TILA-RESPA: Smart lenders are taking action today

Will impact disclosures, estimates, testing and reporting

Like all industry conferences and events, the Mortgage Bankers Association’s Annual conference is a great time to catch up on relationships and see how everyone’s been doing. But this year — after all the handshakes and personal updates are out of the way — the topic du jour has been the new integrated disclosure forms coming from the CFPB next year.

At this week’s event in Las Vegas, lenders were openly comparing notes on how they plan to deal with 1,888-page TILA-RESPA Integrated Mortgage Disclosures Rule. Which is a great thing, because the changes due to hit the industry by the summer of 2015 are nothing like we’ve seen before.  

The new CFPB requirement will mandate the use of two disclosures to help borrowers understand what they’re getting into when they get a mortgage:

  • The Loan Estimate, which replaces the Good Faith Estimate and the initial Truth-in-Lending Disclosure.
  • The Closing Disclosure, which replaces the HUD-1 Settlement Statement and final Truth-in-Lending Disclosure.

The new CFPB requirement is similar to the changes lenders faced in 2010 with RESPA and the new good faith estimate (GFE). The difference is that RESPA-TILA will impact not just disclosures, but also pre-application estimates, compliance tests and reporting requirements.

That means new workflows, processes and procedures. It means educating and training staff on implementing these changes. It means considering and adjusting for the impact these changes will have on key service providers and business partners. It may even mean changing technology vendors, because if a vendor hasn’t incorporated the critical changes to keep a lender in compliance, the lender will get the blame when things turn south.

There are two critical reasons why smart lenders are moving now. First, if you’re still filling out forms manually, or going back and forth between two or more different systems, you’re not going to survive — it’s just too time-consuming and costly. The second reason is that the CFPB isn’t messing around. In its short history, it has wasted no time on enforcement once it finds something amiss.

Obviously, preparation is key. The fact that so many MBA attendees are talking openly and specifically about how they will comply with RESPA-TILA is great news. How many of them will meet the challenge? With RESPA-TILA taking effect less than a year from now, we’ll find out soon enough.  

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