Consumer Finance Agency Proposed Mortgage Disclosure Changes

In October 2015, the Consumer Financial Protection Bureau (CFPB) issued a mortgage disclosure rule called the TILA-RESPA Integrated Disclosure Rule (TRID). TILA-RESPA refers to the Truth in Lending Act and the Real Estate Settlement Practices Act, both of which have been integral parts of the mortgage process for years. Consumers who applied for a mortgage would receive a separate set of disclosures from both TILA and RESPA. CFPB determined that this process was unproductive and sought to create a procedure that would eliminate the quantity of unnecessary paperwork and replace it with simpler, easy-to-read mortgage disclosures. In the effort to keep the mortgage application process less complicated to understand, even the very title, TRID, was replaced with a more straightforward name, “Know Before You Owe.”

“Know Before You Owe” combines the details of the disclosure statements from both TILA and RESPA into one document. It also gives consumers three full days before the closing to review the statement. The goal is to ensure that everyone is given the time and opportunity to understand the details of their mortgage before signing on the dotted line.

The rule, however, has raised some concerns and further questions. This year, the CFPB proposed amendments to “Know Before You Owe,” in an effort to further streamline the mortgage application process and provide the clearest and most comprehensible information for consumers.

What Will the Proposed Amendments Provide?

There are a number of proposed changes set to take place in 2016. Some specific amendments include:

1. Providing a tolerance for the total of all payments:

   In the mortgage world, a tolerance level for payments is an indicator for how much the estimated charges could potentially increase at closing. TILA previously provided tolerance levels for finance charges on the disclosure statement. CFPB proposes to include tolerance levels that will imitate the ones provided in TILA, allowing the new rule to be consistent with the previous methods.

2. Altering the partial exemption for some housing agencies and nonprofits:

   The current rule already provides exemptions from disclosure requirements for particular housing assistance loans, but CFPB’s goal is to make sure the exemptions are being used correctly. CFPB will provide further amendments to the exemptions so that they can be used as they were intended. Specifically, the amendments will confirm that companies providing housing assistance loans are allowed to charge recording fees (which is the fee to record ownership of the property with the county’s public record) and transfer taxes (which are taxes on a property that is being passed from one owner to another). Companies who qualify for the partial exemption will still be able to charge both fees. CFPB hopes the update will encourage housing assistance companies to coordinate with lenders and offer more loans to qualifying consumers.

3. Extending coverage to cooperative units:

   Consumers who purchase cooperatives become shareholders of the company that runs the co-op building. Cooperative units can be a little confusing because some states view them as personal property while other states may view them as real property. The rule’s amendments would streamline compliance regarding cooperatives to ensure equal treatment, whether they are considered real or personal property.

4. Giving instructions on sharing information from mortgage disclosures with certain parties:

   CFPB initially provided guidance regarding the sharing of information with parties such as sellers and real estate agents; however, more clarity has been requested. The amendments intend to give more aid and help in deciding what consumer information may be disclosed and what should remain private so as to keep a buyer’s personal data safe.

How an Ohio Debt Attorney Can Help You

Getting a mortgage can be a stressful process, and you need to make sure your rights are not violated. If you are trying to purchase a home and you think a lender is disregarding your rights under “Know Before You Owe” or any aspect of the Truth in Lending Act, you may be entitled to compensation. Contact an Ohio debt attorney at Luftman, Heck & Associates for a free consultation where you can discuss your particular case with an experienced attorney and find out what action you may be able to take. Call us at (888) 726-3181 or email us at advice@ohiodebthelp.com.