Compliance Blog

Written by JiJi Bahhur, Director of Regulatory Compliance

As part of the TILA-RESPA blog series, I’d like to take a look at the general requirements applicable to the Loan Estimate Disclosure today. 

The Loan Estimate form, a three-page document, integrates and replaces the existing RESPA Good Faith Estimate (GFE) and the initial Truth in Lending (TIL) disclosure. The general requirements, located in new sections 1026.19(e) and 1026.37, are summarized in the CFPB’s TILA-RESPA Small Entity Guide as follows:

• “Loan Estimate must contain a good faith estimate of credit costs and transaction terms. If any information necessary for an accurate disclosure is unknown, the creditor must make the disclosure based on the best information reasonably available at the time the disclosure is provided to the consumer, and use due diligence in obtaining the information. (§ 1026.19(e)(1)(i); Comment 19(e)(1)(i)-1)
• Loan Estimate must be in writing and contain the information prescribed in § 1026.37. The creditor must disclose only the specific information set forth in § 1026.37(a) through (n), as shown in the Bureau’s form in appendix H-24. (§ 1026.37(o))
• Delivery must satisfy the timing and method of delivery requirements. The creditor is responsible for delivering the Loan Estimate or placing it in the mail no later than the third business day after receiving the application. (§ 1026.19(e)(1)(iii))
• Creditors may only use revised or corrected Loan Estimates when specific requirements are met. Creditors generally may not issue revisions to Loan Estimates because they later discover technical errors, miscalculations, or underestimations of charges. Creditors are permitted to issue revised Loan Estimates only in certain situations such as when changed circumstances result in increased charges. (§ 1026.19(e)3)(iv))
• In certain situations, mortgage brokers may provide a Loan Estimate. As discussed in more detail in section 6.2 below, if a mortgage broker receives a consumer’s application, either the creditor or the      mortgage broker may provide the Loan Estimate. (§ 1026.19(e)(1)(ii))”

The new Appendix H to Part 1026 contains model forms, including multiple variations of each page of the Loan Estimate. The standard form, H-24, must be utilized for all loans subject to the TILA-RESPA rule that are federally related mortgage loans.  For loans that are not federally related mortgage loans but that are subject to the TILA-RESPA rule, creditors are not strictly required to use the H-24 form; however, the disclosure used by the creditor must contain the exact same information and be made with headings, content and format substantially similar to that form.

For a page-by-page overview of the Loan Estimate, the CFPB has provided a couple of resources that may be beneficial to a credit union. First, the CFPB’s TILA-RESPA Small Entity Guide provides page-by-page visuals of the form with general information describing what creditors are required to disclose. For further guidance, the CFPB has provided the TILA-RESPA Guide to Forms, which provides detailed, illustrated instruction on how to complete the individual fields and calculations for the Loan Estimate.

It should be noted that NAFCU’s June Compliance Monitor included an article entitled A Deep Dive into the Loan Estimate Disclosure: Requirements, Timing and Tolerances.  For fuller detail on the Loan Estimate, including information on delivery/timing and tolerance restrictions, take a look at that article (NAFCU log-in required).   

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Programming Note.  NAFCU's office will close at noon on Thursday and will also be closed on Friday for the long holiday weekend.  We will be back to blogging on Monday.  Have a great long weekend!

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What Are You Reading?  While some of you are nose deep into TILA-RESPA, I often find myself taking a break from the regulatory readings for something a little lighter.  Kyse and Ava have taken a great liking to books lately.  I like to think they actually enjoy when I read to them, but I’ve come to the realization they actually like carrying the books around more than anything.  Here they are, book in hand: