Amendments to the 2013 Integrated Mortgage Disclosures Rule Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) and the 2013 Loan Originator Rule Under the Truth in Lending Act (Regulation Z), 8767-8778 [2015-01321]
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8767
Rules and Regulations
Federal Register
Vol. 80, No. 33
Thursday, February 19, 2015
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Parts 1024 and 1026
[Docket No. CFPB–2014–0028]
RIN 3170–AA48
Amendments to the 2013 Integrated
Mortgage Disclosures Rule Under the
Real Estate Settlement Procedures Act
(Regulation X) and the Truth In
Lending Act (Regulation Z) and the
2013 Loan Originator Rule Under the
Truth in Lending Act (Regulation Z)
Bureau of Consumer Financial
Protection.
ACTION: Final rule; Official
Interpretations.
AGENCY:
This final rule modifies the
2013 TILA–RESPA Final Rule. This rule
extends the timing requirement for
revised disclosures when consumers
lock a rate or extend a rate lock after the
Loan Estimate is provided and permits
certain language related to construction
loans for transactions involving new
construction on the Loan Estimate. This
rule also amends the 2013 Loan
Originator Final Rule to provide for
placement of the Nationwide Mortgage
Licensing System and Registry ID
(NMLSR ID) on the integrated
disclosures. Additionally, the Bureau is
making non-substantive corrections,
including citation and cross-reference
updates and wording changes for
clarification purposes, to various
provisions of Regulations X and Z as
amended or adopted by the 2013 TILA–
RESPA Final Rule.
DATES: The rule is effective August 1,
2015. The final rule applies to
transactions for which the creditor or
mortgage broker receives an application
on or after August 1, 2015.
FOR FURTHER INFORMATION CONTACT:
Jaydee DiGiovanni, Policy and
Procedure Analyst; Richard Arculin and
rljohnson on DSK3VPTVN1PROD with RULES
SUMMARY:
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David Friend, Counsels; Office of
Regulations at (202) 435–7700.
SUPPLEMENTARY INFORMATION:
I. Summary of Final Rule
In November 2013, pursuant to
sections 1098 and 1100A of the DoddFrank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act), the
Bureau issued the Integrated Mortgage
Disclosures under the Real Estate
Settlement Procedures Act (Regulation
X) and the Truth in Lending Act
(Regulation Z) (2013 TILA–RESPA Final
Rule),1 combining certain disclosures
that consumers receive in connection
with applying for and closing on a
mortgage loan.
On October 10, 2014, the Bureau
proposed several amendments to
Regulation Z provisions adopted by the
2013 TILA–RESPA Final Rule 2 (the
proposal):
• To extend the timing requirement
for creditors to provide a revised Loan
Estimate to consumers when consumers
lock a rate or extend a rate lock after the
Loan Estimate is provided. The 2013
TILA–RESPA Final Rule requires
creditors to provide a revised Loan
Estimate with the revised interest rate,
the points disclosed pursuant to
§ 1026.37(f)(1), lender credits, and any
other interest rate dependent charges
and terms on the date the interest rate
is locked. The Bureau proposed to
extend the timing requirement to the
next business day after the rate is
locked.
• To provide for the placement on the
Loan Estimate form of language relating
to construction loans in transactions
involving new construction that is
required in order for creditors to
redisclose estimated charges.
• To make non-substantive
corrections, including minor wording
changes, corrected or updated citations
and cross-references, in the regulation
and commentary adopted by the 2013
TILA–RESPA Final Rule.
• The Bureau also proposed to amend
the 2013 Loan Originator Final Rule 3 to
provide for placement of the NMLSR ID
on the integrated disclosures.
With respect to the proposal to allow
creditors to redisclose the Loan Estimate
one business day after the interest rate
is locked, the Bureau is extending the
1 78
FR 79730 (Dec. 31, 2013).
FR 64336 (Oct. 29, 2014).
3 78 FR 11280 (Feb. 15, 2013).
2 79
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timing requirement to three business
days after the rate is locked. With
respect to all other aspects of the
proposal, the Bureau is adopting the
amendments as proposed. The Bureau
also is adopting additional, nonsubstantive corrections identified since
the proposal was issued.
II. Background
A. The Integrated Disclosures
Rulemaking
In July 2010, the Dodd-Frank Act was
enacted. The Dodd-Frank Act
transferred rulemaking authority under
both TILA and RESPA to the Bureau. In
addition, Dodd-Frank Act sections
1032(f), 1098, and 1100A mandated that
the Bureau establish a single disclosure
scheme for use by lenders or creditors
in complying with the disclosure
requirements of both RESPA and TILA.
Section 1098(2) of the Dodd-Frank Act
amended RESPA section 4(a) to require
that the Bureau publish a single,
integrated disclosure for mortgage loan
transactions, including ‘‘the disclosure
requirements of this section and section
5, in conjunction with the disclosure
requirements of [TILA]. . . .’’ 4
Similarly, section 1100A(5) of the DoddFrank Act amended TILA section 105(b)
to require that the Bureau publish a
single, integrated disclosure for
mortgage loan transactions, including
‘‘the disclosure requirements of this title
in conjunction with the disclosure
requirements of [RESPA]. . . .’’ 5 The
Dodd-Frank Act required the Bureau to
issue for public comment rules and
model disclosures that integrated the
4 12
U.S.C. 2603(a).
U.S.C. 1604(b). The amendments to RESPA
and TILA mandating a ‘‘single, integrated
disclosure’’ are among numerous conforming
amendments to existing Federal laws found in
subtitle H of the Consumer Financial Protection Act
of 2010. Subtitle C of the Consumer Financial
Protection Act, ‘‘Specific Bureau Authorities,’’
codified at 12 U.S.C. chapter 53, subchapter V, part
C, contains a similar provision. Specifically, section
1032(f) of the Dodd-Frank Act provides that, by July
21, 2012, the Bureau ‘‘shall propose for public
comment rules and model disclosures that combine
the disclosures required under [TILA] and sections
4 and 5 of [RESPA] into a single, integrated
disclosure for mortgage loan transactions covered
by those laws, unless the Bureau determines that
any proposal issued by the [Board] and [HUD]
carries out the same purpose.’’ 12 U.S.C. 5532(f).
The Bureau issued the 2012 TILA–RESPA Proposal
pursuant to that mandate and the parallel mandates
established by the conforming amendments to
RESPA and TILA, discussed above.
5 15
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Federal Register / Vol. 80, No. 33 / Thursday, February 19, 2015 / Rules and Regulations
TILA and RESPA disclosures by July 21,
2012.6
The Bureau issued proposed
integrated disclosure forms and rules for
public comment on July 9, 2012 (the
2012 TILA–RESPA Proposal).7 On
December 31, 2013, more than 17 years
after Congress first directed the Federal
Reserve Board and the Department of
Housing and Urban Development (HUD)
to integrate the disclosures under TILA
and RESPA, the Bureau published the
2013 TILA–RESPA Final Rule.8
B. Implementation Support
In early 2014, the Bureau initiated
efforts to support industry
implementation of the 2013 TILA–
RESPA Final Rule. These on-going
efforts include: (1) The publication of a
plain-language compliance guide and
guide to forms to help industry
understand the new rules, including
updates to the guides, as needed; (2) the
publication of a readiness guide for
institutions to evaluate their readiness
and facilitate compliance with the new
rules; (3) the publication of a disclosure
timeline that illustrates the process and
timing requirements of the new
disclosure rules; (4) an ongoing series of
webinars to address common
interpretive questions; (5) roundtable
meetings with industry, including
creditors, settlement service providers,
and technology vendors, to discuss
implementation; (6) participation in
conferences and forums; and (7) close
collaboration with State and Federal
regulators on implementation of the
2013 TILA–RESPA Final Rule,
including coordination on consistent
examination procedures. More
information regarding the Bureau’s
TILA–RESPA implementation initiative
can be found on the Bureau’s regulatory
implementation Web site at
www.consumerfinance.gov/regulatoryimplementation.
III. Comments
The Bureau received 31 comments
from creditors, trade associations,
technology vendors, and others in
response to the October 10, 2014
proposal to amend the 2013 TILA–
6 12
U.S.C. 5532(f).
Press Release, Consumer Financial
Protection Bureau, CFPB proposes ‘‘Know Before
You Owe’’ Mortgage Forms (July 9, 2012), available
at https://www.consumerfinance.gov/pressreleases/
consumer-financial-protection-bureau-proposesknow-before-you-owe-mortgage-forms/; CFPB
Mortgage Disclosure Team, CFPB Blog, Know Before
You Owe: Introducing our proposed mortgage
disclosure forms (July 9, 2012), available at https://
www.consumerfinance.gov/blog/know-before-youowe-introducing-our-proposed-mortgage-disclosureforms/.
8 78 FR 79730 (Dec. 31, 2013).
rljohnson on DSK3VPTVN1PROD with RULES
7 See
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RESPA Final Rule. Many of the
comments discussed issues beyond the
scope of the proposal. The Bureau
discusses those comments that were
responsive to the proposal in the
section-by-section analysis below. This
final rule does not make any changes
outside the scope of the proposal, other
than additional, non-substantive
corrections identified since the proposal
was issued.
IV. Legal Authority
The Bureau is issuing this final rule
pursuant to its authority under TILA,
RESPA, and the Dodd-Frank Act.
