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A Hilltop View of the CFPB’s TILA/RESPA Regulatory Changes

A Hilltop View of

the CFPB’s TILA/RESPA Regulatory Changes.

By Steven McGurl, Managing Director

The CFPB issued its final rule amending Regulation Z (Truth in Lending Act) and Regulation X (Real Estate Settlement Procedures Act) to integrate these mortgage loan disclosures and make such disclosures more borrower friendly.  The CFPB made these changes to address consumers concerns over the industry practice of providing the consumer with documents that they did not understand nor had the time to absorb.   One of the more critical elements of the rule is a change in how the loan transaction information is presented on the documents. This rule becomes effective for action on August 1, 2015.

By now, loan originators and loan purchasers are preparing for the most significant changes to these two rules in 40 years. The most significant changes required by the new TILA‐RESPA rule are providing the borrower with a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application (the estimate must be very accurate), and a Closing Disclosure that must be provided to the consumer at least three business days prior to the loan closing.

The new rules include detailed requirements for producing and delivering the two disclosures in ways that will impact a lender’s current business processes, technology, policies and procedures, vendor relationships, employee training, and customer education.

Is your company one of the lenders who has been slow in implementing a strategy to prepare for the change with less than a 6 month to go? Lenders should be working with their software vendors or in-house IT staff to be ready to roll out the new documents. The changes are complex; therefore, your company should have documented business requirements to address all of the changes to be in compliance. Assuming that your document vendor or other vendors used in the process are going to all make the appropriate changes to keep your company compliant is a bad strategy. Hilltop can assist in reviewing the vendor’s efforts to comply and provide you with feedback on non-compliance risks.

While the timing requirements for delivering the Loan Estimate will be familiar to the industry, the delivery of the Loan Estimate now begins the seven-day waiting period before the loan consummation begins. Additionally, there are significant changes to the Closing Disclosure delivery requirements. Consumers must receive the Closing Disclosures three business days before closing date. These new requirements for revisions or corrections to the disclosures will also impact existing process workflows and operational procedures thereby requiring a complete review of these workflows and procedures that produce/generate closing disclosures.

If you have not planned out your transition for these new regulatory requirements, you need help or it is likely that you will be non-compliant on August 1, 2015. Please contact Steve McGurl at if you need some help implementing the new rules.

You can read about the changes to the TILA-RESPA rules at the CFPB’s website.