In late March, the Consumer Financial Protection Bureau (CFPB) issued a Small Entity Compliance Guide (Guide) for the TILA-RESPA Integrated Disclosure Rule (TILA-RESPA Rule). In compliance with Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, the CFPB has issued the guide to help small businesses comply with the TILA-RESPA Rule, which is effective August 1, 2015.
For more than 30 years, federal law has required lenders to provide two different disclosure forms to consumers applying for a mortgage as well as different disclosures at closing. The disclosures were developed by two different federal agencies pursuant to two federal statutes: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). However, the forms contain both overlapping and inconsistent information, creating borrower confusion and administrative difficulties for lenders and settlement agents.
The Dodd-Frank Wall Street Reform and Consumer Protection Act addressed these issues by directing the CFPB to integrate the disclosures. In 2012, the CFPB issued proposed rules and forms and, after conducting a study of its proposed rule, finalized the TILA-RESPA Rule. There are now two disclosure forms: the Loan Estimate and the Closing Disclosure. The Loan Estimate replaces the Good Faith Estimate and initial Truth in Lending disclosure (TIL). As is the case with these disclosures, the Loan Estimate will need to be provided within 3 business days of the submission of a loan application. The Loan Estimate is intended to better help consumers understand the key features, costs, and risks of the mortgage loan for which they are applying. The Closing Disclosure, which replaces the HUD-1 and final TIL, must be provided at least 3 business days before closing.
The Guide summarizes the TILA-RESPA Rule and includes citations to relevant parts of the rule. Additionally, the text of the TILA-RESPA Rule and its commentary can be found here.