Section 1061 of the Dodd-Frank Act
transferred to the Bureau the ‘‘consumer
financial protection functions’’
previously vested in certain other
Federal agencies, including the Board’s
consumer protection functions relating
to TILA mortgage disclosures and the
HUD Secretary’s consumer protection
functions relating to RESPA.9 The term
‘‘consumer financial protection
function’’ is defined to include ‘‘all
authority to prescribe rules or issue
orders or guidelines pursuant to any
Federal consumer financial law,
including performing appropriate
functions to promulgate and review
such rules, orders, and guidelines.’’ 10
Title X of the Dodd-Frank Act,
including section 1061 of the DoddFrank Act, along with TILA, RESPA,
and certain subtitles and provisions of
title XIV of the Dodd-Frank Act, are
Federal consumer financial laws.11
Accordingly, the Bureau has authority
to issue regulations pursuant to TILA
and RESPA, including the disclosure
requirements added to those statutes by
title XIV of the Dodd-Frank Act, as well
as title X of the Dodd-Frank Act.
A. The Integrated Disclosure Mandate
Section 1032(f) of the Dodd-Frank Act
requires that, ‘‘[n]ot later than one year
after the designated transfer date [of July
21, 2011], the Bureau shall propose for
public comment rules and model
disclosures that combine the disclosures
required under [TILA] and sections 4
and 5 of [RESPA], into a single,
integrated disclosure for mortgage loan
9 Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, 124 Stat. 1376,
section 1061(b)(7) (2010); 12 U.S.C. 5581(b)(7).
10 12 U.S.C. 5581(a)(1).
11 Dodd-Frank Act section 1002(14), 12 U.S.C.
5481(14) (defining ‘‘Federal consumer financial
law’’ to include the ‘‘enumerated consumer laws’’
and the provisions of title X of the Dodd-Frank Act);
Dodd-Frank Act section 1002(12), 12 U.S.C.
5481(12) (defining ‘‘enumerated consumer laws’’ to
include TILA and RESPA); Dodd-Frank Act section
1400(b), 15 U.S.C. 1601 note (defining ‘‘enumerated
consumer laws’’ to include certain subtitles and
provisions of Title XIV).
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transactions covered by those laws,
unless the Bureau determines that any
proposal issued by the [Board] and
[HUD] carries out the same purpose.’’ 12
In addition, the Dodd-Frank Act
amended section 105(b) of TILA and
section 4(a) of RESPA to require the
integration of the TILA disclosures and
the disclosures required by sections 4
and 5 of RESPA.13 The purpose of the
integrated disclosure is to facilitate
compliance with the disclosure
requirements of TILA and RESPA and to
help the consumer understand the
transaction by using readily
understandable language to simplify the
technical nature of the disclosures.14
Although Congress imposed this
integrated disclosure requirement, it did
not harmonize the underlying statutes.
In particular, TILA and RESPA establish
different timing requirements for
disclosing mortgage credit terms and
costs to consumers and require that
those disclosures be provided by
different parties. TILA generally
requires that, within three business days
of receiving the consumer’s application
and at least seven business days before
consummation of certain mortgage
transactions, creditors must provide
consumers a good faith estimate of the
costs of credit.15 If the annual
percentage rate that was initially
disclosed becomes inaccurate, TILA
requires creditors to redisclose the
information at least three business days
before consummation.16 These
disclosures must be provided in final
form at consummation.17 RESPA also
requires that the creditor or broker
provide consumers with a good faith
estimate of settlement charges no later
12 12
U.S.C. 5532(f).
1100A of the Dodd-Frank Act amended
TILA section 105(b) to provide that the ‘‘Bureau
shall publish a single, integrated disclosure for
mortgage loan transactions (including real estate
settlement cost statements) which includes the
disclosure requirements of this title in conjunction
with the disclosure requirements of the Real Estate
Settlement Procedures Act of 1974 that, taken
together, may apply to a transaction that is subject
to both or either provisions of law.’’ 15 U.S.C.
1604(b). Section 1098 of the Dodd-Frank Act
amended RESPA section 4(a) to require the Bureau
to publish a ‘‘single, integrated disclosure for
mortgage loan transactions (including real estate
settlement cost statements) which includes the
disclosure requirements of this section and section
5, in conjunction with the disclosure requirements
of the Truth in Lending Act that, taken together,
may apply to a transaction that is subject to both
or either provisions of law.’’ 12 U.S.C. 2603(a).
14 See Dodd-Frank Act sections 1098, 1100A.
15 TILA section 128(b)(2)(A); 15 U.S.C.
1638(b)(2)(A). This requirement applies to
extensions of credit that are both secured by a
dwelling and subject to RESPA.
16 TILA section 128(b)(2)(D); 15 U.S.C.
1638(b)(2)(D).
17 TILA section 128(b)(2)(B)(ii); 15 U.S.C.
1638(b)(2)(B)(ii).
13 Section
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than three business days after receiving
the consumer’s application. However,
unlike TILA, RESPA requires that, at or
before settlement, ‘‘the person
conducting the settlement’’ (which may
or may not be the creditor) provide the
consumer with a statement that records
all charges imposed upon the consumer
in connection with the settlement.18
The Dodd-Frank Act did not reconcile
these and other statutory differences.
Therefore, to meet the Dodd-Frank Act’s
mandate to integrate the disclosures
required by TILA and RESPA, the
Bureau was required to do so. DoddFrank Act section 1032(f), TILA section
105(b), and RESPA section 4(a) provide
the Bureau with authority to issue
regulations that reconcile certain
provisions of TILA and RESPA to carry
out Congress’ mandate to integrate the
statutory disclosure requirements.
B. Other Rulemaking and Exception
Authorities
This rule also relies on the
rulemaking and exception authorities
specifically granted to the Bureau by
TILA, RESPA, and the Dodd-Frank Act,
including the authorities discussed
below.
rljohnson on DSK3VPTVN1PROD with RULES
Truth in Lending Act
TILA section 105(a). As amended by
the Dodd-Frank Act, TILA section
105(a), 15 U.S.C. 1604(a), directs the
Bureau to prescribe regulations to carry
out the purposes of TILA and provides
that such regulations may contain
additional requirements, classifications,
differentiations, or other provisions and
may further provide for such
adjustments and exceptions for all or
any class of transactions that the Bureau
judges are necessary or proper to
effectuate the purposes of TILA, to
prevent circumvention or evasion
thereof, or to facilitate compliance
therewith. A purpose of TILA is ‘‘to
assure a meaningful disclosure of credit
terms so that the consumer will be able
to compare more readily the various
credit terms available to him and avoid
the uninformed use of credit.’’ 19 This
stated purpose is informed by Congress’
finding that ‘‘economic stabilization
would be enhanced and the competition
among the various financial institutions
and other firms engaged in the
extension of consumer credit would be
strengthened by the informed use of
credit[.]’’ 20 Thus, strengthened
18 RESPA
sections 4(b), 5(c); 12 U.S.C. 2603(b),
2604(c).
19 TILA section 102(a); 15 U.S.C. 1601(a).
20 TILA section 102(a).
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competition among financial
institutions is a goal of TILA.
Historically, TILA section 105(a) has
served as a broad source of authority for
rules that promote the informed use of
credit through required disclosures and
substantive regulation of certain
practices. Dodd-Frank Act section
1100A clarified the Bureau’s section
105(a) authority by amending that
section to provide express authority to
prescribe regulations that contain
‘‘additional requirements’’ that the
Bureau finds are necessary or proper to
effectuate the purposes of TILA, to
prevent circumvention or evasion
thereof, or to facilitate compliance. This
amendment clarified the Bureau’s
authority to prescribe requirements
beyond those specifically listed in the
statute that meet the standards outlined
in TILA section 105(a). The Dodd-Frank
Act also clarified the Bureau’s
rulemaking authority over certain highcost mortgages pursuant to section
105(a). As amended by the Dodd-Frank
Act, TILA section 105(a) authority to
make adjustments and exceptions to the
requirements of TILA applies to all
transactions subject to TILA, except
with respect to the provisions of TILA
section 129 that apply to the high-cost
mortgages referred to in TILA section
103(bb), 15 U.S.C. 1602(bb).21
TILA section 129B(e). Dodd-Frank Act
section 1405(a) amended TILA to add
new section 129B(e), 15 U.S.C.
1639B(e). That section authorizes the
Bureau to ‘‘prohibit or condition terms,
acts, or practices relating to residential
mortgage loans that the Bureau finds to
be abusive, unfair, deceptive, predatory,
necessary or proper to ensure that
responsible, affordable mortgage credit
remains available to consumers in a
manner consistent with the purposes of
this section and section 129C [of TILA],
necessary or proper to effectuate the
purposes of this section and section
129C [of TILA], to prevent
circumvention or evasion thereof, or to
facilitate compliance with such
sections, or are not in the interest of the
borrower.’’ In developing rules under
TILA section 129B(e), the Bureau has
considered the broad mandate of section
129B.
Real Estate Settlement Procedures Act
Section 19(a) of RESPA, 12 U.S.C.
2617(a), authorizes the Bureau to
prescribe such rules and regulations and
to make such interpretations and grant
such reasonable exemptions for classes
21 15 U.S.C. 1639. TILA section 129 contains
requirements for certain high-cost mortgages,
established by the Home Ownership and Equity
Protection Act (HOEPA), which are commonly
called HOEPA loans.
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8769
of transactions as may be necessary to
achieve the purposes of RESPA. In
enacting RESPA, Congress sought ‘‘to
insure that consumers . . . are provided
with greater and more timely
information on the nature and costs of
the settlement process and protected
from unnecessarily high settlement
charges caused by certain abusive
practices in some areas of the
country.’’ 22 RESPA section 19(a) has
served as a broad source of authority to
prescribe disclosures and substantive
requirements to carry out the purposes
of RESPA.
