A group of mortgage industry trade groups sent a letter calling for improved disclosures for mortgage borrowers under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).
Addressed to Treasury Secretary Geithner, HUD Secretary Donovan and Fed Chairman Bernanke the letter explains that if TILA and RESPA disclosures were harmonized and made simpler, consumers would be better equipped to navigate the market, understand their mortgage and settlement costs, and shop intelligently to meet their home financing needs.
Therefore, the letter urges regulators to work with Elizabeth Warren and the new CFPB Director, to develop a comprehensive plan for disclosure reform that includes an agenda and timetable to propose, finalize and implement all mortgage disclosure revisions by the Board, Bureau and other agencies in an orderly manner.
According to the Mortgage Bankers Association, Special Advisor to the President Elizabeth Warren and Treasury staff have begun discussions internally and with stakeholders to combine the two disclosures into a single, integrated disclosure, and we understand that effort will be a first priority of the new Bureau of Consumer Financial Protection (Bureau).
“Every segment of the financial services industry shares the objective of doing something “exceptional” to improve the mortgage disclosure process for consumers and we fully support this important work,” said the letter. “Both disclosures are provided to borrowers throughout the mortgage process and integrating them will greatly increase transparency and consumer understanding of the mortgage transaction.”
Over the last few years, mortgage lenders have undergone major changed under TILA, HOEPA revisions, new loan officer compensation rules, along with new RESPA disclosures, SAFE Act compliance and appraisal standards, to name a few, have stretched thin the compliance capabilities of financial institutions.
“If these efforts are not coordinated going forward, the cumulative regulatory burden will threaten the availability of housing finance options,” said the letter.
Industry groups specifically request that the Fed postpone work on a 1,000 page TILA proposal that is related to reverse mortgage disclosures, mortgage borrowers’ rights of rescission and certain unfair acts and practices.
The organizations listed in the letter include: the American Bankers Association, American Financial Services Association, Community Mortgage Banking Project, Consumer Bankers Association, CMC, Housing Policy Council, Independent Community Bankers of America, and the Mortgage Bankers Association.