Basics for the Integrated Mortgage Disclosure Rule Changes Effective 8/1/15 – CFPB Update #1
New Disclosure Form Rules Become Effective August 1, 2015
CB Title is committed to providing you with training and reference materials related to the new regulations and forms coming August 1st. Please see below for our first in a series of informational bulletins about the new CFPB forms.
Changes to the Loan and Settlement Disclosure forms and processes are coming.
WHEN:
The changes will be effective for transactions where a loan application is taken by a lender on or after August 1, 2015.
WHY:
Because the Dodd-Frank Act of 2010 mandates the combination of the Truth in Lending Act (TILA) loan disclosures with the Real Estate Settlement Procedures Act (RESPA) Good Faith Estimate and HUD-1 Settlement Statement disclosures.
HOW:
The Consumer Financial Protection Bureau (CFPB), an entity created by the Dodd-Frank Act, issued a new TILA final regulation that, among other things, created two new forms (each with many variations) and new 3 business day delivery requirements.
* Loan Estimate – 3 business days after application
* Closing Disclosure – 3 business days before consummation
WHO WILL ISSUE THE FORMS?
* Loan Estimate – Lender or Mortgage Broker
* Closing Disclosure – Lender or Settlement Agent (Escrow). Lender may delegate responsibility to the Settlement Agent (Escrow).
ENFORCEMENT:
The CFPB can levy substantial penalties so lenders will be very cautious:
* Up to $5,000 per day for any violation of a law, rule, or final order or condition imposed in writing by the Bureau;
* Up to $25,000 per day for any person that recklessly engages in a violation of a Federal consumer financial law; and
* Up to $1,000,000 per day for any person who knowingly violates a Federal consumer financial law.
IMPACT ON REAL ESTATE PROFESSIONALS:
* Closings may take longer because of 3 business day review periods.
* You’ll be seeing different forms for most transactions.
* Your contact information and license number must appear on the Closing Disclosure form. (see page 5 of the Closing Disclosure form)
* Your clients may receive multiple Loan Estimates due to:
» Multiple applications with different lenders; or
» Multiple applications for different loan products with the same lender.
* Your clients may receive multiple Closing Disclosures:
» Some with a 3 day business day waiting period and some without; and
» Some before closing and some after.
See our next bulletin in this series for more information. Feel free to contact us with any questions.
This bulletin is sent courtesy of CB Title Group, LLC and First American Title. This article is for informational purposes only and is not intended to provide legal advice, but rather to provide insight into legal developments and issues that may be useful to our clients and friends. In no circumstance is this article intended to be a full treatment of the above subject matter. Reader is advised to obtain additional information as noted.
