The CFPB has issued its final rule on the integrated mortgage disclosures under the Real Estate Settlement Procedures Act and the Truth in Lending Act, also known as the “Know Before You Owe” mortgage forms. The new Loan Estimate form, which is still required to be provided three business days after receiving the member’s loan application, will replace the Good Faith Estimate and the “early” TILA disclosures. The Closing Disclosure form replaces the current HUD-1 and final TILA disclosures. This disclosure must be provided to the member at least three business days before the loan closes. The final rule and official interpretations contain detailed instructions on how to complete both the Loan Estimate form and Closing Disclosure form and also provides sample forms for different types of loan products. The final rule does not apply to home equity lines of credit, reverse mortgages or mortgages secured by a mobile home or by a dwelling that is not attached to real property.
Thankfully, there were some requirements in the proposed rule that did not make their way to the final rule. One of the most significant for credit unions was the APR calculation. The CFPB was proposing to include additional items in the APR calculation such as title insurance costs and appraisal fees that were not included in the final rule. Secondly, in the proposed rule Saturday was considered in the definition of “business day.” Since not all credit unions are open on Saturday, this could have posed an issue. However, in the final rule Saturday is NOT considered a business day. Lastly, the final rule does not require the credit union to retain records in an “electronic, machine-readable format” as originally proposed.
This final rule is effective on Aug. 1, 2015.