Summary: Proposed Rule

Consumer Financial Protection Bureau (CFPB)
Amendments to Federal Mortgage Disclosure Requirements under the Truth in Lending Act (Regulation Z)


Prepared by NASCUS Legislative and Regulatory Affairs Department
September, 2016


The Consumer Financial Protection Bureau (CFPB) issued a proposed rule with request for comments that amends the Federal mortgage disclosure requirements under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) that are implemented in Regulation Z.  The amendments are intended to memorialize the Bureau’s previously issued informal guidance, clarifications and technical amendments. The Bureau is also proposing several substantive amendments that are highlighted in greater detail below.

Please find the proposal here.  Comments on the proposed rule are due to the CFPB by October 18, 2016.

Summary

Tolerances for “Total of Payments”

  • The proposal would apply the same tolerances for accuracy of the finance charge to the total of payments for purposes of the Closing Disclosure.
  • The proposal would revise Section 1026.38(o)(1) to provide the disclosed “total of payments” shall be treated as accurate if the amount disclosed as the total of payments: (i) is understated by no more than $100; or (ii) is greater than  the amount required to be disclosed.

Adjustment to a partial exemption primarily impacting housing finance agencies and nonprofits

  • The proposal would revise Section 1026.3(h) to clarify that transfer taxes may be payable by the consumer at consummation without losing eligibility for the partial exemption and to exclude recording fees and transfer taxes from the 1% threshold of total costs payable by the consumer at consummation.
  • The proposal notes that loans that satisfy the criteria specified in Section 1026.3(h) often provide consumers fund that could be directly applied against the first lien (such as with down payment assistance) or towards closing costs associated with the first lien.  Such loans are typically made by housing finance agencies or private creditors that partner with housing finance agencies.

Extension of coverage of the integrated disclosure requirements to cooperative units

  • The proposal would amend Section 1026.19(e), (f), (g) and related comments to cover closed-end consumer credit transactions secured by cooperative units, regardless of whether State or other applicable law considers cooperative units to be real or personal property.

Disclosure sharing with various parties involved in the mortgage origination process

  • The proposal would add comment 38(t)(5)(v)-1 to clarify that, at its discretion, the creditor may make modifications to the Closing Disclosure form to accommodate the provision of separate Closing Disclosure forms to the consumer and the seller and the three methods by which a creditor can separate such information. 
  • The proposal would add comments 38(t)(5)(v)-2 and 38(t)(5)(v)-3 to provide examples where the creditor may choose to provide separate Closing disclosure forms to the consumer and seller.

Comment Request

The Bureau has requested comments throughout the section-by-section analysis. Please note, those requests were too extensive to be included.  However, the overarching comment request questions are provided below.  The Bureau is seeking comment on the following:

  • Any required updates to software and systems and other measures that would be necessary to implement the proposed changes?
  • Whether the proposed effective date of the final rule being 120 days after publication in the Federal Register should be changed?
  • Whether there is a better or worse time of year for any of the proposed changes to become effective?
  • Whether specific changes, as detailed in the section-by-section analysis in Part V, should have a separate effective date and if so, whether it should be earlier or later than the general effective date and why?