In developing rules under RESPA
section 19(a), the Bureau has considered
the purposes of RESPA. One purpose of
RESPA is ‘‘to effect certain changes in
the settlement process for residential
real estate that will result in more
effective advance disclosure to home
buyers and sellers of settlement
costs.’’ 23
Dodd-Frank Act
Dodd-Frank Act section 1021. Section
1021(a) of the Dodd-Frank Act provides
that the Bureau shall seek to implement
and, where applicable, enforce Federal
consumer financial law consistently for
the purpose of ensuring that all
consumers have access to markets for
consumer financial services and that
markets for consumer financial products
and services are fair, transparent, and
competitive.24 In addition, section
1021(b) of the Dodd-Frank Act provides
that the Bureau is authorized to exercise
its authorities under Federal consumer
financial law for the purposes of
ensuring, with respect to consumer
financial products and services, that,
among other things: (1) Consumers are
provided with timely and
understandable information to make
responsible decisions about financial
transactions; (2) consumers are
protected from unfair, deceptive, or
abusive acts and practices and from
discrimination; (3) outdated,
unnecessary, or unduly burdensome
regulations are regularly identified and
addressed in order to reduce
unwarranted regulatory burdens; (4)
Federal consumer financial law is
enforced consistently, without regard to
the status of a person as a depository
institution, in order to promote fair
competition; and (5) markets for
consumer financial products and
services operate transparently and
efficiently to facilitate access and
22 RESPA
section 2(a); 12 U.S.C. 2601(a).
section 2(b); 12 U.S.C. 2601(b).
24 12 U.S.C. 5511(a).
23 RESPA
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innovation.25 In developing this
rulemaking, the Bureau has sought to
ensure that it is consistent with the
purposes of Dodd-Frank Act section
1021(a) and with the objectives of DoddFrank Act section 1021(b), specifically
including Dodd-Frank Act section
1021(b)(1) and (3).
Dodd-Frank Act section 1022(b).
Section 1022(b)(1) of the Dodd-Frank
Act authorizes the Bureau to prescribe
rules ‘‘as may be necessary or
appropriate to enable the Bureau to
administer and carry out the purposes
and objectives of the Federal consumer
financial laws, and to prevent evasions
thereof.’’ 26 Section 1022(b)(2) of the
Dodd-Frank Act prescribes certain
standards for rulemaking that the
Bureau must follow in exercising its
authority under section 1022(b)(1).27 As
discussed above, TILA and RESPA are
Federal consumer financial laws.
Accordingly, in finalizing this rule, the
Bureau is exercising its authority under
Dodd-Frank Act section 1022(b) to
prescribe rules under TILA, RESPA, and
title X of the Dodd-Frank Act that carry
out the purposes and objectives and
prevent evasion of those laws. See part
VI for a discussion of the Bureau’s
standards for rulemaking under DoddFrank Act section 1022(b)(2).
Dodd-Frank Act section 1032. Section
1032(a) of the Dodd-Frank Act provides
that the Bureau ‘‘may prescribe rules to
ensure that the features of any consumer
financial product or service, both
initially and over the term of the
product or service, are fully, accurately,
and effectively disclosed to consumers
in a manner that permits consumers to
understand the costs, benefits, and risks
associated with the product or service,
in light of the facts and
circumstances.’’ 28 The authority
granted to the Bureau in section 1032(a)
is broad and empowers the Bureau to
prescribe rules regarding the disclosure
of the ‘‘features’’ of consumer financial
products and services generally.
Accordingly, the Bureau may prescribe
rules containing disclosure
requirements even if other Federal
consumer financial laws do not
specifically require disclosure of such
features.
Dodd-Frank Act section 1032(c)
provides that, in prescribing rules
pursuant to section 1032, the Bureau
‘‘shall consider available evidence about
consumer awareness, understanding of,
and responses to disclosures or
communications about the risks, costs,
U.S.C. 5511(b).
U.S.C. 5512(b)(1).
27 12 U.S.C. 5512(b)(2).
28 12 U.S.C. 5532(a).
and benefits of consumer financial
products or services.’’ 29 Accordingly, in
developing the 2013 TILA–RESPA Final
Rule and amendments thereto under
Dodd-Frank Act section 1032(a), the
Bureau considered available studies,
reports, and other evidence about
consumer awareness, understanding of,
and responses to disclosures or
communications about the risks, costs,
and benefits of consumer financial
products or services. Moreover, the
Bureau has considered the evidence
developed through its consumer testing
of the integrated disclosures as well as
prior testing done by the Board and
HUD regarding TILA and RESPA
disclosures. See part III of the 2013
TILA–RESPA Final Rule for a
discussion of the Bureau’s consumer
testing.30
Dodd-Frank Act section 1405(b).
Section 1405(b) of the Dodd-Frank Act
provides that, ‘‘[n]otwithstanding any
other provision of [title XIV of the
Dodd-Frank Act], in order to improve
consumer awareness and understanding
of transactions involving residential
mortgage loans through the use of
disclosures, the Bureau may, by rule,
exempt from or modify disclosure
requirements, in whole or in part, for
any class of residential mortgage loans
if the Bureau determines that such
exemption or modification is in the
interest of consumers and in the public
interest.’’ 31 Section 1401 of the DoddFrank Act, which amends TILA section
103(cc)(5), 15 U.S.C. 1602(cc)(5),
generally defines a residential mortgage
loan as any consumer credit transaction
that is secured by a mortgage on a
dwelling or on residential real property
that includes a dwelling other than an
open-end credit plan or an extension of
credit secured by a consumer’s interest
in a timeshare plan. Notably, the
authority granted by section 1405(b)
applies to ‘‘disclosure requirements’’
generally and is not limited to a specific
statute or statutes. Accordingly, DoddFrank Act section 1405(b) is a broad
source of authority to exempt from or
modify the disclosure requirements of
TILA and RESPA.
In developing rules for residential
mortgage loans under Dodd-Frank Act
section 1405(b), the Bureau has
considered the purposes of improving
consumer awareness and understanding
of transactions involving residential
mortgage loans through the use of
disclosures and the interests of
consumers and the public.
25 12
26 12
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U.S.C. 5532(c).
FR 79730, 79741 (Dec. 31, 2013).
31 15 U.S.C. 1601 note.
V. Section-by-Section Analysis
A. General—Non-Substantive
Corrections
The Bureau proposed non-substantive
corrections, including citation and
cross-reference updates and wording
changes for clarification purposes, in
Regulation X and Regulation Z. The
Bureau received comments that
supported these proposed changes. The
Bureau is adopting as proposed the nonsubstantive corrections to regulatory
text in §§ 1024.5(d), 1026.37(o), and
1026.38(e); commentary to
§§ 1026.37(b), (c), and (h) and
1026.38(a) and (e); and appendix H. The
Bureau also is making non-substantive
clarifications to the commentary to
§ 1026.38(g) for the reasons discussed in
the section-by-section analysis below, as
well as other, non-substantive
corrections and wording clarifications to
regulatory text in § 1026.38(j) and (t).
B. Regulation Z
Section 1026.19—Certain Mortgage and
Variable-Rate Transactions
19(e) Mortgage Loans Secured By Real
Property—Early Disclosures
19(e)(3) Good Faith Determination For
Estimates of Closing Costs
19(e)(3)(iv) Revised Estimates
19(e)(3)(iv)(D) Interest Rate Dependent
Charges
Proposed Rule
Pursuant to the Bureau’s authority as
described in the 2012 TILA–RESPA
Proposal 32 and the 2013 TILA–RESPA
Final Rule 33, the Bureau proposed to
amend § 1026.19(e)(3)(iv)(D) to modify
the timing requirement for creditors to
provide a revised Loan Estimate to
consumers when the interest rate is
locked after the provision of the Loan
Estimate. Section § 1026.19(e)(3)(iv)(D),
as adopted by the 2013 TILA–RESPA
Final Rule, requires creditors to provide
the revised disclosure with the revised
interest rate, the points disclosed
pursuant to § 1026.37(f)(1), lender
credits, and any other interest rate
dependent charges and terms on the
date the interest rate is locked. The
Bureau proposed to change the timing
requirement to the next business day
after the rate is locked. As discussed in
detail below, this final rule amends
§ 1026.19(e)(3)(iv)(D) to provide
creditors with three business days,
rather than one business day, to provide
the revised Loan Estimate. This
amendment harmonizes the timing
requirement in § 1026.19(e)(3)(iv)(D)
29 12
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33 78
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FR 79730, 79816–79822 (Dec. 31, 2013).
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with other timing requirements for
redisclosure adopted in the 2013 TILA–
RESPA Final Rule and is consistent
with current law and practice pursuant
to § 1024.7(f)(5), under which creditors
have three business days from rate lock
to provide a revised Good Faith
Estimate.
As discussed in the proposal, the
Bureau proposed to allow creditors an
additional business day to provide the
revised Loan Estimate because it
received information suggesting that
creditors may not control when a rate is
locked to the same extent the Bureau
believed when it issued the 2013 TILA–
RESPA Final Rule. The Bureau also
learned that operational challenges due
to the same-day redisclosure
requirement in § 1026.19(e)(3)(iv)(D)
could restrict the flexibility many
creditors currently provide consumers
to lock their interest rates and could
result in creditors imposing time
restrictions on when consumers may
lock their rates (e.g., ‘‘cut-off’’ times).
