Compliance Blog

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

The CFPB recently issued a final rule making changes to the Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures Rule (TILA/RESPA final rule). The TILA/RESPA final rule, inclusive of these latest changes, becomes effective on August 1, 2015.

Changes under the final rule include:

Timing Requirement for Providing a Revised Loan Estimate when the Consumer Locks a Rate Extended to Three Business Days. The final rule allows more time for providing a revised Loan Estimate disclosure when the consumer locks a rate or extends a rate lock after the initial Loan Estimate is provided. Previously, the TILA/RESPA final rule required a creditor to issue a revised Loan Estimate on the same business day the interest rate is locked. The proposal would have relaxed this redisclosure by an additional day; however, in response to industry feedback, the final rule extends the timing requirement to three business days after the rate is locked.

Specific Disclosure Permitted on Loan Estimate for New Construction Loans. The final rule permits language related to new construction loans to be included on the Loan Estimate disclosure. Under the TILA/RESPA final rule, a creditor can issue a revised Loan Estimate for a new construction loan where the creditor reasonably expects settlement will occur more than 60 days after providing the initial Loan Estimate if the creditor includes a clear and conspicuous statement on the initial disclosure reserving that right. The TILA/RESPA final rule did not provide for this statement on the Loan Estimate, so this amendment resolves that issue.

The official staff commentary, as amended by the final rule, clarifies what satisfies the clear and conspicuous requirement for this disclosure:  

 â€œ37(m)(8) Construction loans.

1. Clear and conspicuous statement regarding redisclosure for construction loans. For construction loans in transactions involving new construction, where the creditor reasonably expects the settlement date to be 60 days or more after the provision of the disclosures required under § 1026.19(e)(1)(i), providing the statement, “You may receive a revised Loan Estimate at any time prior to 60 days before consummation” under the master heading “Additional Information About This Loan” and the heading “Other Considerations” pursuant to § 1026.37(m)(8) satisfies the requirements set forth in § 1026.19(e)(3)(iv)(F) that the statement be made clearly and conspicuously on the disclosure.” 12 C.F.R. § 1026, Supp. I, comment 1026.37(m)(8). (My Emphasis).

Mortgage Loan Originator Final Rule.  The final rule also amended the 2013 Mortgage Loan Originator Final Rule to provide for the placement of the NMLSR ID on the integrated disclosures.

Once published, the final rule will be available in the Federal Register here. It applies to transactions for which an application is received on or after August 1, 2015. For additional information on the TILA/RESPA final rule, NAFCU blogs on the topic may be found here.