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Long compliance period needed for mortgage form changes CUNA
WASHINGTON (9/11/12)--Noting that credit unions and financial institutions of all sizes will have issues implementing planned changes to Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures, and related mortgage rules, the Credit Union National Association (CUNA) has encouraged the Consumer Financial Protection Bureau (CFPB) to give financial institutions one year, at a minimum, to comply.

The CFPB earlier this year proposed a new, simplified mortgage disclosure form that combines elements of RESPA and TILA disclosure forms into a single document. New mortgage rules were also proposed to implement these RESPA/TILA changes.

Final versions of the forms and rules are expected to be released in January, but the agency has not settled on final implementation dates.

Staff training and software and system alterations are among the challenges that credit unions and others will face due to these TILA/RESPA changes, and CUNA in a comment letter to the CFPB noted that the agency has admitted that "compliance with the new rules and combined disclosure requirements will be a challenge for a number of institutions." CUNA also noted that easing compliance dates for smaller institutions may not achieve the intended result of relieving burdens for small institutions. For example, CUNA said that many larger institutions purchase loans from smaller institutions. Even if regulatory effective dates are delayed for smaller institutions, larger institutions may require the smaller ones to issue disclosures that are consistent with the regulation, CUNA added.

"This issue would be resolved if all institutions were subject to the same, delayed effective date," CUNA Deputy General Counsel Mary Dunn said in the comment letter. She suggested the CFPB grant financial institutions with more than $10 billion in assets a minimum of 12 months to comply with the new rules, and said the agency should add an additional six months of compliance time for institutions with less than $10 billion in assets.

CUNA also agreed with the CFPB's plans to delay Title XIV disclosures to coincide with the adoption of the combined TILA-RESPA disclosures.

The provisions that the CFPB is proposing to delay are:

  • Warning regarding negative amortization features;
  • Disclosure of state law anti-deficiency protections;
  • Disclosure regarding creditor's partial payment policy;
  • Disclosure regarding mandatory escrow accounts;
  • Disclosure regarding waiver of escrow at consummation;
  • Disclosure of monthly payment, including escrow, at initial and fully-indexed rate for variable-rate transactions;
  • Repayment analysis disclosure to include amount of escrow payments for taxes and insurance;
  • Disclosure of settlement charges and fees and the approximate amount of the wholesale rate of funds;
  • Disclosure of mortgage originator fees;
  • Disclosure of total interest as a percentage of principal; and
  • Optional disclosure of appraisal management company fee.
"With the exception of certain fixed-rate, lump sum reverse mortgages, we believe that creditors should be given an additional period of at least six months for compliance with requirements that apply to open-end and other transactions," CUNA said.

Overall, CUNA urged the CFPB to use its exemption authority "to the fullest extent permissible to relieve regulatory burdens for credit unions."

For the full CUNA comment letter, use the resource link.


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