CFPB Answers FAQ on the TILA-RESPA Integrated Disclosures Rule (2024)

On August 26, 2014, the CFPB staff and Federal Reserve Board co-hosted a webinar and addressed questions about the final TILA-RESPA Integrated Disclosures Rule that will be effective for applications received by creditors or mortgage brokers on or after August 1, 2015. The webinar is the second in a planned series intended to address the new rule. In the initial webinar the CFPB staff provided a basic overview of the final rule and new disclosures that we have previously covered.

According to the CFPB staff, this webinar and the ones that will follow will be in the format of a spoken Q&A to answer questions that have been posed to the CFPB. Although the CFPB staff does not plan to issue written Q&A, the staff believes this approach will help facilitate clear guidance on the new rules in an accessible way. Industry members, however, would prefer written guidance. Note that the American Bankers Association (ABA)has released a transcript ofthe CFPB’swebinar that is available to ABA members.

During the remarks, the CFPB staff announced that the CFPB will soon release additional guidance material on its website, including a timing calendar to illustrate the various timing requirements under the new rule. In addition, the next webinar in the series is tentatively scheduled for October 1, 2014, and will cover Loan Estimate and Closing Disclosure content questions.

Below is a summary of various answers to questions provided by the CFPB staff. The topics covered include: (1) the receipt of an application, (2) whether new disclosures will be required for assumptions, (3) record retention, (4) the tolerance applicable to owner’s title insurance, and (5) the timing for the initial and revised Loan Estimates.

The Receipt of an Application

Q: The definition of application does not include loan term or product type. What if a consumer submits the six elements listed in the rule, but does not specify the type of product or term?

If a consumer submits an application, a requirement to provide the Loan Estimate is triggered under § 1026.19(e). An application is defined as the submission of six pieces of information: (1) the consumer’s name, (2) the consumer’s income, (3) the consumer’s Social Security number to obtain a credit report (or other unique identifier if the consumer has no Social Security number), (4) the property address, (5) an estimate of the value of the property, and (6) the mortgage loan amount sought.

The obligation to provide consumers with a Loan Estimate is silent regarding any assumptions a creditor may make about loan features such as the product type or term. Accordingly, provided that the disclosures in the Loan Estimate are made in good faith and consistent with the best information reasonably available to the creditor at the time the Loan Estimate is issued, a creditor has discretion with respect to what product, term, or other features it uses to issue a Loan Estimate.

A creditor is also not required to provide multiple Loan Estimates for every product it offers, but can do so if it chooses.

Q: What if the consumer starts filing out an online application and saves it with the six pieces of information entered, but has not yet submitted it to the creditor?

A creditor does not have to provide a Loan Estimate to a consumer until the consumer has submitted all six pieces of information that constitute an application. If a consumer has filled out and saved (but not submitted) a mortgage application form online to complete at a later time, even if the consumer included in the saved form the six pieces of information that constitute an application the consumer is not considered to have submitted an application that requires issuance of a Loan Estimate.

Q: May an online application system reject applications submitted by a consumer that contain the six elements of an application because other preferred information is not included?

No. Although the rule provides a creditor with a degree of flexibility in how it may collect the six elements of an application, a creditor may not refuse any of the pieces of information because it wants further information. A creditor’s obligation to provide a Loan Estimate is triggered if a consumer provides all six elements of an application.


Q: Do the new disclosure requirements apply to assumptions?

Yes, provided that “assumptions” means a post-consummation event that is deemed a new closed-end credit transaction secured by real estate as defined by § 1026.20(b).

Note that the assumption provision (§ 1026.20(b)) has not been amended to refer to the new disclosures. It is our view that it would be helpful to make a conforming amendment to § 1026.20(b).

Record Retention

Q: For seller Closing Disclosures that are provided on a separate document by the settlement agent pursuant to § 1026.38(t)(5) and § 1026.19(f)(4), are creditors required to collect and retain documents related to the seller that were provided only to the settlement agent?

The short answer is that creditors are obligated to obtain and retain a copy of completed Closing Disclosures provided separately by a settlement agent to a seller under § 1026.38(t)(5). However, creditors are not obligated to collect underlying seller-specific documents and records from that third party settlement agent to support the Closing Disclosure.

To the extent that the creditor receives documentation related to the seller’s Closing Disclosure, such as when seller-related documents are provided to the creditor by the third party settlement agent along with the complete Closing Disclosure, the creditor should adhere to the normal record retention requirements set forth in §1026.25(c) and retain these records. But this does not mean that the rule imposes a mandatory collection requirement on creditors for this underlying information. (Please refer to the webinar for the full explanation).

