FINAL RULE REVISES TIL AND RESPA

On January 18, 2015 the Consumer Financial Protection Bureau (CFPB) approved final changes to Regulations X and Z. The changes are effective on August 1, 2015. The final rule:

  • Extends the timing requirement for revised disclosures when consumers lock a rate or extend a rate lock after the Loan Estimate is provided;
  • Clarifies placement of the Nationwide Mortgage Licensing System and Registry ID (NMLSR ID) on the integrated disclosures;
  • Permits certain language related to construction loans for transactions involving new construction on the Loan Estimate; and
  • Makes non-substantive corrections, including citation and cross-reference updates and wording changes for clarification purposes, to various provisions of Regulations X and Z as amended or adopted by the 2013 TILA-RESPA Final Rule.

Revised Disclosure After Rate Lock – In October 2014 the CFPB proposed to amend § 1026.19(e)(3)(iv)(D) to modify the timing requirement for creditors to provide a revised Loan Estimate to consumers when the interest rate is locked after the provision of the Loan Estimate. The original rule required creditors to provide the revised disclosure on the date the interest rate is locked. The CFPB proposed to change the timing requirement to the next business day after the rate is locked. The final rule allows creditors with three business days, rather than one business day, to provide the revised Loan Estimate.

Name and NMLSR ID Number on Loan Documents – Section 1026.36(g)(2) lists the specific loan documents that must contain the loan originator’s name and NMLSR ID. When the Final Rule was adopted in January 2013, it reserved § 1026.36(g)(2)(ii) for references to the integrated disclosures.  That section has been finalized to identify the disclosures required by § 1026.19(e) (Loan Estimate) and (f) (Closing Disclosure). The model forms already included the required space for the name and NMLSR ID number.

Construction Loans – Section 1026.19(e)(3)(iv)(F) provides that a creditor may issue revised disclosures at any time prior to 60 days before consummation if the original disclosure clearly and conspicuously states that a revised disclosure may be provided. Except as provided by § 1026.19(f), the creditor may not issue a revised disclosure if the original disclosure did not contain such a statement. The CFPB has added new § 1026.37(m)(8), under the master heading “Additional Information About This Loan” and the heading “Other Considerations,” and new comment 37(m)(8)-1 to state that placement of the language in this section of the form satisfies the “clear and conspicuous” standard set forth in § 1026.19(e)(3)(iv)(F).

A copy of the final rule is available by clicking here.

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