New TILA-RESPA integrated disclosures rule effective August 1

Under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), the Consumer Financial Protection Bureau (CFPB) will require lenders to provide new disclosures and meet new regulations on August 1, 2015.

The new regulations, which span 1,900 pages, mandate two new disclosure forms for lenders: the three-page Loan Estimate, which replaces the Good Faith Estimate (GFE) and the initial Truth in Lending Disclosure, and the five-page Closing Disclosure, which replaces the HUD-1 and final Truth in Lending Disclosure.

The new rules require that, in most cases, the borrower receives the Closing Disclosure at least three business days before closing. (One proposed rule that was dropped was counting Saturday as a business day; Monday-Friday are defined as business days in the final regulation.)

Several other substantive changes to RESPA and TILA were also made. These changes apply to most closed-end consumer mortgages. They do not apply to home-equity lines of credit, reverse mortgages, mortgages secured by mobile homes, or creditors that make five or fewer mortgages a year. Unlike many of the CFPB mortgage rules, the final rule does not otherwise include an exception for small creditors.

The significant changes

While this list is by no means exhaustive, here are some of the changes lenders should know about.

The clock starts ticking on proving the Loan Estimate as soon as a consumer submits an application with six pieces of information:

• Name
• Income
• Social Security number
• Property address
• Estimate of the value of the property
• Mortgage loan amount sought

This is a change from the current rule under Regulation X, which allows creditors to specify "any other information deemed necessary" to trigger a GFE. As of August 1, a lender cannot require additional information, such as the desired loan product, as a condition to provide a Loan Estimate.

Another change is that Loan Estimates may be provided by either a mortgage broker or a creditor. If a mortgage broker provides the Loan Estimate, the creditor maintains responsibility for compliance with all Loan Estimate requirements.