Tolerance Applicable to Owner’s Title Insurance

Q: Is owner’s title insurance not required by the creditor subject to the 10% cumulative tolerance?

No. Owner’s title insurance that is not required by the creditor is not subject to the 10% cumulative tolerance. The CFPB is aware that the preamble to the final rule contains potentially conflicting language, but advises that the final rule text is what should be followed.

Under § 1026.19(e)(3)(ii), the 10% cumulative tolerance category includes recording fees and charges paid to unaffiliated third party service providers when the consumer is permitted to shop for a settlement service provider, but chooses a provider from the creditor’s written list of providers.

Owner’s title insurance is not a charge that is assigned to a particular tolerance category. Therefore, the applicable tolerance category depends on other factors, including whether the creditor requires the insurance and, if so, whether the consumer may shop for the provider of the insurance.

To the extent owner’s title insurance is not required by the creditor and is disclosed as an optional service, under the rule the insurance is not subject to any percentage tolerance limitation, even if paid to an affiliate of the creditor.

Timing for the Initial and Revised Loan Estimates

Q: Does the 7-day waiting period before consummation that applies to Loan Estimates apply to revised disclosures?

No. The 7-day waiting period is a TILA statutory provision that applies to the initial Loan Estimate that is provided after receipt of an application. The 7-day waiting period does not apply to revised Loan Estimates.

However, the latest that a revised Loan Estimate may be received by a consumer is 4 business days before consummation. If a creditor will rely on the mailing rule, under which a consumer is deemed to receive a Loan Estimate 3 business days after delivery by any method other than personal delivery, the creditor would need to send the revised Loan Estimate at least 7 business days before consummation.

Note that the confusion over this issue may, at least in part, be due to a glitch in the Small Entity Guide. The CFPB has taken steps to update the Small Entity Guide to fix this issue and more accurately reflect this requirement. The CFPB anticipates the revised Small Entity Guide will be released soon.

Q: Are creditors required to provide revised Loan Estimates on the same business day that a consumer or loan officer requests a rate lock? § 1026.19(e)(3)(iv)(D).

Not necessarily. A creditor must issue a revised Loan Estimate when the interest rate is locked if the interest rate was floating when the prior Loan Estimate was issued. The rule provides that the revised Loan Estimate must be issued on the same business day the rate “locked.” “Locked” is not expressly defined in Reg Z and would normally be defined by state law or contract law. However, an example in comment §1026.19(e)(3)(iv)(D)-1 provides that the revised Loan Estimate must be provided on the same business day that the rate lock agreement is entered into, not necessarily the same day the rate lock is requested.

The preamble states: “The Bureau does not believe that creditors need that much time in situations where the interest rate is locked because the creditor controls when it executes the rate lock agreement. But, in consideration of the comments, the CFPB is adding comment § 1026.19(e)(4)(i)-2 to explain the relationship between § 1026.19(e)(4)(i) and § 1026.19(e)(3)(iv)(D). The comment clarifies that if the reason for the revision is provided under § 1026.19(e)(3)(iv)(D), notwithstanding the 3-business-day rule set forth in § 1026.19(e)(4)(i), § 1026.19(e)(3)(iv)(D) requires the creditor to provide a revised version of the disclosures required under § 1026.19(e)(1)(i) on the date the interest rate is locked. Comment 19(e)(4)(i)-2 also references comment 19(e)(3)(iv)(D)-1.”

The CFPB is considering amending the rule regarding the requirement to issue a revised Loan Estimate in connection with a rate lock because numerous stakeholders have raised operational and consumer protection concerns. Note that it is our view that without a revision to the rule, it would be prudent for creditors to view the rule as requiring that when the prior Loan Estimate was issued when the rate was floating and the rate is then locked, the creditor must issue the revised Loan Estimate when the rate is locked (even if the lock occurs before a written confirmation or agreement is sent).

A full recording of the webinar and FAQ can be accessed here.

CFPB Answers FAQ on the TILA-RESPA Integrated Disclosures Rule (2024)


What does the TILA-RESPA rule for integrated disclosures cover? ›

The rule is also known as the TILA-RESPA Rule or TRID. It created new Loan Estimate and Closing Disclosure forms that consumers receive when applying for and closing on a mortgage loan. The Loan Estimate replaced the RESPA Good Faith Estimate (GFE) and the early Truth in Lending disclosure.

