As we noted last week the Consumer
Financial Protection Bureau (CFPB) and the Federal Reserve have scheduled a series
of web seminars on implementation of the final TILA-RESPA Integrated Disclosure
Rules that go into effect next summer. The
sessions are designed to help lenders, settlement agents, and others involved
in the mortgage process become familiar with the rules and the changes they
will entail. The first webinar was held Tuesday and was
primarily a presentation by CFPB staff of the basics of the rule and the new
Several questions at the end of the
session were viewed by Marc Patterson, an attorney with the Ballard Spahr law
firm as worthy of further discussion.
Ballard Spahr closely tracks Bureau activities for its clients and
Patterson reviewed the questions on the firm's CFPB blog.
According to Patterson the CFPB staff,
in answer to one question, explained that there are six pieces of information
that constitute an application (name, income, ssn, address, estimated value, and loan amount). A lender
can request other information from the borrower but those are not considered
elements of the application and have no impact on disclosure deadlines. Once the six pieces of data are received, the
clock is ticking on the three business day timeframe to issue the Loan Estimate.
A creditor does not, however, have to
collect the six pieces of information all at once. The order in which the information is
collected can be sequenced so that the lender controls triggering the
obligation to issue a Loan Estimate. For
example, CFPB staff said a lender could delay asking for a consumer's Social
Security number to run the credit report until after it has received the other
five pieces of information.
(As an aside, Patterson suggested that
the six elements that constitute an application could be increased to seven by
adding an "other information" category.
This would be more straightforward than providing information on how to
sequence the six.)
Lenders must follow pre-disclosure
restrictions such as the prohibition on requiring consumers to provide
verifications or imposing fees before providing the Loan Estimate. A fee is considered to be imposed when a
method of payment is requested such as a credit card number or a check even if
the creditor states there will be no attempt to collect on them until after
disclosures are provided and the customer elects to proceed. The one exception is a bona fide and
reasonable fee for obtaining a credit report. Were there or are there a lot of lenders out there who were charging for quotes?!
The final rule permits creditors to
provide an early estimate to consumers as long as there is a disclaimer to
differentiate it from the required Loan Estimate.
The small entity compliance guide that states this disclaimer is also
required for advertisements but staff said this was a "glitch" and clarified
that the disclaimer is only necessary when a written estimate is given specific
to that customer.
Subsequent sessions on the TILA-RESPA
Rule and disclosures will be structured entirely as question and answer
sessions. CFPB said in its earlier
announcement that it believed the webinars will
be more efficient and beneficial to stakeholders than relying on private,
one-to-one conversations with CFPB staff or waiting for updates to the rule or