Today, the CFPB released its proposed amendments to disclosure requirements under RESPA and TILA. These disclosure requirements are also known as the “Know Before You Owe” rule (the Rule). The amendments propose several notable changes:
- The CFPB proposes to change the way loan tolerances are calculated. Tolerance calculations will now include finance charges “and disclosures affected by the finance charge.” This amendment would effectively bring loan tolerance calculations back to what they were before the Rule originally took effect.
- For loans originated by housing finance agencies, recording fees and transfer taxes would now be chargeable to the borrower. Prior to the proposed amendment, there existed some confusion over whether charging recording fees and transfer taxes would cause the housing finance agencies to lose their partial exemptions. The CFPB hopes that the amendment will grant the partial exemption to more finance agencies, which in turn “should encourage lenders to partner with” such agencies.
- The Rule will now expressly apply to housing cooperatives. The CFPB’s goal is to “simplify compliance” given that prior to the amendment cooperatives were inconsistently treated by the states as personal or real property, which meant the necessity of complying with the Rule varied by state.
The proposed amendments also invite commentary as to how creditors can provide sellers and real estate brokers with mortgage disclosures without violating the consumer/buyer’s financial privacy.
The CFPB has asked that comments on the proposed amendments be provided by Oct. 18, 2016.