Which law required the CFPB to integrate the TILA and RESPA disclosures into a single simplified set of disclosures? ›

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directed the Consumer Financial Protection Bureau (Bureau) to integrate the mortgage loan disclosures under TILA and RESPA sections 4 and 5.

Which action is not a requirement under the TILA-RESPA integrated disclosure rule? ›

The TILA-RESPA rule applies to most closed-end consumer credit transactions secured by real property, but does not apply to: HELOCs; • Reverse mortgages; or • Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property (i.e., land).

What is the CFPB 3 day rule for closing disclosure? ›

Pre-consummation or account opening waiting period.

A creditor must furnish § 1026.32 disclosures at least three business days prior to consummation for a closed-end, high-cost mortgage and at least three business days prior to account opening for an open-end, high-cost mortgage.

What are the 4 main disclosures required under TILA? ›

TILA disclosures include the number of payments, the monthly payment, late fees, whether a borrower can prepay the loan without penalty and other important terms. TILA disclosures is often provided as part of the loan contract, so the borrower may be given the entire contract for review when the TILA is requested.

What is the main purpose of TILA and RESPA? ›

The purpose of this law, initially, was to promote the informed use of consumer credit by requiring lenders and others (including real estate agents) to make specified disclosures (TIL) on real estate credit transactions. It was first amended in 1970 to prohibit unsolicited credit cards.

When did TILA RESPA integrated disclosure become mandatory? ›

The new TILA-RESPA integrated disclosure (“TRID”) rule becomes effective October 1, 2015. Previously, two different federal agencies developed and mandated separate forms for residential consumer loans.

What is the most common reason a borrower will be denied a prime loan? ›

A borrower's credit history is usually summarized by a Fair Isaac and Company (FICO) credit score. Everything else being the same, borrowers with FICO scores below 620 are viewed as higher risk and generally ineligible for prime loans unless they make significant downpayments.

What is the statute of limitations for TILA? ›

This is because the express language of TILA provides for a one (1) year statute of limitations for rescission claims. Moreover, 15 U.S.C. § 1640(e) provides a one (1) year time limit within which actions may be brought when a lender allegedly fails to comply with a request for rescission under TILA.

What is exempt from TILA disclosure requirements? ›

The Truth in Lending Act (and Regulation Z) explains which transactions are exempt from the disclosure requirements, including: loans primarily for business, commercial, agricultural, or organizational purposes. federal student loans.

What is not required by RESPA? ›

The following are kinds of transactions that are not covered: an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction. 3. Is a "time share" a covered transaction under RESPA?

What does RESPA not apply to? ›

RESPA does not apply to what kinds of loans? - Loans secured by mobile homes or other dwellings that are not real property, if the dwelling is not attached to real estate. - Loans made by persons who are not considered "creditors" because they make five or fewer mortgages per year.

Do you have to wait 3 days after closing disclosure to close? ›

What Is The Closing Disclosure 3-Day Rule. Your lender is required by law to give you the standardized Closing Disclosure at least 3 business days before closing. This is what is known as the Closing Disclosure 3-day rule.

Can a loan be denied after closing disclosure? ›

Despite receiving the Closing Disclosure, loan approval is not guaranteed, and unforeseen circ*mstances can lead to denial, such as changes in financial status or property issues discovered during underwriting.

Can I waive the 3 day waiting period closing disclosure? ›

A consumer may modify or waive the right to the three-day waiting period only after receiving the disclosures required by § 1026.32 and only if the circ*mstances meet the criteria for establishing a bona fide personal financial emergency under § 1026.23(e).

Which of the following would be covered by RESPA? ›

This includes: home purchase loans, refinances, lender approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.

What is not covered by TILA? ›

The Truth in Lending Act (and Regulation Z) explains which transactions are exempt from the disclosure requirements, including: loans primarily for business, commercial, agricultural, or organizational purposes. federal student loans.

What is included in RESPA disclosures? ›

RESPA Requirements

The information disclosure should include settlement services, relevant consumer protection laws, and any other information connected to the cost of the real estate settlement process.

What transactions does TILA apply to? ›

What loans does the Truth In Lending Act apply to? TILA's provisions cover open and closed-end credit. Open-end credit includes home equity lines of credit (HELOCs), credit cards, reverse mortgages and bank-issued cards. Closed-end credit includes home equity loans, mortgage loans and car loans.

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