TILA-RESPA Integrated Disclosures Regulation | TILA-RESPA Resource Center | Wolters Kluwer Financial Services
  • Wolters Kluwer Financial Services Banner Image

Law, Regulation and Official Guidance

  • Construction Loan Factsheet

    On January 12, 2016, the Consumer Financial Protection Bureau (CFPB) released a construction loan factsheet. Under the “Know Before You Owe” umbrella, this factsheet provides additional disclosure guidance for construction loans that are closed-end consumer credit transactions secured by real property. The factsheet explicitly affirms that the Regulation Z provisions for disclosures for certain construction loans and construction-to-permanent loans and Appendix D apply to the Loan Estimate and Closing Disclosure.

    TRID Enforcement - Regulatory Relief?

    As most every mortgage lender knows by now, the TILA–RESPA Integrated Disclosure (TRID) rule went into effect on October 3, 2015. Covered mortgage loan applications received on and after this date will trigger new disclosures that include the Loan Estimate and the Closing Disclosure. Although compliance with all aspects of the TRID rule is now expected, regulators and other industry players have stated that technical compliance reviews will not be conducted for a period of time.

    From a regulatory perspective, the Consumer Financial Protection Bureau (CFPB) has sent a letter to mortgage industry trade groups stating that during initial examinations for compliance with the TRID rule, examiners will evaluate an institution’s compliance management system and overall efforts to achieve compliance. Recognition will be given to the scope and scale of changes necessary for each supervised institution to achieve effective compliance. A good faith efforts to comply with the rule’s requirements in a timely manner is expected and towards that end, examiners will consider:

    • Overall implementation plans
    • Actions taken to update policies, procedures, and processes;
    • Training of appropriate staff; and,
    • Handling of early technical problems or other implementation challenges.

    Fannie Mae and Freddie Mac have followed suit and stated that they’re aware that some lenders continue to address the implementation of TRID’s technical requirements. In recognition of this, until further notice, neither will conduct routine post-purchase loan file reviews for technical compliance with TRID. That being said, institutions will be evaluated as to whether the correct forms were used in connection with the origination of a mortgage loan. Both Fannie Mae and Freddie Mac expect lenders to make good faith efforts to comply with TRID. Failure to use a TRID-required form will be deemed a violation of the good faith efforts standard and will render the mortgage loan subject to all contractual remedies, including repurchase.

    Finally, HUD has issued a memo stating that the Federal Housing Administration’s (FHA) Office of Single Family Housing (SFH) announcing that it will not include technical TRID compliance as an element of its routine quality control reviews. This memo contains an expiration date of April 16, 2016.

    While these industry statements provide some regulatory relief, it’s important to recognize that they do not rise to the level of a regulatory safe harbor. Congress continues to explore bills that would provide for such a safe harbor; however, to date, no such bills have been signed into law. Finally, remember that in addition to regulatory supervisory action, Truth in Lending Act provides for a private right of action which includes actual damages, statutory damages in certain cases, court costs, and attorney’s fees. Ultimately, it will be in every institution’s best interest to fully comply with the TRID rule sooner, rather than later.

    TRID Rule to Take Effect October 3, 2015

    The CFPB announced today it is delaying the effective date of the TILA-RESPA Final Rule and the related TILA-RESPA Amendments from August 1 to October 3, 2015.

    A copy of the final rule is available on the CFPB's website.

    CFPB Proposes Two-Month Extension of Know Before You Owe Mortgage Rule

    Proposal Open for Public Comment Until July 7th

    Published June 24, 2015: WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today issued a proposed amendment to the Know Before You Owe mortgage disclosure rule, which proposes to move the rule’s effective date to October 3, 2015.

    Read the full announcement on the CFPB site.

    Statement by CFPB Director Richard Cordray on Know Before You Owe Mortgage Disclosure Rule

    Published June 17, 2015: The Consumer Financial Protection Bureau announced that it will issue a proposed amendment to delay the effective date of the TILA-RESPA Integrated Disclosure rule until October 1, 2015.

    Read the entire statement on the CFPB's website.