Given the potential consequences of
losing the ability to reset the applicable
tolerances for interest rate dependent
charges pursuant to § 1026.19(e)(3), the
Bureau believes creditors could respond
to the same-day timing requirement
adopted by the 2013 TILA–RESPA Final
Rule by limiting consumers’ ability to
lock rates at the time of their choice and
imposing cut-off times that only allow
consumers to lock interest rates on
business days during preset hours.
Accordingly, the Bureau reconsidered
the same-day redisclosure requirement
and proposed to amend
§ 1026.19(e)(3)(iv)(D) and its
commentary to adjust this timing
requirement.
Currently, some creditors permit the
consumer, or loan originator working on
behalf of the consumer, to lock the
interest rate unilaterally at any point
during a business day or even after
normal business hours. The Bureau
believes this flexibility is beneficial to
consumers because it allows them to
lock interest rates on a date and time of
their choosing, without time restrictions
imposed by the creditor. The same-day
redisclosure requirement could reduce
consumers’ ability to determine when
their rates are locked, if creditors
respond by either imposing cut-off times
after which consumers are unable to
lock their interest rates until the next
business day or refusing to lock the rate
contractually until the business day
after the consumer requests a rate lock.
As explained in the proposal, the
Bureau believes that, if creditors impose
cut-off times, consumers would be
limited to certain times of day that they
or their representatives could lock
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interest rates. This could result in
consumers, particularly those who are
in different time zones than their
creditors, missing the applicable time
window to lock on a day of their choice
and having to wait until the next
business day to do so. Alternatively, the
Bureau believes some creditors may be
able to provide a revised Loan Estimate
on the date that a rate lock agreement is
formed if those creditors allow
consumers to request the rate only at a
time of the creditors’ choosing and then
later execute or form a binding
agreement with the consumers.
However, the Bureau believes this result
could present other challenges to
consumers. For example, consumers
may be confused if they believe they are
locking an interest rate at a certain time
but in fact are merely requesting rates
that are not contractually binding until
the creditor accepts the request at some
later time. Accordingly, the Bureau
stated in the proposal that it believed
the same-day redisclosure requirement
warranted reconsideration because it
could create implementation challenges
to industry that may result in reduced
consumer flexibility in locking or
resetting floating interest rates.
The Bureau maintained, however, that
the same-day redisclosure requirement
could benefit consumers by allowing
them to have more time to evaluate the
revised Loan Estimate. The Bureau also
noted that creditors should be able to
provide a revised Loan Estimate based
on interest rate dependent charges more
quickly in comparison to other types of
redisclosures because creditors may not
need to obtain information from other
parties, such as third-party vendors.
Accordingly, the Bureau proposed a
next-business-day timing requirement,
on the ground that providing for
redisclosure on the next business day
after the rate is locked could provide
consumer benefits without the
operational challenges to creditors
presented by a same-day redisclosure
requirement.
The Bureau sought comment on
whether consumers could be harmed if
creditors were given until the next
business day to provide a revised Loan
Estimate or if consumers would benefit
from the same-day requirement.
Additionally, the Bureau sought
comment on whether a single business
day is sufficient for creditors to deliver
or place in the mail a revised Loan
Estimate while preventing any
unintended consequences, such as
restricting the timing flexibility of
consumers to lock the interest rate, and
whether consumers would be harmed if
redisclosures were permitted more than
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one business day after the interest rate
was locked.
Comments
The Bureau received comments from
industry trade associations, creditors,
technology vendors, and other industry
representatives addressing these
proposed changes. All comments
supported the proposal to relax the
timing requirement, but most advocated
for extending it to three business days.
The Bureau received no comments that
opposed the proposal or that raised
concerns about extending the timing
requirement beyond the next business
day.
Most commenters argued that a nextbusiness-day requirement presents
many of the same operational challenges
to industry as a same-day redisclosure
requirement. For example, a credit
union stated that one business day does
not allow creditors sufficient time to
address potential software issues or
conduct quality control review of a
revised Loan Estimate. Another industry
commenter stated that it takes time to
update fees and verify that the correct
information is printed on the
disclosures generated by older loan
operating systems. A national banking
trade association noted that consumers
with ‘‘self-lock’’ capability commonly
make mistakes in locking rates or
attempt to lock through an incorrect
channel, which requires creditors to
verify the consumer’s intent to lock the
rate. Consumers also may leave an
ambiguous voicemail or email that the
creditor needs to verify is a rate lock
request. This commenter explained that
a single business day is not always
enough time for a creditor both to verify
the consumer’s intent and also to issue
a revised disclosure. Consequently, a
next-business-day deadline could still
result in creditors imposing cut-off
times for consumers to lock interest
rates.
Additionally, trade associations,
banks, and an individual industry
commenter working for a creditor stated
that smaller institutions in particular
may have difficulty redisclosing on the
next business day after the rate lock due
to staffing level constraints.
Commenters noted that, in some cases,
a single individual may be responsible
for creating the disclosures, and staffing
levels may also be affected by inclement
weather, Saturday business hours, and
employee training. A credit union
commenter noted that the nextbusiness-day requirement could burden
small lending operations that do not
have a full-time employee to prepare
disclosures on Saturdays and around
the holidays. Accordingly, these small
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creditors may require additional staff to
meet the next-business-day delivery
requirement.
Commenters argued that expanding
the timing requirement to three business
days would facilitate compliance for
industry and consumer understanding
because it would provide consistent
timing rules for redisclosures. A bank
stated that the three-business-day
timeframe is the standard in operating
procedures and systems and is also
well-established among industry
professionals. Commenters noted that a
next-business-day requirement for rate
locks would result in different timing
requirements for rate-lock-based
redisclosure as opposed to other events
that permit redisclosure, such as
‘‘changed circumstances’’ described in
§ 1026.19(e)(3)(iv)(A). These other
triggering events for redisclosure may
occur around the time of a rate lock.
Commenters noted that consumer
confusion could result if a changed
circumstance occurs on the same date
that the rate is locked and the creditor
needs to produce two different revised
disclosures on two different dates.
These commenters stated that the
provision of two revised Loan Estimates
to a consumer within the same week
could cause confusion as to which Loan
Estimate reflects the most recent and
accurate information.
Finally, commenters questioned the
benefit to consumers of receiving a
revised Loan Estimate for rate-lockrelated changes two business days
earlier than is required for other
redisclosure events, such as ‘‘changed
circumstances’’ described in
§ 1026.19(e)(3)(iv)(A). Commenters
argued that allowing creditors two extra
business days to provide a revised Loan
Estimate does not pose risks or harms to
consumers. A national banking trade
association stated that consumers get
little benefit from receiving the revised
Loan Estimate earlier because a
consumer has most likely completed the
shopping process by the time the
consumer requests a rate lock. These
commenters generally asserted that the
benefit to consumers, if any, of receiving
the revised disclosure earlier does not
outweigh the costs associated with the
requirement to provide redisclosures by
the next business day.
Final Rule
The Bureau is adopting proposed
§ 1026.19(e)(3)(iv)(D), modified to
extend the timing requirement to no
later than three business days after the
date the interest rate is locked. The
Bureau also is making conforming
modifications to proposed comments
19(e)(3)(iv)(D)–1 and 19(e)(4)(i)–2,
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which provide illustrations of the
timing requirement.
The Bureau considered the comments
received and determined that extending
the timing requirement to no later than
three business days after the interest
rate is locked will reduce the burden on
industry and facilitate compliance
without harming consumers, and also
may provide benefits to consumers. The
Bureau believes that creditors would
experience operational challenges in
providing redisclosures by the next
business day that could be alleviated by
extending the timing requirement for
redisclosure to three business days.
Moreover, extending the redisclosure
deadline to three business days after the
rate is locked harmonizes the timing
requirement in § 1026.19(e)(3)(iv)(D)
with the other timing requirements for
redisclosure. Harmonizing the
redisclosure requirements could
facilitate compliance and compliance
monitoring and could reduce consumer
confusion. Furthermore, allowing
creditors to have three business days
from the date the rate is locked to issue
a revised disclosure would enable small
creditors with limited staffing levels to
prepare and review revised disclosures
without the difficulties and challenges
that may have arisen under the
proposed rule.
The Bureau does not believe a risk of
potential consumer harm arises in
extending the period for redisclosure to
three business days. While the Bureau
expressed, in the preambles to the 2012
TILA–RESPA Proposal and the 2013
TILA–RESPA Final Rule, a concern
about potential rent-seeking behavior
through rate arbitrage (e.g., delaying the
rate lock in order to increase the interest
rate offered to the consumer or
otherwise increase the spread between
market interest rates and the rate offered
the consumer), the Bureau also
acknowledged that it had seen no
evidence nor received any data or
reports suggesting such a practice under
the existing Regulation X disclosure
practice, which employs a threebusiness-day deadline. The Bureau has
not identified any risks to consumers—
nor were any raised by commenters in
response to the Bureau’s request for
comment on potential risks to
consumers.
Accordingly, the Bureau is adopting
§ 1026.19(e)(3)(iv)(D) to state that, no
later than three business days after the
date the interest rate is locked, the
creditor shall provide a revised version
of the disclosures required under
§ 1026.19(e)(1)(i) to the consumer with
the revised interest rate, the points
disclosed pursuant to § 1026.37(f)(1),
lender credits, and any other interest
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rate dependent charges and terms. The
Bureau also is adopting modified
versions of proposed comments
19(e)(3)(iv)(D)–1 and 19(e)(4)(i)–2 to
reflect this change.
