Integrated Mortgage Disclosure Forms and H.R. 3192 and S. 1484/S. 1910: In Brief

Summary

On November 20, 2013, the Consumer Financial Protection Bureau (CFPB) issued the TILA-RESPA Integrated Disclosure (TRID) Final Rule that would require mortgage lenders to use more easily understood and streamlined mortgage disclosure forms. The Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) have long required lenders to provide consumers disclosures about the estimated and actual real estate settlement costs and financial terms of the mortgages they offer. These disclosures are intended to help consumers compare the terms and make informed decisions regarding the suitability of various mortgage products and services they are offered. However, TILA and RESPA required disclosures of duplicative information while using inconsistent language, which might have led to increased regulatory costs and consumer confusion. In light of these concerns, Sections 1098 and 1100A of the Dodd-Frank Wall Street Reform and Consumer Protection Act required the CFPB to develop “a single, integrated disclosure for mortgage loan transactions ... to aid the borrower ... in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures” that remains compliant with both TILA and RESPA.

The CFPB chose to give the industry until August 1, 2015—nearly two years from the date on which the Final Rule was first publicly released—to comply. In spite of this lead time, mortgage bankers and lenders in recent months have expressed concern about their inability to update software and make other necessary changes to meet the compliance deadline. This led some to plead with CFPB Director Richard Cordray for additional time to get into compliance before the CFPB starts enforcing the law. Those pleas went unheeded until it was discovered that, because of an “administrative error,” the August 1 effective date would violate a provision of the Congressional Review Act (CRA) that prevents a major rule from going into effect until at least 60 days from the date on which the rule was published in the Federal Register or was formally reported to Congress, whichever is later. The CFPB recently announced that,“[t]o comply with the CRA and to help ensure the smooth implementation of the TILA-RESPA Final Rule, the Bureau is extending the effective date ... [from August 1 to] October 3, 2015.... ”

The CFPB has also announced what some have characterized as a restrained enforcement period related to the integrated disclosures.

Some in Congress argue that an additional two months is insufficient for lenders to make the upgrades needed to satisfy the deadline and that the restrained enforcement period does not address several underlying concerns. Several bills respond to these concerns. The Homebuyers Assistance Act (H.R. 3192) was reported by the House Committee on Financial Services on October 1, 2015. The Financial Regulatory Improvement Act of 2015 (S. 1484) was reported by the Senate Committee on Banking, Housing, and Urban Affairs on June 2, 2015. The Financial Services and General Government Appropriations Act, 2016 (S. 1910) was reported by the Senate Committee on Appropriations on July 30, 2015. The proposals would provide a safe harbor for lenders related to the integrated disclosure forms.