I think we can all agree it’s about time the RESPA and TILA disclosures were simplified and CFPB has set out to do just that! But with the explanation of the new integrated disclosure approximately 1,100 pages, can this be the solution we’ve all hoped for?
Let’s begin with what we do know about the new disclosure, which many MLOs will find beneficial, some of the areas the last RESPA change caused them great consternation. To begin with it’s now called a Loan Estimate not a Good Faith Estimate. Though the new form looks much different, it does cover some of the same areas as the current version such as, loan program information and costs the borrower can shop for, not to mention it is still 3 pages. But the new Loan Estimate also addresses concerns MLOs have had with the existing GFE, such as itemizing loan origination charges, reflection of credits from the lender or seller, complete PITI payment break down, cash to close information, and, many will like to see, the borrower signs the disclosure as receipt of the document.
The Loan Estimate also provides the borrower information we currently look to the Truth-in-Lending disclosure for, such as Annual Percentage Rate, Total Payments (although only for 5 years), assumption rights and late payment fees. But there is also a new bit of information added, Total Interest Percentage. This TIP, interesting acronym, is to inform the borrower of the total interest they will pay on the loan, reflected as a percentage of the loan amount.
Conspicuously missing is our old favorite Amount Financed. Although still quite present in the calculation of APR, no longer will you have fumble with that “never quite sure of” explanation of amount financed.
All in all this integrated form, at first appearance, looks to not only simplify the two disclosure forms, but also includes many of the GFE items MLOs over the last two years have complained vehemently about. Will this new change settle all of the disclosure concerns that have raged for decades, I.m uncertain. Job one is to interpret the 1,100 pages that explain the form, then hold out for any other changes before the scheduled release in early January.