• Dodd-Frank Implementation Update: Merger of GFE and TILA Disclosures
  • June 10, 2011 | Author: Jeffrey T. Powell
  • Law Firm: Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. - Birmingham Office
  • Pursuant to the Dodd-Frank Act, the new Consumer Financial Protection Bureau (“CFPB”) was charged with the responsibility of merging disclosures required by the Truth in Lending Act and the Real Estate Settlement Procedures Act into a new consumer-friendly disclosure to be provided to borrowers within a few days of their application for a loan. The CFPB recently released two versions of the new mortgage disclosure (the “Ficus Bank” form and the “Pecan Bank” form) and asked for public comment on the CFPB website from the real estate industry, lenders, and consumers.

    The new draft disclosure combines the data found in the Good Faith Estimate and the Truth in Lending Statement, and consolidates the information deemed essential concerning the loan into a single two page document. The first page generally sets forth terms regarding projected payments and installment payments. The second page displays information related to the interest rates, estimated closing costs, and other loan terms. It is important to note that the CFPB has released only these draft versions of the disclosure and has not provided the accompanying rules setting forth the required timing of the disclosure, the responsibilities and liabilities of the issuers, and other key elements associated with the form.

    The CFPB has indicated that it will revise the drafts and ask for additional public comment later this month. In addition, the CFPB plans to visit six cities, Birmingham, Alabama; Albuquerque, New Mexico; Baltimore, Maryland; Chicago, Illinois; Los Angeles, California; and Springfield, Massachusetts, to test the draft disclosure forms and gather additional comments. The CFPB is required to issue proposed forms and implementing regulations by July 2012 for a final formal notice and comment period. As the CFPB continues to take shape, you should continue to monitor these and other proposed fundamental changes to loan processing procedures and other banking regulations.