Compliance Update with Amy K
by Amy Kleinschmit, Director of ComplianceThe Consumer Financial Protection Bureau issued a final rule to delay the implementation of certain new mortgage disclosures requirements of the Dodd-Frank Act that were set to take effect on January 21, 2013. You will recall the Dodd-Frank Act amended the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) directing that the CFPB establish a single disclosure for use by lenders or creditors. The Dodd-Frank Act required that the CFPB propose for public comment rules and model disclosures that integrated the TILA and RESPA disclosures by July 21, 2012. (These proposed rules and model forms were issued July 9, 2012).
The Dodd-Frank Act also requires new disclosures for mortgage transactions in addition to the integrated forms discussed above. These provisions take effect within 18 months after the designated transfer date, which would be January 21, 2013, unless final rules implementing those requirements are issued on or before that date and provide for a different effective date. The CFPB issued this final rule implementing the Affected Title XIV Disclosures and the Post-Consummation Escrow Cancellation Disclosure prior to the statutory provisions becoming self effectuating on January 21, 2013. “Accordingly, persons will not be required to comply with these statutory disclosure requirements until such time as the Bureau removes the exemption, which it plans to do in the final rule for the TILA–RESPA integrated disclosures, and such removal takes effect.” 77 FR 70111
This final rule can be found here:
http://www.gpo.gov/fdsys/pkg/FR-2012-11-23/pdf/2012-28341.pdf
Therefore, instead of making changes to disclosures multiple times as the rules take effect or are issued, by issuing this final rule, the CFPB hopes to reduce confusion and regulatory burden to require changes to disclosure once. Though no deadline was mandated for finalizing the TILA-RESPA integrated proposal, the Bureau anticipates that the final rules will be published next year.
These Title XIV disclosures include:
· Warning regarding negative amortization features.
· Disclosure of State law anti-deficiency protections.
· Disclosure regarding creditor’s partial payment policy prior to consummation and, for new creditors, after consummation.
· Disclosure regarding mandatory escrow or impound accounts.
· Disclosure prior to consummation regarding waiver of escrow in connection with the transaction.
· Disclosure regarding cancellation of escrow after consummation.
· Disclosure of monthly payment, including escrow, at initial and fully indexed rate for variable-rate residential mortgage loan transactions.
· Repayment analysis disclosure to include amount of escrow payments for taxes and insurance.
· Disclosure of aggregate amount of settlement charges, amount of charges included in the loan and the amount of such charges the borrower must pay at closing, the approximate amount of the wholesale rate of funds, and the aggregate amount of other fees or required payments in connection with a residential mortgage loan.
· Disclosure of aggregate amount of mortgage originator fees and the amount of fees paid by the consumer and the creditor.
· Disclosure of total interest as a percentage of principal.
· Optional disclosure of appraisal management company fees.
· Disclosure regarding notice of reset of hybrid adjustable rate mortgage.
· Loan originator identifier requirement.
· Consumer notification regarding appraisals for higher-risk mortgages.
· Consumer notification regarding the right to receive an appraisal copy.
Should you have any questions or concerns on this or any other regulatory topic, please do not hesitate to contact Amy Kleinschmit at akleinschmit@cuad.coop or 701.214.9721.