WASHINGTON (4/18/12)—As the Consumer Financial Protection Bureau (CFPB) moves to the final stages of its project to integrate Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures into a single form, the Credit Union National Association (CUNA) has provided a number of specific recommendations the bureau could take to reduce the regulatory burdens faced by credit unions.
In a letter to CFPB Director Richard Cordray, CUNA Senior Assistant General Counsel Jared Ihrig said CUNA supports the CFPB's work to consolidate the mortgage disclosures currently required by TILA and RESPA, and added that credit unions will welcome the elimination of the duplication which has been inefficient for consumers and industry for the past many years.
However, CUNA said, the CFPB's stated goals of speeding up the lending process to benefit the consumer and improving the accuracy and clarity of disclosures for consumers are admirable objectives, but added that it will be difficult to achieve both goals through the same regulatory change.
The mortgage form changes will require significant systems, software and operational changes within credit union mortgage lending departments, and the costs of most of these changes will likely be passed on to consumers, CUNA said. "These costs will significantly increase the cost to lenders of originating mortgage loans, and ultimately, the consumer will face these increased costs in either rate or fee adjustments, which will have the end result of further tightening the availability of mortgage credit for consumers," the letter adds.
CUNA in the letter requested that the CFPB give credit unions and other financial institutions at least one year to comply with the TILA/RESPA changes, once they are finalized. The agency should also attempt to minimize implementation costs for credit unions and exempt credit unions from portions of the regulation, where possible.
The letter also urged the CFPB to remove parts of the proposed changes that would require lenders to maintain "standardized, machine-readable" electronic versions of the proposed loan estimate and settlement disclosure forms that are provided to consumers, and recommended that the CFPB not expand its definition of "finance charge" to include currently excludable real estate and other charges.
The CFPB continues to work toward final versions of the combined TILA/RESPA forms, and the agency is required to publish a proposed rule and proposed disclosure forms by July. The regulations are scheduled to be finalized by Jan. 21, 2013.
For the full CUNA comment letter, use the resource link.