance guide, the bureau subsequently released a companion guide to provide a roadmap to completing the integrated Loan Estimate and Closing Document forms (see the Banking and Finance Law DailyApril 18, 2014). The TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure forms provides instructions for completing the Loan Estimate and Closing Disclosure and also highlights common situations that may arise when completing the forms.

The revised forms guidance updates following sections:

  • Section 1.3 includes updates to information on who to contact with questions on the rule;

  • Section 2.2.2 clarifies the description of time periods less than whole years; and

  • Section 3.6.2 clarifies the requirement relating to provision of appraisals for certain loan types.

Timeline example. Lastly, the bureau has issued an example of the integrated disclosure timeline. The timeline is intended to illustrate, in calendar form, the process and timing of disclosures for an example real estate purchase transaction under the integrated rule. The timeline contains various assumptions and a list of events that trigger the required disclosures and demonstrates, for illustration purposes only, the interplay between the events and the rule requirements.

MainStory: TopStory CFPB DoddFrankAct Loans Mortgages TruthInLending

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