Alert

July 13, 2017

CFPB Issues Final TILA-RESPA Rule Amendments

On July 7, 2017, the Consumer Financial Protection Bureau issued a final rule amending and clarifying certain mortgage disclosure requirements under the Real Estate Settlement Procedures Act and the Truth in Lending Act that are implemented in Regulation Z ("2017 TILA-RESPA Rule").

Among other changes, the 2017 TILA-RESPA Rule:

  • Addresses the applicability of requirements concerning escrow closing notices and partial payment policy notices;
  • Provides a uniform rule regarding application of the integrated disclosure requirements to cooperative units;
  • Clarifies that, for purposes of Regulation Z's definition of "consumer," credit extended to certain trusts established for tax or estate planning purposes is credit extended to a natural person;
  • Adjusts a partial exemption that primarily affects housing finance agencies and nonprofits;
  • Amends and clarifies certain disclosure provisions related to construction loans;
  • Provides disclosure requirements for simultaneous subordinate lien loans;
  • Establishes tolerances for the total of payments disclosure, including tolerances that apply for purposes of rescission;
  • Amends and clarifies the application of the good faith standard under 12 CFR 1026.19(e)(3) and related tolerances for certain integrated disclosures, as well as clarifies when revised Loan Estimates or Closing Disclosures are permitted or required;
  • Revises the calculation of certain fields in the Calculating Cash to Close table;
  • Amends the disclosure requirements related to decimal places and rounding;
  • Revises several requirements related to the Loan Estimate or written list of settlement service providers;
  • Revises certain disclosure requirements relating to the Closing Disclosure; and
  • Provides guidance on sharing disclosures with various parties involved in the mortgage origination process.

The 2017 TILA-RESPA Rule is effective 60 days after publication in the Federal Register. Compliance with the rule is mandatory for applications received on or after October 1, 2018. However, the escrow closing notice and partial payment disclosure requirements apply starting October 1, 2018, without regard to when the creditor or mortgage broker receives the application. The final rule also includes an optional compliance period, which begins on the rule's effective date. The Bureau has provided an executive summary of the rule and will provide additional implementation resources in the future. It has also updated the TILA-RESPA Integrated Disclosure Rule Small Entity Compliance Guide and Guide to the Loan Estimate and Closing Disclosure Forms.

In addition to the issuance of the 2017 TILA-RESPA Rule, the CFPB is issuing a notice of proposed rulemaking regarding when a creditor may use a Closing Disclosure, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance. This is the "Black Hole" problem for which the Bureau originally proposed a solution, but has now decided to seek further comment. Comments on the notice of proposed rulemaking are due 60 days after publication in the Federal Register.

  News Release
  Final Rule
  Executive Summary
  Proposed Rule