ABA: RESPA-TILA Disclosure Reform Must Be Done Right

ABA has long supported reforming the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures, and the CFPB should to take the time to do it right, ABA banker Brenda Hughes told the House Insurance, Housing and Community Opportunity Subcommittee yesterday.

In reforming the RESPA and TILA disclosure requirements, the [CFPB] is effectively rewriting rules that control the timing of the loan origination process, disclosures to consumers and the legal liabilities that result.

This is a massive and important undertaking. The goal must be to achieve a workable and lasting framework of clear and comprehensible mortgage disclosures, and rigid time frames should not trump quality.

Hughes, who is SVP and retail lending administrator at First Federal Savings Bank in Twin Falls, Idaho, emphasized that the many regulatory changes the Dodd-Frank Act imposes on the mortgage-loan origination process should be implemented in coordination with integrating the RESPA-TILA disclosures.

It would be cumbersome, expensive, inefficient and confusing to finalize a merger rule without considering these other rules that must be implemented. It would result in erratic and never-ending amendments to our compliance systems.

In his testimony yesterday, CFPB Deputy Director Raj Date said his agency will issue proposed forms combining the TILA and the RESPA mortgage disclosures by its July 21 statutory deadline, with detailed requirements and guidance for filling out the form.

During the Small Business Review Panel and our other outreach, industry identified several areas in which the current rules create uncertainty about how to comply. We plan to use the proposed rule as an opportunity to reduce unnecessary compliance burden by providing clear guidance that resolves those ambiguities.

Read more.
Read Hughes’ testimony.
Read Date’s testimony.