As expected, on November 16, 2012, the Consumer Financial Protection Bureau adopted a temporary exemption for certain mortgage disclosure requirements added by the Dodd-Frank Act. This exemption will allow the disclosures to be implemented along with the proposal to integrate the Real Estate Settlement Procedures Act and Truth in Lending Act disclosures. Without the temporary exemption, the disclosures would be required as of January 21, 2013.
When the CFPB issued in July its massive proposal to integrate the RESPA and TILA disclosures, it also proposed to temporarily exempt the mortgage industry from compliance with 12 new disclosures the Dodd-Frank Act added to RESPA and TILA. This approach would avoid the need for the CFPB to amend the existing RESPA and TILA documents to incorporate the new disclosures by January 21, 2013, only to replace the existing disclosures a short time later with the new integrated disclosures. Thus, the approach saves both time and money for the CFPB and the industry, and avoids potential consumer confusion and costs. The approach also affords the CFPB the opportunity to assess the new disclosures in connection with consumer testing of the integrated disclosures. Dodd-Frank imposes no deadline for the adoption of the integrated disclosures.
The temporary exemption applies to the following disclosures (the first is under RESPA and the remaining ones are under TILA):
- Appraisal management fee optional disclosure
- Negative amortization feature warning
- State anti-deficiency protection disclosure
- Partial payment acceptance policy disclosure
- Mandatory escrow account disclosure
- Waiver of escrow at consummation disclosure
- Monthly payment disclosure for a variable rate loan with an escrow account
- Repayment analysis disclosure of monthly payment (with escrow payment)
- Settlement charges disclosure
- Mortgage originator fees disclosure
- Wholesale rate disclosure
- Total interest as a percentage of principal disclosure
The disclosures are reflected in the proposed Loan Estimate and/or proposed Closing Disclosure that are the centerpiece of the integrated mortgage disclosure proposal. Based on consumer testing, however, the CFPB is considering not adopting the last two of the listed disclosures, and it requested comment on this consideration.
Ballard Spahr's Mortgage Banking Group combines broad regulatory experience assisting clients in both the residential and commercial mortgage industries with formidable skill in litigation and depth in enforcement actions and transactions. It is part of Ballard Spahr’s Consumer Financial Services Group, which produces the CFPB Monitor, a blog that focuses exclusively on important Consumer Financial Protection Bureau developments. To subscribe, use the link provided to the right.
We will be closely following the rulemaking efforts of the CFPB in connection with the integrated disclosures, and the broader mortgage loan provisions of Dodd-Frank Title XIV. For more information, contact Richard J. Andreano, Jr., at 202.661.2271 or email@example.com, or John D. Socknat at 202.661.2253 or firstname.lastname@example.org.
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