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Lending

CFPB issues TILA-RESPA compliance guide

Governs new mortgage disclosure forms

pile of paper

The Consumer Financial Protection Bureau released a compliance guide for the new TILA-RESPA Integrated Disclosure Rule.

The Small Entity Compliance Guide will serve to help smaller lenders and other mortgage companies to understand and comply with the new mortgage disclosure rules, designed to make it easier for consumers to understand the loan documentation.

Previous to the passage of the Dodd-Frank Consumer Protection Act, two federal statues, the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA), governed two agencies that required forms when a mortgage loan was originated.

The two sets of forms have now been combined into the TILA-RESPA forms. The first form is known as the “loan estimate” and is “designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying. This form will be provided to consumers within three business days after they submit a mortgage loan application.”

The second form is the “closing disclosure” and is designed to “provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. This form will be provided to consumers three business days before they close on the mortgage loan.”

The new forms use clear language and are designed to make it easier for the consumer to understand and locate key information, such as the interest rate, monthly payments, and costs to close the loan.

The Integrated Disclosure Rule takes effect on August 1, 2015.  

Click here to view the CFPB’s TILA-RESPA Integrated Disclosure Rule compliance guide.

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