As we previously reported, the Consumer Financial Protection Bureau released the nearly 1,900-page final RESPA-TILA Integrated Disclosures Rule on November 20. The rule will be effective for applications received on or after August 1, 2015. The industry had urged the CFPB to provide a reasonable implementation period in view of the significant changes to systems and procedures necessary to implement the rule, on top of the implementation challenges presented by the other CFPB mortgage rules. It appears the efforts were successful; much shorter implementation periods had been rumored.
The Dodd-Frank Wall Street Reform Act (Dodd-Frank) directs the CFPB to issue rules that combine certain disclosures that consumers receive in applying for and closing on a residential mortgage loan, including disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The new disclosures are generally referred to as the “combined” or “integrated” disclosures.
The final rule mandates the use of two disclosures, the three-page Loan Estimate (which replaces the Good Faith Estimate (GFE) and the initial Truth in Lending Disclosure) and the five-page Closing Disclosure (which replaces the HUD-1 and final Truth in Lending Disclosure). In addition, the rule requires that the Closing Disclosure in most cases be received by the borrower at least three business days before closing. The rule also includes a number of substantive changes and additions to RESPA and TILA.
The final rule applies to most closed-end consumer mortgages. It does not apply to home-equity lines of credit, reverse mortgages, mortgages secured by mobile homes, or creditors that make five or fewer mortgages a year. Unlike many of the CFPB mortgage rules, the final rule does not otherwise include an exception for small creditors.
For more information on the final rule, please see our legal alert.