Section 1026.36—Prohibited Acts or
Practices and Certain Requirements for
Credit Secured by a Dwelling
36(g) Name and NMLSR ID on Loan
Documents
36(g)(2)
36(g)(2)(ii)
The Bureau proposed to amend
§ 1026.36(g)(2)(ii) to conform to the
requirements adopted by the 2013 Loan
Originator Final Rule. Section
1026.36(g)(2) lists the specific loan
documents that must contain the loan
originator’s name and NMLSR ID. When
the Bureau issued the 2013 Loan
Originator Final Rule in January 2013, it
reserved § 1026.36(g)(2)(ii) for
references to the integrated disclosures
the Bureau was expecting to adopt in
the final rule implementing the 2012
TILA–RESPA Proposal. The disclosures
referenced are those required by
§ 1026.19(e) and (f) as adopted by the
2013 TILA–RESPA Final Rule.
The Bureau proposed amending
§ 1026.36(g)(2)(ii) to include the
disclosures described in § 1026.19(e)
and (f), as adopted by the 2013 TILA–
RESPA Final Rule. The Bureau received
comments from industry and trade
associations in support of this proposed
change and none that opposed it or
suggested further modifications.
Accordingly, the Bureau is adopting
§ 1026.36(g)(2)(ii) as proposed.
Section 1026.37—Content of Disclosure
for Certain Mortgage Transactions (Loan
Estimate)
37(m) Other Considerations
Proposed Rule
The Bureau proposed adding
§ 1026.37(m)(8) to provide for a
statement notifying the consumer that a
revised disclosure may be provided for
a construction loan in a transaction
involving new construction where the
creditor reasonably expects settlement
to occur more than 60 days after the
provision of the initial Loan Estimate.34
As explained in the proposal,
§ 1026.19(e)(3)(iv)(F) provides that a
creditor may issue revised disclosures at
any time prior to 60 days before
consummation if the original disclosure
clearly and conspicuously states that a
revised disclosure may be provided.
34 Transactions covered by this provision are
described in § 1026.19(e)(3)(iv)(F) and comment
19(e)(3)(iv)(F)–1.
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Except as provided by § 1026.19(f), the
creditor may not issue a revised
disclosure if the original disclosure did
not contain such a statement.
The Bureau proposed to add new
§ 1026.37(m)(8), under the master
heading ‘‘Additional Information About
This Loan’’ and the heading ‘‘Other
Considerations,’’ and new comment
37(m)(8)–1 to state that placement of the
language in this section of the form
satisfies the ‘‘clear and conspicuous’’
standard set forth in
§ 1026.19(e)(3)(iv)(F). The Bureau stated
that it believes the § 1026.19(e)(3)(iv)(F)
language is appropriately placed in this
part of the disclosure mandated by
§ 1026.37, but sought comment on
whether the language would be more
appropriately placed elsewhere on the
form.
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Comments
The Bureau received comments from
trade associations, creditors, and a
technology vendor. All commenters
supported the proposal. Commenters
generally stated that including the
language concerning construction loans
in transactions that involve a new
construction on the Loan Estimate
should facilitate construction lending.
Most agreed with the proposed content
and placement of the language. A few
commenters made minor suggestions for
additional clarity or suggested
alternative placement on the form. For
example, two trade associations
recommended that the Bureau provide
additional clarifying language on the
nature of the disclosure, as well as
additional clarification regarding
placement on the form or provision of
a sample disclosure illustrating this
language on the form.
Final Rule
The Bureau has considered the
comments and is adopting
§ 1026.37(m)(8) and comment 37(m)(8)–
1 as proposed, with minor wording
changes for clarification. The Bureau
believes that the proposed language and
its placement is appropriate and allows
creditors to preserve their ability to
redisclose estimates for construction
loans in transactions that involve a new
construction, as provided in
§ 1026.19(e)(3)(iv)(F). With respect to
the requests for additional clarifying
language or a sample disclosure
illustrating the language on the form,
the Bureau does not believe that
additional language or a new sample
disclosure is necessary. The Bureau
notes that proposed § 1026.37(m)(8) and
comment 37(m)(8)–1 contain language
already promulgated under
§ 1026.19(e)(3)(iv)(F) and would not
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require any additional consumer testing.
Further, comment 37(m)(8)–1 provides
that placement of the new construction
language in this section of the Loan
Estimate satisfies the clear and
conspicuous standard set forth in
§ 1026.19(e)(3)(iv)(F).
Section 1026.38—Content of Disclosure
for Certain Mortgage Transactions
(Closing Disclosure)
38(g) Closing Cost Details; Other Costs
38(g)(2) Prepaids
Section 1026.38(g)(2) requires
creditors to disclose certain prepaid
items disclosed on the Loan Estimate
pursuant to § 1026.37(g)(2), including
prepaid interest. Neither the regulation
nor the model Closing Disclosure forms
in appendix H provide for disclosure of
the interest rate for prepaid interest.
Rather, the model forms provide that
prepaid interest is to be disclosed on the
Closing Disclosure as a per diem sum
amount along with a range of dates,
without disclosing the applicable
interest rate, prescribed as: ‘‘Prepaid
Interest (___per day from _____to
_____).’’
One industry commenter noted that
comment 38(g)(2)–4, which describes
the interest rate that should be used to
calculate per diem interest, implies that
the interest rate must be disclosed
pursuant to § 1026.38(g)(2). This
commenter recommended that the
Bureau clarify that creditors are not
required to disclose an interest rate for
purposes of this disclosure.
The Bureau agrees that the interest
rate should not be disclosed in the
prepaid interest disclosure pursuant to
§ 1026.38(g)(2). Rather, creditors should
disclose amounts of prepaid interest as
per diem sum amounts based on the
interest rate disclosed under
§ 1026.38(b), which is determined by
§ 1026.37(b). Accordingly, the Bureau is
amending comment 38(g)(2)–4 to clarify
that the comment addresses the interest
rate that is used to determine amounts
of prepaid interest, but does not require
disclosure of the interest rate itself.
VI. Dodd-Frank Act Section 1022(b)(2)
A. Overview
In developing this rule, the Bureau
has considered potential benefits, costs,
and impacts.35 The Bureau has
35 Specifically, section 1022(b)(2)(A) of the DoddFrank Act calls for the Bureau to consider the
potential benefits and costs of a regulation to
consumers and covered persons, including the
potential reduction of access by consumers to
consumer financial products or services; the impact
on depository institutions and credit unions with
$10 billion or less in total assets as described in
section 1026 of the Dodd-Frank Act; and the impact
on consumers in rural areas.
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consulted, or offered to consult with,
the prudential regulators, the Securities
and Exchange Commission, HUD, the
Federal Housing Finance Agency, the
Federal Trade Commission, the U.S.
Department of Veterans Affairs, the U.S.
Department of Agriculture, and the
Department of the Treasury, including
regarding consistency with any
prudential, market, or systemic
objectives administered by such
agencies.
The Bureau is adding or amending
two main provisions in this rule. First,
the Bureau is amending
§ 1026.19(e)(3)(iv)(D) which, as adopted
by the 2013 TILA–RESPA Final Rule,
requires creditors to provide a revised
version of the disclosures required
under paragraph § 1026.19(e)(1)(i) to the
consumer with the revised interest rate,
the points disclosed pursuant to
§ 1026.37(f)(1), lender credits, and any
other interest rate dependent charges
and terms, on the date the rate is locked.
As discussed in the section-by-section
analysis above, the Bureau believes that
this requirement, if unchanged, is likely
to result in at least some creditors
imposing cut-off times that only allow
consumers to lock their interest rates
only on business days and during preset
hours due to the costs associated with
providing the disclosure to the
consumer on the date when the interest
rate is locked. The Bureau believes that
consumers are unlikely to choose
creditors based on the creditors’ policies
regarding interest rate locks and,
moreover, that consumers would be
unlikely to know whether their creditors
will allow interest rate locks at flexible
times until the consumer actually
attempts to lock the rate. Thus,
consumers of creditors who will not
allow locks at flexible times will
experience inconvenience. Given that
consumers are unlikely to know of this
practice until they attempt to lock the
rate, this practice is unlikely to be
corrected or influenced by market
competition.
Given these concerns, the Bureau
proposed to relax the same-day timing
requirement and give creditors until the
next business day after the rate is locked
to provide a revised version of the
disclosures to consumers. As described
in the section-by-section analysis above,
in light of the comments received, the
Bureau is instead finalizing an
amendment to the provision that affords
creditors three business days after the
rate is locked to provide a revised
version of the disclosures.
In response to the proposal, several
commenters noted that the proposed
next-business-day requirement presents
many of the same operational challenges
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to industry as a same-day redisclosure
requirement. These commenters
suggested that three business days
would provide adequate time for
creditors to issue revised disclosures,
but that one business day would not. No
commenters suggested that extending
the timing requirement beyond the next
business day would impact consumers
adversely.
The Bureau is adopting proposed
§ 1026.19(e)(3)(iv)(D), modified to
extend the timing requirement to no
later than three business days after the
date the interest rate is locked. The
change will harmonize the timing
requirement in § 1026.19(e)(3)(iv)(D)
with the other timing requirements for
redisclosure and thus may facilitate
compliance and compliance monitoring
and also may reduce consumer
confusion. Small creditors, in particular,
may find it easier to comply with a
three-day redisclosure timing
requirement. Finally, the Bureau
believes that the next-business-day
requirement might not give creditors
adequate time to confirm the
consumer’s intentions where the
consumer’s attempts to lock the rate
through an incorrect channel, or the
communication requesting a rate lock
(e.g., a voicemail or email left with the
creditor) is ambiguous. The Bureau does
not possess the data necessary to
estimate the impact of the change to
three full business days quantitatively.
