Compliance Blog

Written by JiJi Bahhur, Director of Regulatory Compliance

NAFCU continues to receive TILA/RESPA Integrated Mortgage Disclosures questions from its members.  As someone who has been digging through this rule for over a year, I must say these questions are not easy, especially since the questions become even more nitty gritty as the effective date, August 1, becomes nearer.  Recently, a TILA/RESPA question was posed at a compliance roundtable that NAFCU attended.  When the question was posed, I said to myself that it sounded awfully familiar . . . maybe something I recently read . . . and I was right. 

The question was as follows: Is it permissible to use the TILA/RESPA disclosures instead of the currently-required Good Faith Estimate (GFE) and HUD-1 disclosures for those loans that are not under the scope of the TILA/RESPA rule?  If so, this would prevent some credit unions from having to utilize two parallel systems.

The Short:  No.  Creditors originating transactions that are not covered under the TILA/RESPA rule must continue to use, as applicable, the GFE, HUD-1, and TIL disclosures required under current law.

The Long: While the TILA/RESPA rule applies to most mortgage loan transactions, there are certain categories of loans that are excluded from the rule. The TILA/RESPA rule does not apply to:

• Home-equity lines of credit (HELOCs);
• Reverse mortgages;
• Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property; and
• Mortgage loans made by a person or entity that is not a “creditor” under Regulation Z. 

For transactions not covered under the TILA/RESPA rule, as listed above, creditors originating these types of mortgages must continue to use, as applicable, the GFE, HUD-1, and TIL disclosures required under current law.  In other words, creditors cannot use the new integrated disclosure forms instead of the GFE, HUD-1, and TIL forms for non-covered transactions, thus requiring the use of two systems/platforms to generate applicable forms. 

Now, the bigger question (at least for me): Why did the original question sound familiar?  That’s right, the CFPB’s Small Entity Compliance Guide briefly makes mention of it.  From the Compliance Guide:

“4.2 What are the disclosure obligations for transactions not covered by the TILA-RESPA rule, like HELOCs and reverse mortgages?

The new Integrated Disclosures will not be used to disclose information about reverse mortgages, HELOCs, chattel-dwelling loans, or other transactions not covered by the TILA-RESPA rule. Creditors originating these types of mortgages must continue to use, as applicable, the GFE, HUD-1, and Truth-in-Lending disclosures required under current law.”

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Cookie Break.  Imagine this – a family with over a dozen sets of twins, three sets of which are 8 to 10 months apart in age and live within a 2-block radius of each other.  Yep, no imagination needed here – that’s my family.  And this is what a cookie break looks like on a warm Saturday afternoon after tons of running around the yard! 

If you don’t normally follow my blogs, my twins – Ava and Kyse – are, from left to right, third and fifth on the bench.