TILA-RESPA Integrated Disclosures
May 1, 2016
On December 31, 2013, the Bureau of Consumer Financial Protection (“CFPB”) published its long-awaited TILA-RESPA Integrated Disclosures Rule (“TRID Rule”), combining the mortgage disclosures consumers receive under the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”). For more than thirty years, the TILA and RESPA mortgage disclosures had been administered separately by the Federal Reserve Board and the U.S. Department of Housing and Urban Development (“HUD”), respectively. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) transferred authority over TILA and RESPA to the CFPB and directed the CFPB to create “rules and model disclosures that combine the disclosures required under [TILA] and sections 4 and 5 of [RESPA] into a single, integrated disclosure for mortgage loan transactions covered by those laws.” Congress did not, however, amend TILA and RESPA provisions governing timing, responsibility, and liability for the disclosures, leaving it to the CFPB to resolve the inconsistencies.
The TRID Rule was originally scheduled to become effective on August 1, 2015. But, “[b]ecause of an administrative error on the Bureau’s part in complying with the Congressional Review Act (“CRA”) with respect to the TILA-RESPA Final Rule,” the CFPB was forced to push back the effective date. Even though the CFPB could have chosen a date as early as August 15, 2015, as the new effective date, the CFPB settled on Saturday, October 3, 2015.
On June 3, 2015, CFPB Director Richard Cordray responded to requests from industry and members of Congress for delayed enforcement of the TRID Rule. The CFPB did not, as many had hoped, establish a “hold harmless” period during which the TRID Rule would be in effect but public and private enforcement would be limited. Instead, Director Cordray stated that he had spoken with other regulators to clarify “that [the CFPB’s] oversight of the implementation of the [TRID] Rule will be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the Rule on time.” As noted in Director Cordray’s letter, this approach is consistent with the approach taken by the CFPB in early 2014 after other regulations implementing Title XIV of the Dodd-Frank Act took effect. Director Cordray noted that, in the CFPB’s view, this approach “has worked out well.”
Although the new disclosures, the Loan Estimate and the Closing Disclosure, are demonstrably more accessible for consumers than their predecessors, they have proven to be difficult to implement—despite the CFPB’s unprecedented efforts to help the industry implement the TRID Rule. These difficulties arise because the TRID Rule is often deceptively complex in that it implements many familiar concepts but applies higher, or slightly different, standards to them. These general disclosure requirements, as well as two key issues the industry has struggled to resolve, are discussed below.
Originally published in Business Lawyer; reprinted with permission.