Second, the Bureau is adding a new
provision that allows for a specific
statement related to construction loans
in transactions involving new
construction to be placed on the Loan
Estimate. For these loans, the 2013
TILA–RESPA Final Rule requires that
creditors include a statement on the
Loan Estimate in order to preserve their
ability to redisclose estimates prior to
settlement. However, this language is
found only in § 1026.19(e)(3)(iv)(F),
which governs timing and procedure,
and no corresponding provision exists
in the section that governs the content
of the disclosures. Without this new
provision, creditors will have lower
incentives to originate these
construction loans, especially if they
believe that the Loan Estimate might
need to be revised. Consumers either
will not be able to get a commitment to
fund construction loans until most of
the uncertainty about the terms is
resolved or creditors will price in a
premium, to account for the creditor’s
inability to redisclose estimates after the
initial 60 days.
The Bureau believes that both
amendments, extending the time for rate
lock redisclosure and adding language
on new construction loans, provide
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options that a financial institution is
free to undertake or not to undertake,
and thus present no cost to creditors.
The Bureau believes that both
provisions present some benefits to
creditors. The Bureau believes that the
first provision could present both
benefits and costs to consumers, while
the second provision presents benefits
to consumers.
B. Potential Benefits and Costs to
Consumers and Covered Persons
Relaxing the Same-day Redisclosure
Requirement for Interest Rate Locks
This amendment provides an option
to creditors: creditors may continue to
provide revised disclosures on the date
the rate is locked if they so choose.
Therefore, some creditors will benefit
from this amendment by not having to
redisclose on the date the rate is locked,
while other creditors may continue to
redisclose on the date the rate is locked
if they so choose, and are as well off as
they would have been without this
amendment. All creditors will enjoy
increased flexibility. No creditors will
face increased costs.
Under the current rule, the Bureau
believes that some creditors could
continue offering flexible time periods
for interest rate locks, but others, for
example, might choose to impose cut-off
times that only permit consumers to
lock interest rates on business days and
at times early in the day in order to ease
their compliance costs. Other creditors
might change their existing practices
and allow consumers to request a rate
lock at any time, but only contractually
lock the interest rate on the business
day after the consumer requests a rate
lock, instead of on the date the rate lock
is requested. Consumers of these
creditors could benefit from this
amendment through the increased
convenience of being able to lock the
interest rate at more flexible times.
Consumers of creditors that would
continue to allow flexibility in locking
interest rates might experience a cost
from the amendment: their revised Loan
Estimate may not be provided until up
to three business days later. However,
some of these creditors may still provide
a revised Loan Estimate on the date that
the interest rate is locked, for example,
because they have already put in place
the system to provide the redisclosures
on the date the rate is locked and do not
want to change their systems. If the
creditor does not provide the revised
Loan Estimate until up to three business
days later, then the potential consumer
harm is the time difference between
when the consumer would receive the
revised disclosures.
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While the Bureau does not possess
any data, and is not aware of a source
to obtain data, that would enable it to
report the quantitative effects of this
amendment, it believes any harm to
consumers from the extension of the
rate-lock-redisclosure timing
requirement is minor. Under current
law and practice pursuant to
§ 1024.7(f)(5), creditors have three
business days from rate lock to
redisclose, and the Bureau has not
received any data or reports of
consumer harm resulting from a three
business day turnaround time for
redisclosure.36
Specific Language on Construction
Loans’ Loan Estimates
The Bureau believes that without this
new provision, creditors that ordinarily
originate construction loans in
transactions involving a new
construction would be forced either to
originate only those construction loans
for which the creditor is certain that no
redisclosure prior to settlement will be
necessary, or to price in the risk of
having to cure any amounts charged
over the estimates initially provided
more than 60 days before settlement,
absent some other type of a redisclosure
triggering event. Creditors that choose
the second option, including the
estimated cost of cure in their pricing,
risk miscalibrating the pricing and
losing consumers to less risk-averse
competitors or facing unanticipated
costs if they are required to cure any
amounts that the consumer is charged
for settlement charges that exceed the
initial estimated amounts. In all events,
creditors risk losing consumers to other
options. Accordingly, this new
provision presents benefits to the
creditors that decide to originate these
construction loans and presents no
costs.
As noted above, under the current
rule, a consumer who needs a
construction loan may only be able to
obtain a construction loan where the
creditor has priced in the risk of having
to cure any amounts charged over the
estimates initially provided over 60
days before settlement, which would be
a cost to consumers. On the other hand,
without this new provision, the Loan
Estimate would have provided
consumers more certainty concerning
loan terms and settlement costs because
creditors would be limited in their
ability to redisclose and change the
terms or costs of the loan. Where
creditors misgauged the initial Loan
Estimate, consumers might be entitled
to receive a cure. However, the Bureau
36 See
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believes that these benefits to
consumers are marginal, given that
construction loans are inherently
volatile and subject to events beyond
the creditor’s control. As a result, the
Bureau believes that creditors barred
from redisclosing a Loan Estimate
provided more than 60 days prior to
consummation would be less likely to
originate such loans and that any
increased certainty, where creditors
were willing to commit to new
construction loans well in advance of
consummation, would come at the price
of increased costs to consumers.
The Bureau does not possess any data,
and is not aware of a source to obtain
data, that would enable it to report the
number of transactions affected or to
quantify the extent of creditor and
consumer benefits.
C. Impact on Covered Persons With No
More Than $10 Billion in Assets
The amendment regarding interest
rate locks could have two particular
effects on covered persons with no more
than $10 billion in assets. First, covered
persons with no more than $10 billion
in assets are more likely to benefit from
this provision to the extent that
redisclosure of the Loan Estimate on the
date the interest rate is locked may
require software and business processes
upgrade costs. Larger covered persons
are more likely to originate a sufficient
number of transactions to make it worth
implementing these changes, as
opposed to choosing to offer interest
rate locks to consumers only at set times
during business hours.
In addition, creditors located in more
than one time zone might have to offer
a shorter preset adjustment time to some
customers (for example, if the location
of the rate lock operation is in the
Eastern Time zone), but covered persons
with no more than $10 billion in assets
are more likely to be located in a single
time zone. From this perspective,
covered persons with no more than $10
billion in assets are less likely to benefit
from this amendment. The Bureau does
not possess data to quantify either of the
two possible aforementioned effects of
the provision on covered persons with
no more than $10 billion in assets.
The Bureau believes that covered
persons with no more than $10 billion
in assets will not be differentially
affected by the new provision regarding
construction loans.
D. Impact on Access to Credit
The Bureau does not believe that
there will be an adverse impact on
access to credit resulting from either of
the changes adopted by this final rule.
There may be an expansion of access to
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credit, if the second provision facilitates
the making of construction loans as the
Bureau anticipates.
E. Impact on Rural Areas
The Bureau believes that rural areas
might benefit more than urban areas
from the provision for construction
loans and the amendment to the existing
provision for rate lock redisclosure.
Competition may drive creditors to
originate construction loans despite the
possible redisclosure issues and to
provide interest rate locks throughout
the day despite the same-day
redisclosure requirement. Thus, rural
areas are more likely to benefit from
these two provisions, to the extent that
there are fewer creditors operating in
rural areas than in urban areas and to
the extent that competition would affect
these issues.
VII. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (the
RFA), as amended by the Small
Business Regulatory Enforcement
Fairness Act of 1996, requires each
agency to consider the potential impact
of its regulations on small entities,
including small businesses, small
governmental units, and small nonprofit
organizations. The RFA defines a ‘‘small
business’’ as a business that meets the
size standard developed by the Small
Business Administration pursuant to the
Small Business Act. The RFA generally
requires an agency to conduct an initial
regulatory flexibility analysis (IRFA)
and a final regulatory flexibility analysis
(FRFA) of any rule subject to noticeand-comment rulemaking requirements,
unless the agency certifies that the rule
will not have a significant economic
impact on a substantial number of small
entities. The Bureau also is subject to
certain additional procedures under the
RFA involving the convening of a panel
to consult with small business
representatives prior to proposing a rule
for which an IRFA is required.
An IRFA is not required for this rule
because it will not have a significant
economic impact on any small entities.
The Bureau does not expect the rule to
impose costs on covered persons. All
methods of compliance under current
law will remain available to small
entities when these provisions become
effective. Thus, a small entity that is in
compliance with current law need not
take any additional action.
Accordingly, the undersigned certifies
that this final rule will not have a
significant economic impact on a
substantial number of small entities.
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VIII. Paperwork Reduction Act
Under the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501 et seq.),
Federal agencies are generally required
to seek the Office of Management and
Budget (OMB) approval for information
collection requirements prior to
implementation. The collections of
information related to Regulations Z and
X have been previously reviewed and
approved by OMB in accordance with
the PRA and assigned OMB Control
Numbers 3170–0015 (Regulation Z) and
3170–0016 (Regulation X). Under the
PRA, the Bureau may not conduct or
sponsor and, notwithstanding any other
provision of law, a person is not
required to respond to an information
collection unless the information
collection displays a valid control
number assigned by OMB.
The Bureau has determined that this
final rule would not impose any new or
revised information collection
(recordkeeping, reporting, or disclosure)
requirements on covered entities or
members of the public that would
constitute collections of information
requiring OMB approval under the PRA.
List of Subjects
12 CFR Part 1024
Condominiums, Consumer protection,
Housing, Mortgage servicing, Mortgages,
Reporting and recordkeeping
requirements.
