The Trusted Adviser
March 2015 | Volume 8 · Number 2

More on the New CFPB Integrated Disclosures:

Industry Concerned about Mortgage Gridlock – Advise Your Clients Accordingly

John G. O'Brien photo

Forewarned is forearmed.

As you are all aware, the Consumer Financial Protection Bureau (CFPB) has promulgated a new Loan Estimate and Integrated Closing Disclosure that will replace the GFE and RESPA/TILA. These new procedures will apply to most mortgage applications made on or after August 1, 2015—less than five months from now! Many in the industry believe implementation will cause gridlock in mortgage processing. To avoid delays, encourage your clients to lock-in their real estate deals in June or July. For detailed information and links to forms, see our previous article, New CFPB Integrated Disclosures: ATG Will Help You Prepare for August Implementation. Also, see Wells Fargo's most recent newsletter, Settlement Agent Communications, which mentions the noticeable uptick in articles and seminars as the implementation date draws near. Wells notes, "For those who have been paying attention to the upcoming changes, your questions are becoming more specific and more detailed. For others, here is some of the information you need to learn to be ready to continue closing Wells Fargo loans...." Read up!

The entire settlement service industry — lenders, title companies, closing services providers of all sorts — has been working diligently since the final rule was announced in November 2013. The software programming issues have been substantial. For instance, there are no line numbers any longer, closing costs are listed alphabetically (Is that person who sold the house a broker? a realtor? an agent?) and so on. As of now, the software providers are still working on these issues. In addition, there are many new regulations concerning who prepares the new disclosures and when they must be delivered to the consumer. The possibility exists that these issues won't be resolved until the very last minute. Remember Y2K?

The American Land Title Association (ALTA) has been at the forefront of informing the title and closing industry to be prepared for the changes ahead. There are significant penalties for non-compliance. ALTA has recently asked the CFPB for a five-month restrained enforcement to allow settlement service providers that are making a good faith effort to comply with the new regulations to make any changes to their systems and business practices that become apparent only after the new disclosures have gone "live" on August 1. (You may recall that there was a four-month period granted in 2010 when the procedures surrounding the current RESPA went into effect.) In response, CFPB Director Richard Cordray stated that the Bureau, "won't come in on day one and bring the hammer down, but people should take the August 1 date seriously." That is a not-so-subtle reminder that he does have a hammer in the form of very substantial fines for non-compliance.

So what is the point for you and your clients? It seems to me that you should use the next several months to be as proactive as possible with your clients, referral sources, and even lenders, to make sure that they are aware of the August 1 sea change and are prepared to deal with it. Given the possible confusion that may very well ensue, think about encouraging people who are in the market for a new home to go to contract and make loan application in June or July and avoid all of these issues.

As always, we love to hear from you, so please Contact Us with questions. We've already published information about the technical aspects of the new rules and what you and your staff need to do to be ready see the article mentioned above, New CFPB Integrated Disclosures: ATG Will Help You Prepare for August Implementation, and the helpful links within. But you will hear more from us over the coming months, so keep an eye on our website and watch your email. Until then, remember: it's a jungle out there!


John G. O'Brien
ATG Vice President and Counsel to the President

[Last update: 3-17-15]

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