The Consumer Financial Protection Bureau (CFPB) recently sent a letter to mortgage industry trade groups regarding the Know Before You Owe mortgage disclosure rule, which became effective October 3. The rule, also called the TILA-RESPA Integrated Disclosure rule, requires easier-to-use mortgage disclosure forms that clearly lay out the terms of a mortgage for a borrower.
As the letter states, the mortgage industry has needed to make significant systems and operational changes to adjust to the requirements of the rule, and that implementation requires extensive coordination with third parties. The letter also notes that the mortgage industry has dedicated substantial resources to understand the requirements, adapt systems, and train affected personnel, and additional technical and other questions are likely to be identified once the new forms are used in practice after the effective date.
During initial examinations for compliance with the rule, the Bureau’s examiners will evaluate an institution’s compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance. Examiners will expect supervised entities to make good faith efforts to comply with the rule’s requirements in a timely manner. Specifically, examiners will consider: the institution’s implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and, its handling of early technical problems or other implementation challenges.
This is similar to the approach the Bureau took in initial examinations for compliance with the mortgage rules that became effective at the beginning of January 2014. The Bureau’s experience at that time was that institutions did make good faith efforts to comply and were typically successful in doing so.
"For all the good work that has been done, we know there will be challenges ahead, especially in the first few months,” says National Association of REALTORS® President Chris Polychron. "That means that as these new rules take effect, the hard work to deliver timely and efficient closings continues; extra time for closings and open lines of communication will be critical. NAR will continue to communicate REALTORS®’ and their clients’ concerns to the CFPB and help ensure the new rules are carried out with as little disruption as possible to consumers and the industry.
"At the same time, REALTORS® will continue providing expert service to their clients and playing a critical role in helping consumers everywhere achieve their buying, selling and investing objectives."
For more information, visit www.consumerfinance.gov.