On November 20, 2013, the Consumer Financial Protection Bureau (CFPB) issued the Final Rule on the Integrated Mortgage Disclosures (the “Rule”) under both the Real Estate Settlement Procedures Act (RESPA) and the Truth-in-Lending Act (TILA). As part of a Dodd-Frank Act mandate, the Rule aims to combine two sets of forms that customers receive under both RESPA and TILA between the time of the initial borrower loan application and the closing / origination of a mortgage. The result is the integration of the Good Faith Estimate (GFE) and the initial Truth-in-Lending (TIL) disclosures into the new Loan Estimate form and the HUD-1 and Final TIL disclosures into the new Closing Disclosure. These new disclosures, also referred as the ‘Know Before You Owe’ disclosures, aim to reduce the overlapping of information received by customers, as well as to simplify the overall origination process. Most of the information in the current forms will be retained in the new forms. However, these new forms will be subject to new delivery timeframes, new specific information to be disclosed, and other regulatory requirements embedded in the Rule.
The essential TILA-RESPA changes and implications are straightforward, but there are a number of complex nuances which, for most institutions, will require a very significant implementation process.
In this paper, Vincent Urbancic provides a high-level overview of impact of the TILA-RESPA changes in four key process areas within loan originations. We also outline potential challenges to implementation that lenders should consider.