Compliance Blog

Written by JiJi Bahhur, Director of Regulatory Compliance

TILA/RESPA Good-Faith Efforts.  On Wednesday, the Consumer Financial Protection Bureau (CFPB) announced, in a letter to Members of Congress, that it will consider an institution’s “good-faith efforts” when examining for compliance with the Truth in Lending Act and Real Estate Settlement Procedures Act (TILA/RESPA) Integrated Mortgage Disclosure rule.   From the letter:

“ [T]he Bureau’s work to support the implementation of the Rule does not end on the effective date of August 1, as we continue to work with industry, consumers, and other stakeholders to answer questions, provide guidance, and support a smooth transition for the mortgage market.  As we do so, and in response to considerable input we have received from you and your constituents, I have spoken with our fellow regulators to clarify that our oversight of the implementation of the Rule will be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the Rule on time.  My statement here of this approach is intended to ease some of the concerns we have heard about this transition to new processes in the coming months …”. 

This type of oversight is consistent with the approach used by the CFPB in the implementation of Title XIV mortgage rules.

You may recall from an earlier blog post that the CFPB’s announcement is in line with NCUA Chairman Debbie Matz’s acknowledgement that NCUA examiners will recognize “good faith efforts” by credit unions for the TILA/RESPA rules.  From Chairman Debbie Matz’s letter to NAFCU:

“NCUA examiners will be looking for reasonable and good faith efforts by credit unions toward substantial compliance with the new rule as of the effective date.”

The TILA/RESPA Integrated Mortgage Disclosure rule takes effect on August 1. 

For more information on the TILA/RESPA Integrated Mortgage Disclosure rule, follow our blog series here. 

New TILA/RESPA Fact Sheet.  Also on Wednesday, the CFPB released a fact sheet to “clarify” some questions about delivery of the Closing Disclosure and the limited circumstances when changes to the loan require a new three-day review period.  While it was a kind gesture to provide some much-needed additional guidance on TILA/RESPA, it would have been nicer if the information provided was legally accurate.  More specifically, the fact sheet lays out the three changes that require a new 3-day waiting period.  The first change, quoted below, does not take section 1026.22 of Regulation Z, in its entirety, into account.

“Only THREE changes require a new 3–day review:

1. The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans.  A decrease in APR will not require a new 3-day review if it is based on changes to interest rate or other fees.” (Footnote omitted.)

The full fact sheet can be accessed here.  NAFCU will address these inaccuracies in more detail in a near future blog post. 

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