Trade groups react to mortgage disclosure efforts

The American Bankers Association is not a fan of the Consumer Financial Protection Bureau’s proposal to come up with a combined RESPA/TILA form.

The American Bankers Association is not a fan of the Consumer Financial Protection Bureau’s proposal to come up with a combined RESPA/TILA form.  Frank Keating, the trade group’s president and CEO said in a July 10 statement:

“ABA has long supported simplifying RESPA and TILA mortgage disclosures; however, we are concerned that the CFPB’s 1,100-page proposal fails to both simplify the disclosure and consider other ongoing reforms.

“Regulators and the industry must take time to consider the full impact of proposals that rewrite the entire mortgage origination process. This is a massive undertaking, and it is important that reform is workable while actually simplifying the disclosures.

“Moving forward, disclosure reforms must be coordinated with servicing, compensation, and consumer protection reforms to ensure we are creating a system that is clear and efficient for consumers and lenders.” 

In a July 13 email newsletter to members, Keating said further: “We also are extremely concerned that the bureau is not coordinating RESPA/TILA reform with the many mortgage origination reforms mandated by the Dodd-Frank Act … the result will be a cumbersome, expensive and inefficient rulemaking process that will involve never-ending amendments to banks’ compliance systems.”

In testimony delivered before a U.S. House of Representatives subcommittee on June 20, Brenda Hughes said the proposed rule should accomplish four objectives. Hughes is senior vice president and lending administrator for the $482 million First Federal Savings Bank, Twin Falls, Idaho. Representing the American Bankers Association as its co-vice chair of its mortgage markets committee, Hughes said the proposal should in fact, simplify a complicated process;

  • recognize and reconcile conflicts within the statutory structure;
  • not be misused to add rules that go beyond congressional intent, and
  • allow adequate time for guidance and implementation.

Read Hughes testimony here.

The Mortgage Bankers Association also has raised concerns, calling on the CFPB to slow its process down. David Stevens, president of the MBA, told the American Banker newspaper that he thinks the 60-day comment period is too short, given the length and complexity of the proposal.

His comments are consisted with MBA testimony delivered at that same June 20 subcommittee hearing. Bill Cosgrove, president and CEO of Union National Mortgage Company, Strongsville, Ohio, who serves on the MBA Board of Governors, urged the CFPB to slow down. “At this point, the issuance of a proposed rule and establishment of a mere 60- or 90-day comment period would be inadequate and unwise,” he said in his testimony.

He said more work needs to be done to assure that the new proposed forms are user-friendly. He also said the CFPB needs to take care that other Dodd-Frank Act implications are taken into account. Cosgrove also is concerned CFPB efforts could hurt the mortgage market and he urged caution once the forms are finalized that sufficient time is taken to phase in their use. Read his testimony here.

For its part, the CFPB produced this five-page summary of it effort to simplify the disclosures surrounding mortgage loans. It wants to make it easier to shop for a mortgage, compare prices between mortgage providers, close a mortgage loan and understand exactly what the repayment obligations will be throughout the life of the mortgage. Read the CFPB summary here.

Fredrikson & Byron Law