12 CFR Part 1026
Advertising, Consumer protection,
Credit, Credit unions, Mortgages,
National banks, Recordkeeping and
recordkeeping requirements, Reporting,
Savings associations, Truth in lending.
Authority and Issuance
For the reasons set forth in the
preamble, the Bureau amends
Regulation X, 12 CFR part 1024, and
Regulation Z, 12 CFR part 1026, as set
forth below:
PART 1024—REAL ESTATE
SETTLEMENT PROCEDURES ACT
(REGULATION X)
1. The authority citation for part 1024
continues to read as follows:
■
Authority: 12 U.S.C. 2603–2605, 2607,
2609, 2617, 5512, 5532, 5581.
Subpart A—General Provisions
2. Section 1024.5 is amended by
revising paragraph (d) introductory text
to read as follows:
■
§ 1024.5
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Coverage of RESPA.
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(d) Partial exemptions for certain
mortgage loans. Sections 1024.6, 1024.7,
1024.8, 1024.10, and 1024.33(a) do not
apply to a federally related mortgage
loan:
*
*
*
*
*
PART 1026—TRUTH IN LENDING
(REGULATION Z)
3. The authority citation for part 1026
continues to read as follows:
■
Authority: 12 U.S.C. 2601, 2603–2605,
2607, 2609, 2617, 5511, 5512, 5532, 5581; 15
U.S.C. 1601 et seq.
Subpart C—Closed-End Credit
4. Section 1026.19 is amended by
revising paragraph (e)(3)(iv)(D) to read
as follows:
■
§ 1026.19 Certain mortgage and variablerate transactions.
*
*
*
*
*
(e) * * *
(3) * * *
(iv) * * *
(D) Interest rate dependent charges.
The points or lender credits change
because the interest rate was not locked
when the disclosures required under
paragraph (e)(1)(i) of this section were
provided. No later than three business
days after the date the interest rate is
locked, the creditor shall provide a
revised version of the disclosures
required under paragraph (e)(1)(i) of this
section to the consumer with the revised
interest rate, the points disclosed
pursuant to § 1026.37(f)(1), lender
credits, and any other interest rate
dependent charges and terms.
*
*
*
*
*
Subpart E—Special Rules for Certain
Home Mortgage Transactions
5. Section 1026.36 is amended by
adding paragraph (g)(2)(ii) to read as
follows:
■
§ 1026.36 Prohibited acts or practices and
certain requirements for credit secured by
a dwelling.
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(g) * * *
(2) * * *
(ii) The disclosures required by
§ 1026.19 (e) and (f);
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■ 6. Section 1026.37 is amended by
adding paragraph (m)(8) and revising
paragraph (o)(4)(i)(A) to read as follows:
§ 1026.37 Content of disclosures for
certain mortgage transactions (Loan
Estimate).
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(m) * * *
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(8) Construction loans. In transactions
involving new construction, where the
creditor reasonably expects that
settlement will occur more than 60 days
after the provision of the loan estimate,
at the creditor’s option, a clear and
conspicuous statement that the creditor
may issue a revised disclosure any time
prior to 60 days before consummation,
pursuant to § 1026.19(e)(3)(iv)(F).
*
*
*
*
*
(o) * * *
(4) * * *
(i) * * *
(A) The dollar amounts required to be
disclosed by paragraphs (b)(6) and (7),
(c)(1)(iii), (c)(2)(ii) and (iii), (c)(4)(ii), (f),
(g), (h), (i), and (l) of this section shall
be rounded to the nearest whole dollar,
except that the per diem amount
required to be disclosed by paragraph
(g)(2)(iii) of this section and the monthly
amounts required to be disclosed by
paragraphs (g)(3)(i) through (iii) and
(g)(3)(v) of this section shall not be
rounded.
*
*
*
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*
■ 7. Section 1026.38 is amended by
revising paragraphs (e)(3)(iii)(A),
(e)(4)(ii), (j)(2)(iv), (k)(2)(v), (k)(2)(vi),
and (t)(4)(ii) to read as follows:
(v) The amount of any loan secured by
a first lien on the property that will be
paid off as part of the real estate closing,
labeled ‘‘Payoff of First Mortgage Loan’’;
(vi) The amount of any loan secured
by a second lien on the property that
will be paid off as part of the real estate
closing, labeled ‘‘Payoff of Second
Mortgage Loan’’;
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*
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*
(t) * * *
(4) * * *
(ii) Percentages. The percentage
amounts required to be disclosed under
paragraphs (b), (f)(1), (n), and (o)(5) of
this section shall not be rounded and
shall be disclosed up to two or three
decimal places. The percentage amount
required to be disclosed under
paragraph (o)(4) of this section shall not
be rounded and shall be disclosed up to
three decimal places. If the amount is a
whole number then the amount
disclosed shall be truncated at the
decimal point.
*
*
*
*
*
■ 8. Appendix H to part 1026 is
amended by revising the Description in
H–24(G) to read as follows.
§ 1026.38 Content of disclosures for
certain mortgage transactions (Closing
Disclosure).
*
*
*
*
*
*
(e) * * *
(3) * * *
(iii) * * *
(A) If the amount disclosed under
paragraph (e)(3)(ii) of this section is
different than the amount disclosed
under paragraph (e)(3)(i) of this section
(unless the difference is due to
rounding), a statement of that fact, along
with a statement that the consumer paid
such amounts prior to consummation of
the transaction; or
*
*
*
*
*
(4) * * *
(ii) Under the subheading ‘‘Final,’’ the
total amount of payoffs and payments
made to third parties disclosed pursuant
to paragraph (t)(5)(vii)(B) of this section,
to the extent known, disclosed as a
negative number;
*
*
*
*
*
(j) * * *
(2) * * *
(iv) The amount of any existing loans
that the consumer is assuming, or any
loans subject to which the consumer is
taking title to the property, labeled
‘‘Existing Loan(s) Assumed or Taken
Subject to’’;
*
*
*
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*
(k) * * *
(2) * * *
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Appendix H to Part 1026—Closed-End
Forms and Clauses
*
*
*
*
H–24(G) Mortgage Loan Transaction Loan
Estimate—Modification to Loan Estimate for
Transaction Not Involving Seller—Model
Form
Description: This is a blank model Loan
Estimate that illustrates the application of the
content requirements in § 1026.37, with the
optional alternative tables permitted by
§ 1026.37(d)(2) and (h)(2) for transactions
without a seller. This form provides one
variation of page one, four variations of page
two, and four variations of page three,
reflecting the variable content requirements
in § 1026.37.
*
*
*
*
*
9. In Supplement I to part 1026:
a. Under Section 1026.19—Certain
Mortgage and Variable-Rate
Transactions:
■ i. Under paragraph 19(e)(3)(iv)(D),
paragraph 1 is revised.
■ ii. Under paragraph 19(e)(4)(i),
paragraph 2 is revised.
■ b. Under Section 1026.37—Content of
Disclosures for Certain Mortgage
Transactions (Loan Estimate):
■ i. Under paragraph 37(b)(6), paragraph
1 is revised.
■ ii. Under paragraph 37(c)(2)(ii),
paragraph 2 is revised.
■ ii. Under paragraph 37(c)(2)(iii),
paragraph 1 is revised.
■ iii. Under paragraph 37(c)(4)(iv),
paragraph 2 is revised.
■ iv. Under paragraph 37(h)(1)(ii),
paragraph 1 is revised.
■
■
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v. Under paragraph 37(m), the
subheading 37(m)(8) Construction loans
and paragraph 1 are added.
■ vi. Under paragraph 37(n), paragraph
2 is revised.
■ c. Under Section 1026.38—Content of
Disclosures for Certain Mortgage
Transactions (Closing Disclosure):
■ i. Under paragraph 38(a)(3)(vi),
paragraph 2 is added.
■ ii. Under paragraph 38(e)(1)(iii)(A),
paragraph 1 is revised.
■ iii. Under paragraph 38(e)(2)(iii)(A),
paragraph 3 is added.
■ iv. Under paragraph 38(g)(2),
paragraph 4 is revised.
The revisions and additions read as
follows:
■
Supplement I to Part 1026—Official
Interpretations
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*
19(e)(4)(i) General Rule
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Subpart C—Closed-End Credit
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Section 1026.19—Certain Mortgage and
Variable-Rate Transactions
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19(e)(3)(iv)(D) Interest Rate Dependent
Charges
1. Requirements. If the interest rate is
not locked when the disclosures
required by § 1026.19(e)(1)(i) are
provided, a valid reason for revision
exists when the interest rate is
subsequently locked. No later than three
business days after the date the interest
rate is locked, § 1026.19(e)(3)(iv)(D)
requires the creditor to provide a
revised version of the disclosures
required under § 1026.19(e)(1)(i)
reflecting the revised interest rate, the
points disclosed pursuant to
§ 1026.37(f)(1), lender credits, and any
other interest rate dependent charges
and terms. The following examples
illustrate this requirement:
i. Assume a creditor sets the interest
rate by executing a rate lock agreement
with the consumer. If such an agreement
exists when the original disclosures
required under § 1026.19(e)(1)(i) are
provided, then the actual points and
lender credits are compared to the
estimated points disclosed pursuant to
§ 1026.37(f)(1) and lender credits
included in the original disclosures
provided under § 1026.19(e)(1)(i) for the
purpose of determining good faith
pursuant to § 1026.19(e)(3)(i). If the
consumer enters into a rate lock
agreement with the creditor after the
disclosures required under
§ 1026.19(e)(1)(i) were provided, then
§ 1026.19(e)(3)(iv)(D) requires the
creditor to provide, no later than three
business days after the date that the
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13:41 Feb 18, 2015
consumer and the creditor enter into a
rate lock agreement, a revised version of
the disclosures required under
§ 1026.19(e)(1)(i) reflecting the revised
interest rate, the points disclosed
pursuant to § 1026.37(f)(1), lender
credits, and any other interest rate
dependent charges and terms. Provided
that the revised version of the
disclosures required under
§ 1026.19(e)(1)(i) reflect any revised
points disclosed pursuant to
§ 1026.37(f)(1) and lender credits, the
actual points and lender credits are
compared to the revised points and
lender credits for the purpose of
determining good faith pursuant to
§ 1026.19(e)(3)(i).
