Credit Union Regulatory Alert  

Published by Howard & Howard Attorneys PLLC



Thank you for taking the time to read this Howard & Howard Credit Union Regulatory Alert. It is no secret that the CFPB's final rule on TILA-RESPA Integrated Disclosures will drastically change credit union procedures. We are planning a series of Alerts to identify key issues in the final rule to help you understand the requirements and, more importantly, comply by the August 1, 2015 effective date. 


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If you have any questions on this Alert or any other issue, please feel free to contact Steve Van Beek or Michael Bell 

7 Initial Items from the CFPB's TILA-RESPA Final Rule


On Wednesday, the Consumer Financial Protection Bureau (CFPB) finalized its long-awaited regulation integrating the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) mortgage disclosure forms. This e-Alert will be the first of many discussing these regulatory changes. Below are a few key issues to be aware of as you dig into the final rule.


Effective Date

The new requirements apply to applications received on or after August 1, 2015. While this may seem like a lengthy implementation period, the new rule is complex and will require countless hours of analysis, discussion, procedure changes, training and testing.


Scope & Applicability

The final rule applies to closed-end consumer transactions secured by real property. This includes loans on 25 or more acres, vacant-lot loans and construction-only loans (all of which were previously exempt from RESPA). The final rule does not apply to home equity lines of credit (HELOCs), reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (e.g., manufactured homes secured by personal property).


No Exemptions for Small Creditors

The new rules apply to all creditors making closed-end consumer transactions secured by real property. The CFPB was asked to provide an exemption for small creditors and they explicitly declined to do so.


New Disclosure Form Terminology

The CFPB's final rule integrates the TILA and RESPA disclosure forms. Specifically, the new Loan Estimate - which must be provided within three business days after receiving an application - replaces the early Truth in Lending disclosure and the Good Faith Estimate. And, the new Closing Disclosure - which must be provided at least three business days prior to closing - replaces the final Truth in Lending disclosure and the HUD-1 settlement statement.


Additional Restrictions on Settlement Services

The final rule provides additional restrictions on closing cost increases. The CFPB moved fees paid to an affiliate as well as fees paid to a service provider the consumer cannot shop for to the zero tolerance category (these are currently in the 10% tolerance category). Unless an exception applies, these fees cannot increase.


No All-In Annual Percentage Rate

The proposed rule included a discussion of whether the CFPB should move away from the current definition of "finance charge" and move to a so-called "All-In APR" that would cover most fees and charges. The final rule did not adopt the "All-In APR"; however, the CFPB did indicate they would continue to study this issue.


No Requirement for Cost of Funds Disclosure

One of the controversial parts of the proposal was a disclosure related to the creditor's cost of funds. Dodd-Frank required this disclosure but the benefit to consumers was not clear. In the final rule, the CFPB decided to exempt creditors from having to provide the cost of funds disclosure.


Bonus: While the proposed rule clocked in at a weighty 1,099 pages, the final rule stretches 1,888 pages.

If you have any questions or need assistance, please feel free to contact Steve Van Beek or Michael Bell

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In This Issue
7 Initial Items from the CFPB's TILA-RESPA Final Rule
About Howard & Howard

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This Advisory is intended for informational purposes only, and is not offered as legal advice.  Please call a qualified attorney for counsel related to your particular situation.