Discovery Conference Attendees Told to Prepare for TILA/RESPA Integrated Disclosures Now
MADISON, WI (October 15, 2014) -- The Consumer Financial Protection Bureau’s TILA/RESPA Integrated Disclosure Rule is the largest mortgage lending regulatory compliance change seen by credit unions in recent times, attendees of CUNA Mutual Group’s fifth annual Discovery Conference were told today.
“Don’t underestimate the amount of staff education and training that will be needed,” said Theresa Reinke, LOANLINER® compliance consultant for CUNA Mutual Group. “The TILA/RESPA Integrated Disclosure Rule will completely overhaul the way credit unions go about mortgage lending and will likely impact the types of mortgage lending credit unions engage in because it redefines disclosures for first mortgages and closed-end home equity loans.”
The Consumer Financial Protection Bureau (CFPB) issued the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) Rule in November 2013 to simplify and improve disclosures consumers receive when applying for and closing on mortgage loans.
“Overall, TILA/RESPA will directly affect the people, processes and technology credit unions use to support their lending operations because the regulations require loan disclosures to change dynamically to reflect each borrower’s unique loan features,” said Reinke. “Specifically, the rule will impact credit unions’ relationships with their system providers and, most importantly, their members and their own staff.”
The TILA/RESPA rule becomes effective and must be complied with by Aug. 1, 2015.
“No one can be early or late to comply,” said Reinke. “There is no grandfather clause to the Integrated Disclosure rule. Any application taken on or before July 31, 2015 must use the old disclosures, and continue with the old disclosures through the closing of the loan while any application taken on or after Aug. 1, 2015 must use the new disclosures. Thus, credit unions will be running dual systems for a while.”
The new Loan Estimate replaces the Initial TILA Disclosure and the RESPA Good Faith Estimate, which is provided three business days after the lender receives an application. Then, the Closing Disclosure replaces the Final TILA Disclosure and HUD-1 Settlement Statement, which is provided three business days before closing.
Reinke reminded audience members that the new disclosures are not merely replacing or combining the existing disclosures. The new documents will have new data elements, calculations, and restrictions, and incorporate dynamic elements based on loan type, loan feature, and loan purpose.
“Taking everything into consideration, there could be thousands of permutations of the new disclosures because of the dynamic nature of the documents, which means it really is a whole new world for mortgage lending,” said Reinke.
To be fully prepared, credit unions must start making and documenting business decisions regarding the type of lending programs offered, and fees and services charged.
“Systems will need to be updated with new data fields and calculations, so it is critical that credit unions work with their system and form providers to make sure they are on track,” Reinke said. “Procedures should be established to guarantee service providers and settlement agents are walking in step with the credit union to address restrictions and timing limitations.”
Reinke went on to explain to audience members why the new disclosures are so difficult to implement, including a detailed examination of both new disclosures as well as a deep dive into the implications and impacts of them.
“When the rubber meets the road, the true success of these game-changing requirements will be based on how the credit unions implement them,” said Reinke. “Now is the time to determine who is on your team and is in charge, what the credit union’s compliance resources are, how the credit union’s departments are impacted, and how your third-party partners can help.”
Reinke concluded her session by reminding attendees of the resources available to them at www.consumerfinance.gov/regulations, and for CUNA Mutual Group LOANLINER customers at www.loanliner.com/realestate.
The Discovery Conference is an annual conference sponsored by CUNA Mutual Group that attracts a national and international credit union audience of more than 1,300. This virtual, no-cost event helps credit unions remain relevant to members, manage compliance risk and drive growth. Attendees view sessions, ask questions, visit booths and network with peers from the comfort of a computer without expense or time away from the office.
CUNA Mutual Group was founded in 1935 by credit union pioneers, and our commitment to their vision continues today. We offer insurance and protection for credit unions, employees and members; lending solutions and marketing programs; TruStage™ – branded consumer insurance products; and investment and retirement services to help our customers succeed. More information is available on the company’s website at www.cunamutual.com
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wis.
Photo Caption: Theresa Reinke of CUNA Mutual Group shares insights on the TILA/RESPA Integrated Disclosure Rule during the company’s Discovery Conference on Wednesday.