The Dodd Frank Act requires that CFPB issue rule proposals and model disclosures that integrate the mortgage forms required by Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). Such proposals must be officially issued by July 2012. CFPB has initiated consumer testing on the merged disclosures, and has solicited comments via their official website on various versions of these forms.
ABA has consistently supported efforts to improve mortgage costs disclosures and make shopping easier for consumers. ABA supports the current effort by CFPB to craft simpler and improved consumer disclosures, and notes that the merged forms currently being developed provide a very good starting point toward meaningful reform of the existing mortgage disclosure process. ABA believes, however, that there are many substantive and procedural details that require careful consideration and analysis.
ABA understands that the RESPA-TILA merger constitutes a major reform effort in real estate finance, and implementation will be extremely complex and burdensome for member banks. As such, ABA will advocate to ensure that this rulemaking process: (1) facilitates compliance, (2) results in better disclosures for consumers, (3) leads to legally sound disclosure outcomes that are sensible in terms of origination and settlement requirements, and (4) incorporates reasonable implementation periods.
Sections 1032 and 1098 of the Dodd Frank Act require that CFPB issue a proposal for integrated mortgage disclosures that merge the forms required by RESPA and TILA. CFPB has stated that the merger of mortgage-related disclosures will be a "top priority" in the next 18 months. Since May 2011, CFPB has been issuing numerous rounds of drafts combining the RESPA and TILA forms into a single disclosure, and has solicited public comments on these drafts. Throughout this initiative, dubbed the "Know Before You Owe" project, ABA has submitted various comments based on extensive member consultations regarding format and intelligibility of the forms.
The "Know Before You Owe" initiative is currently being undertaken outside of the official rulemaking process, and CFPB officials have announced that they intend to eventually publish these forms via Federal Register, as part of a formal proposed rule process. In addition, CFPB is in the midst of numerous rounds of consumer testing on the combined forms. The goal, according to Bureau officials, is to construct a simple disclosure that consumers can use to effectively compare among products and to also reduce compliance costs for banks.
The Bureau has stated that it is currently on track to issue formal proposed rules by July 2012.
Contact for further information: Rod Alba (202) 663-5592.