Changes You Need To Know In 2015: TILA-RESPA Regulations

Welcome to 2015:

TILA-RESPA Regulations in Place August 1

The effective date for the Consumer Finance Protection Bureau’s new TILA-RESPA regulations is now less than eight months away, and preparing to implement the rules is a key activity for real estate professionals this year.  At Continental Title Company, we are working with our staff, business partners and agents to be certain that we are ready for August 1. We’re committed to helping consumers through the process as well.

Throughout 2015, Continental Title will be holding many education seminars throughout Kansas and Missouri educating our partners on the changes regarding TILA-RESPA.  We will also be posting FAQ’s on our CTC University Facebook Group page if you’d like to visit us there and learn more.  Let’s start with introductory questions together with answers directly from information provided by CFPB.  As always, if you have any questions about the upcoming changes, please contact us at info@ctitle.com.

1) What is the TILA-RESPA rule about?

The TILA –RESPA rule consolidates four existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms:

• A Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application , and

• A Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.

2) What transactions does the rule cover?

The TILA-RESPA rule applies to most closed-end consumer credit transactions secured by real property, but does not apply to:

• HELOCs;

• Reverse mortgages; or

• Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property (i.e., land).

Consistent with the current rules under TILA, the rule also does not apply to loans made by a person or entity that makes five or fewer mortgages in a calendar year and thus is not a creditor.

There is also a partial exemption for certain transactions associated with housing assistance loan programs for low-and moderate income consumers.

However, certain types of loans that are now subject to TILA but not RESPA are subject to the TILA-RESPA rule’s integrated disclosure requirements, including:

• Construction-only loans

• Loans secured by vacant land or by 25 or more acres

3) When do I have to start following the new rule and using the new Integrated Disclosures?

The new Integrated Disclosures must be provided by a creditor or mortgage broker that receives an application from a consumer for a closed-end credit transaction secured by real property on or after August 1, 2015. Creditors will still be required to use the GFE, HUD-1, and Truth-in- Lending forms for applications received prior to August 1, 2015. As the applications received prior to August 1, 2015 are consummated, withdrawn, or cancelled, the use of the GFE, HUD-1, and Truth-in-Lending forms will no longer be used for most mortgage loans.

4) Are there any requirements that take effect on August 1, 2015 regardless of whether an application has been received on or after that date?

Yes. The TILA-RESPA rule includes some new restrictions on certain activity prior to a consumer’s receipt of the Loan Estimate. These restrictions take effect on the calendar date August 1, 2015, regardless of whether an application has been received on that date.

These activities include:

• Imposing fees on a consumer before the consumer has received the Loan Estimate and indicated an intent to proceed with the transaction

• Providing written estimates of terms or costs specific to consumers before they receive the Loan Estimate without a written statement informing the consumer that the terms and costs may change, and

• Requiring the submission of documents verifying information related to the consumer’s application before providing the Loan Estimate.

Note: A consumer may indicate an intent to proceed in any manner the consumer chooses, unless a particular manner of communication is required by the creditor.

For more information, visit cfpb.gov, or ALTA’s blog: http://blog.alta.org/consumer-financial-protection-bureau.