New Disclosure Rules for Some Consumer Loans.
By Kevin M. Langford, General Counsel
The Dodd-Frank Act required the Consumer Financial Protection Bureau (CFPB) to integrate certain mortgage
loan disclosures which are currently required under The Truth in Lending Act (TILA) and the Real Estate Settlement
Procedures Act (RESPA). The changes are designed to make the disclosures more clear and concise. All lenders on
certain consumer loans are required to disclose items in a consistent manner.
The TILA-RESPA Integrated Disclosure Rule (TRID Rule) requires significant changes to the disclosure forms
that all lenders provide to consumers applying for a closed-end loan secured by real estate. A consumer loan is a loan
that is made primarily (that is, more than 50%) for family, household or personal purposes. Such purposes include
buying a new residence, buying a new family car, paying medical bills or paying education expenses. A closed-end
loan is one that does not have a revolving feature so a consumer does not have access to principal that is repaid.
All lenders must comply with the TRID Rule with applications for closed-end consumer loans secured by real
estate that are taken on or after October 3, 2015. For loan applications that were taken before October 3, 2015, the
lender must continue to use the current disclosure forms even if the loan is closed on or after October 3, 2015.
The following table is a comparison of current disclosure rules and the revised disclosure rules.
Before October 3,2015
•
At the time of application, consumers receive
a disclosure booklet titled - “Shopping for Your
Home Loan: Settlement Cost Booklet.”
On or After October 3, 2015
•
Within 3 business days of application, consumers
receive a disclosure booklet titled - “Your Home
Loan Toolkit: A Step-by-Step Guide.”
•
Consumers receive an initial disclosure document
called the Loan Estimate form (LE).
The initial TIL disclosure statement and GFE will be
replaced by the LE.
The lender must provide the LE within 3 business
days of the application.
Fee changes based on valid changed
circumstances will be re-disclosed on a revised LE.
After the consumer receives the initial LE, FCS
Financial must obtain the consumer’s Intent to
Proceed to confirm an intent to proceed with the
application, prior to imposing any fees (other than
a credit report fee).
•
•
Within 3 business days of application, consumers
receive an initial TIL disclosure statement (TIL) and
a Good Faith Estimate form (GFE).
•
•
•
•
•
18
At closing, consumers receive a final TIL and a
HUD-1 Settlement Statement (HUD-1).
HEARTBEAT | FALL 2015
•
•
•
Consumers receive a new document called the
Closing Disclosure (CD).
The CD replaces the final TIL and HUD-1.
Consumers must receive the CD no later than 3
business days before the loan closing.
If certain information on the CD is changed,
the lender must provide a revised CD to the
consumers. In some circumstances, the 3-day
waiting period must be restarted.