Industry experts have not been shy about sharing input with the CFPB about their proposed new combined Truth in Lending/RESPA mortgage disclosure form.
Round 1 (which included the Ficus and Pecan forms) drew some 13,000 responses. The CFPB analyzed where the responses came from by ZIP code and generated a heat map to measure where users clicked on the forms the most.
ABA questioned use of the term “APR” as a means for consumers to comparison shop for loans, promising more detailed comments in the future.
ABA also pointed out the difficulty of reproducing the forms’ many graphics, columns and horizontal lines. The association recommended that the final form should be expandable to allow banks to itemize estimated closing costs as needed, and should include space for the consumer’s signature and date, even if not formally required by RESPA or TILA.
The comments in the letter were based on input from a 20-member banking Working Group, explained Rod Alba, vice president, mortgage finance and senior regulatory counsel at ABA.
Alba said that ABA did not submit written comments on Round 2, “though we did meet with members on them, and encouraged that individual comments be submitted,” he said.
“This has the potential of being an unending process of proposal-and-comment ping-pong,” he added.
Likewise, the Credit Union National Association (CUNA) also offered a list of specific items to be addressed – such as better defining “points,” “fees to originators,” and “total closing costs to be financed.”
“Our members would most like to see the Redbud disclosure. They feel it is the easiest for the consumer to compare fees,” said Mary Dunn, CUNA deputy counsel, of the options presented in Round 2.
In an earlier comment letter, CUNA had requested that CFPB create a testing panel comprised entirely of credit union professionals during the study phase prior to the CFPB releasing draft versions of the form.
“In addition, CUNA believes that — after this study is complete and the CFPB has developed a draft version of the combined mortgage disclosure form — the draft form should be subject to additional outreach to small financial institutions, including all credit unions, pursuant to the Small Business Regulatory Enforcement Fairness Act (SBREFA) panel process,” the May 5, 2011, comment letter said.
CFPB must convene a SBREFA panel any time a proposed regulation “will have a significant economic impact on a substantial number of small entities.”
Another large player in the industry, Wolters Kluwer Financial Services, whose services include software and forms for mortgage lenders, asked the CFPB to consider an important addition to the final version.
“One of the most important elements would be clear business rules for every data field on the combined RESPA and TILA disclosure for all standard loan products (i.e., Fannie Mae, Freddie Mac, FHA, and VA loan products); any of the unique loan products originated by the community bank/credit union market segment; and construction loans,” said Jason Marx, vice president and general manager, mortgage and indirect lending, at Wolters Kluwer.
“Clear business rules will help provide certainty to the industry about what the Bureau’s expectations are in this area, which in turn will enable the industry to partner with the Bureau to better serve consumers and promote stability,” he explained.
The entire process will include five rounds of comments by September, followed by introduction of a single draft disclosure.