In addition to closing out another month of posts on this blog, we’ve also passed the milestone of the one-year countdown for go-live of the TILA-RESPA Integrated Disclosure Rule. As a result, we have jumped to the implementation part of the rule, as planning and discussions in your organization regarding that very topic should be happening today.
For many organizations out there, one year is cutting it awfully close to be ready and compliant for August 1, 2015.
In feedback from those we’ve had discussions with, we see alarm bells starting to go off in some parts of the industry over the looming TILA-RESPA deadline. There are firms that have started to gear up in meaningful ways for the change that is coming.
For others in the industry, however, there has been an uneasy silence and disengagement around the issue. That attitude points to one of two things:
1) The industry thinks the changes that will go into effect on August 1, 2015 will simply be a few tweaks to how things are done today
2) The industry is overwhelmed with how they will comply with this new shift in doing business and is currently in paralysis
Do you fall into one of these two camps? I fully realize we’re painting with a broad brush to boil things down to those two mindsets, but think about that for a minute while we recap our July topics:
· Leaving a Loan Estimate audit trail: Can you prove that your consumer not only read the form but that they were educated and understand the various components of the form? We talked about the Loan Estimate audit trail, educating the consumer, transparency in your processes, and that you’ll need to leverage technology to help you achieve that.
· Business Day: TILA-RESPA has a specific definition for what constitutes being open for business, and therefore what counts as a day against the three-day rule. It is important for lenders to understand what does or does not qualify as being open for business so that they do not get penalized for missing disclosure deadlines.
· Changes during the Loan Estimate window: Changes happen during the three days from the request for an estimate and the delivery of the Loan Estimate. We discussed what the rules are in regards to when the Loan Estimate does not need to be delivered due to changes, and when the Estimate must still be delivered regardless of the new information.
· Good faith effort: There will be times when the required information for completing a Loan Estimate are not immediately available. The blog discussed what actions the lender should take to make a good-faith effort to reasonably estimate the costs.
· Blind Shopping: What would a “blind-shopping” experience be like with the Loan Estimate, and is that feasible?
· Tolerances of the loan estimate: Primarily around the circumstances where charges on the Loan Estimate form can change without any violations to the “tolerance” thresholds. The CFPB spells out in what instances creditors are permitted to charge more than disclosed on the Loan Estimate, charges that may change without regard to a tolerance limitation, and charges that are subject to a 10% cumulative tolerance.
· Consumer shopping: The ability for consumers to shop for settlement services. We asked some questions to get your opinion on this, and whether you’ve already embraced this change with consumers. As a reminder, identification of at least one available settlement provider for each service, and stating that the consumer may choose a different provider of that particular service are the two main points of that portion of the rule.
· Loan Estimate food for thought: We’ve also posed some questions around streamlining the loan estimate process, and suggested ways to enhance the Loan Estimate form.
· Implementation: We started discussing the portion of the rule regarding implementation, with a high-level timeline in our post about using smart tech assessments to help control implementation costs.
· And more: Other topics included reputation, finance and compliance risks associated with mortgage brokers delivering the LE on behalf of creditors. We had a great comment on this post regarding record retention.
In Friday’s post, our Implementation Manager, Dustin Morton, challenged you to send three emails asking leadership and/or colleagues when you’ll develop your TILA-RESPA implementation approach. Here are a few questions:
1) How many of you completed that challenge?
2) Have any of you discussed anything in your organization regarding implementation?
3) If you answered no to the previous two questions, why?
Which leads us back to the question at the beginning of this post. Do you have compliance for August 2015 under control, or are you still wondering who can give you guidance on how to get started? If you are still trying to get started, talk to us. Talk to your LOS provider. Talk to someone to start getting an idea of the steps your company will need to take in order move down the right path over the next year.
As we wrap up the last month, I’d also like to remind you that we’ve provided a place for you to talk to others. You can visit www.TILARESPA.com to view a growing knowledge base of information and forums where you can ask questions and interact with others in this industry.
All information and views expressed or implied are provided without warranty and are only the opinion of Pavaso, Inc. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation. The final rule can be found here.
