CFPB Proposes New Mortgage Disclosure Rules

The Dodd-Frank Wall Street Reform and Consumer Protection Act that became law on July 21, 2010, instructed the Consumer Financial Protection Bureau (“CFPB”) to combine mortgage disclosures forms required by the Real Estate Settlement Procedures Act (“RESPA”) and the Truth In Lending Act (“TILA”). The CFPB began this process, which it referred to as the “Know Before You Owe” mortgage project, in February 2011. Approximately 18 months later, the CFPB released combined forms to replace the existing disclosures required by RESPA and TILA. The CFPB has proposed an “estimate” disclosure that must be provided within three days after a consumer’s application is received and a “closing” disclosure that must be provided at least three days prior to loan closing.

The proposed estimate and closing disclosures reduce the number of pages of mortgage disclosures from ten to eight. However, the proposed changes are significantly more complex than simply combining information onto combined forms, which is evidenced by the 1,097-page proposed rule that was issued by the CFPB to discuss the changes.

In a separate proposal, the CFPB issued changes that would expand what is considered a “high-cost mortgage.” This proposal would also increase the protections that are required for borrowers of high-cost mortgage loans. Read the proposed rule here.

Read the new combined RESPA-TILA disclosures and the CFPB’s proposed rule.

To discuss the proposed changes further, please contact the expert listed below at PYA, (800) 270-9629.

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Learn more about Financial Institutions Advisory Services and Financial Institutions Audit & Accounting Services.

WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOLLOWING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.


Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

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