ABA Banking Journal - May/June 2015 - (Page 38)

FEATURE > TILA/RESPA Mortgage Origination Overhaul Looms Changes in TILA/RESPA regs scheduled to go into effect on Aug. 1 BY PHIL HALL S OME dates have a special significance: they either bring about warm and happy feelings by the mere mention of their month and day (Feb. 14, Oct. 31, Dec. 25) or they generate less than pleasant emotions (April 15). It appears that Aug. 1 will fall into the latter category: That is the date when the residential mortgage process undergoes a change of dramatic proportions. Beginning Aug. 1, two of the most complex pieces of financial legislation-the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA)-will be joined together, and the home loan origination process will be governed by a new set of integrated disclosure requirements. For many industry leaders, this is the single greatest overhaul of the origination process in modern times. 38 ABA BANKING JOURNAL | MAY/JUNE 2015 "We are overturning 40 years of law with this one regulation," said Rod Alba, vice president and senior counsel for mortgage markets for the American Bankers Association (ABA). "We're starting from zero and a lot of issues will be unanswered." New disclosures What is the problem? Well, the crux of the RESPA-TILA Integrated Disclosures changes, as planned by the Consumer Financial Protection Bureau (CFPB), consolidates four documents into a pair of new disclosures: The early TILA disclosure and the good-faith estimate are going to be combined into a new disclosure called the Loan Estimate, while the final TILA disclosure and HUD-1 settlement statement are to be blended into a new form called the Closing Disclosure. In concept, these changes were meant to simplify the loan documents that borrowers need to review and sign. But in reality, the changes encompass 1,888 pages of identifying requirements and more than 400 regulatory citation revisions. "ABA has always backed and supported a simpler, more streamlined and integrated disclosure process," said Alba. "We're not sure their integration process gets us the simplification and improves consumer disclosures. In this simplification process, they managed to add paper to the consumers." Requirements The TILA-RESPA rule applies to most, but not all real propertysecured credit transactions. Reverse mortgages, home equity lines of credit and chattel-dwelling loans including manufacturing housing are not covered. However, loans that are subject to TILA but not RESPA-including construction-only loans and loans that are secured by either vacant land of properties covering space spanning 25 acres and more-will now be subject to the requirements of the new integrated disclosure.

Table of Contents for the Digital Edition of ABA Banking Journal - May/June 2015

CHAIRMAN’S VIEW
UPFRONT
ECONOMIC OUTLOOK
LEGAL BRIEFS
PICTURE THIS
CELEBRATING A TRADITION OF INNOVATION
SOUND RISK CULTURE
AN INTERVIEW WITH FDIC’s MARTIN GRUENBERG
NEW RESPA/TILA MORTGAGE DISCLOSURES
BANK DOMAIN ROLLOUT
INVESTOR PERSPECTIVE
MARKETING/RETAIL
PAYMENTS
ADVOCACY
ABA COMPLIANCE CENTER INBOX
CYBERSECURITY
MORTGAGES
OPERATIONS
BOARD MATTERS
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - May/June 2015

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