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Washington
Three-day Disclosure Flexibility Still Issue In CFPB Rule
 WASHINGTON (6/19/13)--Richard Cordray, who heads the Consumer Financial Protection Bureau, said in a letter to lawmakers Wednesday that his agency is "sensitive" to issues revolving around its proposed rule integrating mortgage disclosures required under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z).

The CFPB director was responding to recent letters from 82 members of Congress, 62 Republicans and 20 Democrats, who stated concerns with a provision in the proposal that would require that consumers receive final loan-cost disclosures at least three days before closing on the loan.  The provision is intended to give potential borrowers time to review the disclosure without pressure.

However, as pointed out by the lawmakers, as well as by the Credit Union National Association in a joint trade group letter, in a typical real estate transaction, changes frequently occur in the three days prior to closing that could increase a borrower's cost to close.

Additional flexibility is needed in the three-day requirement, concerned parties have said, or the CFPB's proposed rule could cause costly delays to closings, which could harm consumers by reducing their ability to make reasonable changes to their purchase, increasing their costs, putting at risk their mortgage rate lock and even the expiration of their purchase contract and earnest money deposit to the seller.

Cordray wrote that the bureau understands that things do sometimes change between the time of a three-day disclosure and the closing, and that not all changes justify delaying the closing date.

Cordray added that although the proposed rule specifies several exceptions that would not force an additional waiting period, the CFPB continues to review public comments to determine the "most appropriate way" to provide meaningful disclosures while avoiding unnecessary delays.

The final TILA/RESPA rule is expected out later this year, perhaps between September and December.


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