CFPB Responds to Enforcement Concerns Over New Lending Rules

Mortgage ApplicationAt the urging of NAHB, other industry stakeholders and members of Congress, the Consumer Financial Protection Bureau (CFPB) today announced it will work with lenders and others who are trying to comply with new mortgage lending rules that will take effect on Aug. 1 to support a smooth transition for the mortgage market.

In less than 60 days, CFPB will institute new rules regarding disclosures under the Truth in Lending Act and Real Estate Settlement Procedures Act that will affect all home builders, particularly those with a real estate lending arm.

NAHB has put together a new FAQ and other resources to prepare you for the changes so that your home closings will not be delayed.

Under the new procedures as a result of the Dodd Frank Act, four documents will be merged into two. The Good Faith Estimate and Truth in Lending disclosures will be eliminated and combined into a new single Loan Estimate form, or “LE.”

In addition, the final Truth in Lending Disclosure and HUD-1 Settlement Statement are being replaced by the Closing Disclosure, or “CD.”

What Do These Changes Mean?

Under the new rule, the biggest change is that the Closing Disclosure must be provided to the consumer a full three days prior to the closing, and if there are changes during that 72-hour period, the closing could be delayed.

Currently, the HUD-1 Settlement Statement can be presented to the buyer on the day of closing and any changes to the statement can take place during the loan closing.

In addition, the Loan Estimate must be delivered to the prospective buyer no later than three business days after receiving the application.

NAHB and other real estate leaders, along with members of Congress, have raised concerns that the abrupt switch on Aug. 1 will cause confusion and unanticipated disruptions. We have urged the CFPB to provide a good-faith enforcement grace period for the rule as the industry adapts to the new disclosure requirements.

The agency took an important step forward today, announcing that its oversight of the implementation of the rule will “be sensitive to the progress made by those entities that have been squarely focused on making good-faith efforts to come into compliance with the rule on time.”

Learn more about the new rules and view NAHB resources to help you comply.

For more information, email Steve Linville at NAHB or call him at 800-368-5242 x8597.

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Comments (3)

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  1. Larry Kady says:

    Great info to help us get ready for a new way of business

  2. JANET ERTEL says:

    Great Article. Thanks for the info. Does anyone know where I can find a blank “HUD-GFE” to fill out?

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