• The CFPB and the Model TILA/RESPA Mortgage Loan Disclosure Form
  • May 16, 2011 | Authors: David N. Anthony; Jon S. Hubbard; Robert M. Luck; John C. Lynch; Alan D. Wingfield
  • Law Firms: Troutman Sanders LLP - Richmond Office ; Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Richmond Office
  • The newly-created Consumer Financial Protection Bureau (CFPB) will officially begin exercising its regulatory authority in the financial and mortgage industries on July 21, 2011. Created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB already is moving forward on the Dodd-Frank’s mandate to revise and combine the model mortgage loan disclosure forms under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedure Act (RESPA). Pursuant to Dodd-Frank, the CFPB must fully integrate the disclosure forms within the first year of its operation.

    Since late 2010, the CFPB has solicited comments from contractors to assist in designing the new model forms. Various industry organizations have submitted proposed disclosures and conducted meetings with the CFPB, including the American Land Title Association, which met with the CFPB in March 2011 and has released its own version of a draft Uniform Real Estate Mortgage Disclosure Form.

    In April 2011, the Department of Treasury, on behalf of the CFPB, requested public comment on a proposed quantitative testing regimen to allow consumers, brokers and lenders to help review and validate the integrated mortgage loan disclosure forms. Elizabeth Warren, Special Advisor to the Secretary of the Treasury on the CFPB, stated that the CFPB’s implementation team will begin reviewing draft disclosure forms beginning in May 2011 and plans to begin quantitative testing of the model forms shortly thereafter.

    The CFPB’s draft disclosure forms, which are expected to be posted online for public review within the next few weeks, will give the financial and mortgage industries their first real look at potential changes and how the CFPB plans to regulate residential mortgage loans. While the CFPB must base any regulation or required disclosure on the statutory provisions of TILA and RESPA, CFPB will not necessarily be bound by previous interpretations of other agencies. As the CFPB takes a new look at the requirements of TILA and RESPA, there is potential for significant change in what is required and how those required disclosures function. In today’s litigious climate, a strong understanding of the CFPB’s activities and the specific policies it enacts is critical to protecting the interests of financial institutions and all businesses that regularly deal with consumer finance.