The Consumer Financial Protection Bureau on Monday released a long-awaited proposed rule that would require combined mortgage disclosures under the Truth in Lending Act and Real Estate Settlement Procedures Act.
The rule would amend Regulations X and Z to establish new disclosure requirements and forms for most residential 1st mortgages.
The streamlined disclosures would require credit union loan officers to learn RESPA law, which involves details regarding the sale of a property. Both NAFCU and CUNA have opposed the idea, saying it would create unnecessary regulatory burdens for credit unions. Final comments on the 1,100-page proposed rule are due to the CFPB by Sept. 7.
The rule would require two disclosures: a Loan Estimate, which would provide within three business days of applying information regarding key features, costs and risks associated with the mortgage; and a Closing Disclosure, provided three business days before the close of the loan, that would further explain all costs associated with the loan.
Carrie Hunt, NAFCU’s general counsel and vice president of regulatory affairs, said her association supports streamlining mortgage disclosures, but said the rule will have a “huge impact on credit union operations.”
However, Hunt credited the CFPB for reaching out to the credit union industry in drafting the regulation.
The proposed disclosure rule also contains a lengthy cost/benefit analysis that addresses the impact on small entities, which NAFCU said it had been pushing for.
The CFPB also issued a proposed rule Monday that would expand the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protection Act.
The proposed rule would revise and expand the triggers for HOEPA coverage and would impose new restrictions, including a pre-loan counseling requirement.