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Delivery of Loan Estimate creates risks for creditors

TILA-RESPA holds creditors responsible even when brokers deliver estimate

Fed Money
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This article is part of HW PartnerDirect™. What is this?

CFPB TILA-RESPA Integrated Disclosure Rule Compliance Guide: 6.1-6.2, page 28 

We all know by now that the creditor is responsible for ensuring the Loan Estimate Form is delivered or in the mail no later than the third business day after the receiving the consumer’s application. It is imperative that the creditor ensures the Loan Estimate meets the content, delivery and timing requirements outlined in sections 5, 6, 7, 8 and 9 of the CFPB TILA-RESPA Integrated Disclosure Rule Compliance Guide, as they are held responsible.

This leads to a general question a creditor and mortgage broker would ask: Can a mortgage broker provide the Loan Estimate on behalf of the creditor?

The TILA-RESPA ruling states clearly the mortgage broker can provide the Loan Estimate on behalf of the creditor if the mortgage broker receives the consumer’s application. It is the responsibility, however, of the creditor to ensure the Loan Estimate is delivered according to TILA-RESPA requirements and the creditor is legally responsible for any errors or defects.

Additionally, if the mortgage broker does deliver the Loan Estimate, they must comply with the three year record retention requirement.

This is a call for more oversight and communication to ensure all parties are in compliance, and will ultimately have a large business impact if handled incorrectly.

This leads us to the three types of risks most creditors are concerned with:

  • Reputational
  • Financial
  • Compliance

Even if the mortgage broker acts on behalf of the creditor, the creditor is still liable and their reputation is on the line, along with the risk of compliance penalties and financial impact.

For more information on the impact to the industry and technology solutions that can help your business be compliant on August 1, 2015, visit our growing knowledge base and forums at the TILA-RESPA Knowledge Center.

All information and views expressed or implied are provided without warranty and are only the opinion of Pavaso, Inc. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation. The final rule can be found here.

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