TILA-RESPA Integrated Disclosure Rule Effective August 1st!

Going through the CFBP manual now- essentially the rule that will become effective on August 1st is the integration of two former disclosure forms required of consumers when applying for a home loan (under TILA and RESPA) into a new, more user friendly form. This new form was mandated under Dodd-Frank and went under a public comment period in summer of 2012.

 

New rule summary:

First, the Good Faith Estimate (GFE) and the initial Truth-in-lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate Similar to those forms, the new Loan Estimate form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application.

Second, the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) have been combined into another new form, the Closing Disclosure, which is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. This form must be provided to consumers at least three business days before consummation of the loan.

 

Overall these forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.

 

The final rule applies to most closed-end consumer mortgages. It 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 (i.e. land). The final rule also does not apply to loans made by persons who are not considered “creditors,” because they make five or fewer mortgages in a year.  

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