    CFPB to be “sensitive to the progress made” on TILA-RESPA Enforcement

    The Consumer Financial Protection Bureau has officially responded to Congress’ inquiry regarding a possible delay in the implementation of the TILA-RESPA Integrated Disclosure rule requirements, effective on August 1, 2015. In CFPB Director Richard Cordray’s response, he stated that the CFPB will not delay implementation deadlines, however, it will be sensitive to the progress made on the enforcement of the rules to “those entities that have squarely focused on making good-faith efforts to come into compliance with the rule on time.” The considerations made are said to be open-ended, allowing the CFPB to assess as the implementation rolls out.

    CFPB Releases Mortgage Origination Examination Procedures

    On May 4, 2015 the Consumer Financial Protection Bureau released an update to its Mortgage Origination Examination Procedures. These procedures contain 8 modules covering the various elements of the mortgage origination process. Note that Module 4: Loan Disclosures and Terms - Closed-End Residential Mortgage Loans includes provisions for the TILA-RESPA Integrated Disclosure (TRID) rule that takes effect on August 1, 2015.

    CFPB Releases Guide to Replace Settlement Cost Booklet

    The Consumer Financial Protection Bureau (CFPB) has released new guidance Your home loan toolkit that assists consumers through the process of shopping for a mortgage and buying a house. Developed as part of the CFPB’s “Know Before You Owe” mortgage initiative, the toolkit is intended to help consumers understand the new Loan Estimate and Closing Disclosure forms that lenders are required to begin providing on August 1, 2015. The Toolkit is intended to replace the current Settlement Cost booklet from the Department of Housing and Urban Development that lenders now distribute. New booklets available for pre-order on our website.

    Proposed Updates to TILA-RESPA Final Rule

    The CFPB has released a new proposal to the TILA-RESPA integrated disclosure rule that addresses two issues.

    First, the CFPB proposes to give creditors some extra time to provide consumers with revised Loan Estimates after a consumer locks a floating interest rate. Under the current rule, when consumers lock their interest rates, creditors are required to give them a revised Loan Estimate the same day. After considering feedback from stakeholders on this requirement, the CFPB believes that such a short turnaround may be challenging for creditors that currently allow consumers to lock interest rates late in the day or after business hours. This could result in creditors only allowing consumers to lock interest rates during business hours or even early in the day (e.g., before noon). The proposal gives creditors until the next business day to provide the revised disclosures.

    Second, the proposal includes a minor addition on the Loan Estimate form. Construction loans often take longer to settle than other loans, and the estimated charges can change when more than 60 days pass. The proposal would create a space on the Loan Estimate form where creditors could include language informing consumers that they may receive a revised Loan Estimate for a construction loan that is expected to take more than 60 days to settle.

    Comments on this latest proposal are due by November 10, 2014.

    CFPB Updates TILA-RESPA Compliance Guide

    The Consumer Financial Protection Bureau has updated its small entity compliance guide and new mortgage disclosure form guide for the integrated Truth Lending Act and the Real Estate Settlement Procedures Act disclosure. The CFPB also issued a new sample disclosure timeline illustrating what actions would be expected of a creditor at different stages of the origination process.

    Read the small entity compliance guide.

    Read the guide to the forms.

    View the disclosure timeline.

    Small Entity TILA-RESPA Integrated Disclosure Guide

    The Consumer Financial Protection Bureau has published a Small Entity Compliance Guide to provide an easy-to-use summary of the TILA-RESPA integrated disclosure rule. This guide also highlights issues that small creditors, and those that work with them, might find helpful to consider when implementing the rule.

    TILA-RESPA Integrated Disclosure Final Rule

    The final rule has been published in the federal register and is effective on August 1, 2015. The preamble included with the final rule offers a plain language explanation of the rule provisions and the CFPB's intentions.

    TILA-RESPA Integrated Disclosure rule implementation

    The CFPB has created various compliance guides and model form downloads to assist financial institutions in complying with the final rule.

    Variations between the final and proposed rule

    In an effort to provide financial organizations with a better understanding of the new rule, the CFPB Mortgage Disclosure Team has outlined differences between the final and proposed integrated disclosure regulation.

    Integrated Disclosure Press Release

    In announcing the release of the final regulation, the CFPB highlights its process for creating the new disclosures and the intended benefit to consumers.