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*
2. Relationship to
§ 1026.19(e)(3)(iv)(D). If the reason for
the revision is provided under
§ 1026.19(e)(3)(iv)(D), notwithstanding
the three-business-day rule set forth in
§ 1026.19(e)(4)(i), § 1026.19(e)(3)(iv)(D)
requires the creditor to provide a
revised version of the disclosures
required under § 1026.19(e)(1)(i) no later
than three business days after the date
the interest rate is locked. See comment
19(e)(3)(iv)(D)–1.
*
*
*
*
*
Subpart E—Special Rules for Certain
Home Mortgage Transactions
*
*
*
*
*
Section 1026.37—Content of Disclosures
for Certain Mortgage Transactions (Loan
Estimate)
*
*
*
*
*
37(b)(6) Adjustments After
Consummation
1. Periods not in whole years. For
guidance on how to disclose increases
after consummation that occur after a
number of months less than 24 but that
do not equate to a number of whole
years or within a number of days less
than a week, see the guidance provided
in comment 37(a)(10)–3. For increases
that occur after more than 24 months,
see the guidance provided in comment
37(b)(8)–1.
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*
*
*
*
Paragraph 37(c)(2)(ii)
*
*
*
*
*
2. Relationship to principal and
interest disclosure. The creditor
discloses mortgage insurance premiums
pursuant to § 1026.37(c)(2)(ii) on the
same periodic basis that payments for
principal and interest are disclosed
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8777
pursuant to § 1026.37(c)(2)(i), even if
mortgage insurance premiums are
actually paid on some other periodic
basis.
Paragraph 37(c)(2)(iii)
1. Escrow disclosure. The disclosure
described in § 1026.37(c)(2)(iii) is
required only if the creditor will
establish an escrow account for the
payment of some or all of the charges
described in § 1026.37(c)(4)(ii). If no
escrow account for the payment of some
or all such charges will be established,
the creditor discloses the escrow
amount as ‘‘0.’’ If an escrow account is
established for the payment of amounts
described in § 1026.37(c)(4)(ii), but no
escrow payment is required with a
particular periodic payment (such as
with a final balloon payment) or range
of payments, the escrow payment
should be disclosed as ‘‘—.’’
*
*
*
*
*
Paragraph 37(c)(4)(iv)
*
*
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*
2. Amounts paid by the creditor using
escrow account funds. Section
1026.37(c)(4)(iv) requires the creditor to
disclose an indication of whether the
amounts disclosed pursuant to
§ 1026.37(c)(4)(ii) will be paid by the
creditor using escrow account funds. If
the amount disclosed pursuant to
§ 1026.37(c)(4)(ii) requires the creditor
to disclose a description of more than
one amount and only some of those
amounts will be paid by the creditor
using escrow account funds, the creditor
may indicate that only some of those
amounts will be paid using escrow
account funds, such as by using the
word ‘‘some.’’
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*
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*
*
37(h)(1)(ii) Closing Costs Financed
1. Calculating amount. The amount of
closing costs financed disclosed under
§ 1026.37(h)(1)(ii) is determined by
subtracting the estimated total amount
of payments to third parties not
otherwise disclosed pursuant to
§ 1026.37(f) and (g) from the total loan
amount disclosed pursuant to
§ 1026.37(b)(1). If the result of the
calculation is a positive number, that
amount is disclosed as a negative
number under § 1026.37(h)(1)(ii), but
only to the extent that it does not exceed
the total amount of closing costs
disclosed under § 1026.37(g)(6). If the
result of the calculation is zero or
negative, the amount of $0 is disclosed
under § 1026.37(h)(1)(ii).
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37(m)(8) Construction Loans
1. Clear and conspicuous statement
regarding redisclosure for construction
loans. For construction loans in
transactions involving new
construction, where the creditor
reasonably expects the settlement date
to be 60 days or more after the provision
of the disclosures required under
§ 1026.19(e)(1)(i), providing the
statement, ‘‘You may receive a revised
Loan Estimate at any time prior to 60
days before consummation’’ under the
master heading ‘‘Additional Information
About This Loan’’ and the heading
‘‘Other Considerations’’ pursuant to
§ 1026.37(m)(8) satisfies the
requirements set forth in
§ 1026.19(e)(3)(iv)(F) that the statement
be made clearly and conspicuously on
the disclosure.
‘‘increased’’ is in boldface font and is
replaced with the word ‘‘decreased’’ as
applicable, complies with this
requirement.
*
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*
*
*
37(n) Signature Statement
38(g)(2) Prepaids
*
*
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*
*
*
2. Multiple consumers. If there is
more than one consumer who will be
obligated in the transaction, the first
consumer signs as the applicant and
each additional consumer signs as a coapplicant. If there is not enough space
under the heading ‘‘Confirm Receipt’’ to
provide signature lines for every
consumer in the transaction, the
creditor may add additional signature
pages, as needed, at the end of the form
for the remaining consumers’ signatures.
However, the creditor is required to
disclose the heading and statement
required by § 1026.37(n)(1) on such
additional pages.
*
*
*
*
*
Paragraph 38(e)(2)(iii)(A)
*
*
*
*
*
3. Statements regarding excess
amount and any credit to the consumer.
Section 1026.38(e)(2)(iii)(A) requires a
statement that an increase in closing
costs exceeds legal limits by the dollar
amount of the excess and a statement
directing the consumer to the disclosure
of lender credits under § 1026.38(h)(3) if
a credit is provided under
§ 1026.19(f)(2)(v). See form H–25(F) in
appendix H to this part for examples of
such statements.
*
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*
4. Interest rate for prepaid interest.
The dollar amounts disclosed pursuant
to § 1026.38(g)(2) must be based on the
interest rate disclosed under
§ 1026.38(b), as required by
§ 1026.37(b)(2).
*
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*
Dated: January 18, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2015–01321 Filed 2–18–15; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF COMMERCE
Section 1026.38—Content of Disclosures
for Certain Mortgage Transactions
(Closing Disclosure)
National Oceanic and Atmospheric
Administration
*
15 CFR Part 922
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*
38(a)(3)(vi) Property
[Docket No. 120809321–4999–03]
*
RIN 0648–BC26
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2. Multiple properties. Where more
than one property secures the credit
transaction, § 1026.38(a)(3)(vi) requires
disclosure of all property addresses. If
the addresses of all properties securing
the transaction do not fit in the space
allocated on the Closing Disclosure, an
additional page with the addresses of all
such properties may be appended to the
end of the form.
*
*
*
*
*
Paragraph 38(e)(1)(iii)(A)
1. Statements of increases or
decreases. Section 1026.38(e)(1)(iii)(A)
requires a statement of whether the
amount increased or decreased from the
estimated amount. The statement, ‘‘This
amount increased,’’ in which the word
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Gulf of the Farallones and Monterey
Bay National Marine Sanctuaries
Regulations on Introduced Species
Office of National Marine
Sanctuaries (ONMS), National Oceanic
and Atmospheric Administration
(NOAA), Department of Commerce
(DOC).
ACTION: Final rule.
AGENCY:
On March 18, 2013, NOAA
proposed to prohibit the introduction of
introduced species into the state waters
of Gulf of the Farallones and Monterey
Bay national marine sanctuaries
(GFNMS and MBNMS, respectively).
The proposed prohibition included
exceptions for the catch and release of
SUMMARY:
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
striped bass and for introduced species
of shellfish as part of commercial
aquaculture activities in the Tomales
Bay region of GFNMS (the only
geographic area within sanctuaries
offshore of California where aquaculture
occurs). On March 27, 2014, NOAA
amended the proposal to allow GFNMS
and MBNMS to consider authorizing the
introduction of certain introduced
species of shellfish, those considered to
be non-invasive, from commercial
aquaculture culture projects in all state
waters of the sanctuaries. NOAA’s final
action allows MBNMS to authorize state
of California permits or leases for
commercial aquaculture projects in state
waters involving introduced species of
shellfish that a) the state management
agencies and NOAA have determined to
be non-invasive, and b) will not have
significant adverse impacts to sanctuary
resources or qualities. For GFNMS,
NOAA will not adopt authorization
authority for similar projects in state
waters at this time and will revert to the
proposal from March 2013, which
prohibits introduction of introduced
species, exempts state permitted
commercial shellfish aquaculture
activities within Tomales Bay only, and
provides an exception for the catch and
release of striped bass.
DATES: Effective Date: Pursuant to
section 304(b) of the National Marine
Sanctuaries Act (NMSA) (16 U.S.C.
1434(b)), the revised designation and
regulations shall take effect and become
final after the close of a review period
of forty-five days of continuous session
of Congress beginning on February 19,
2015. NOAA will publish an
announcement of the effective date of
the final regulations in the Federal
Register.
FOR FURTHER INFORMATION CONTACT:
Dave Lott, Regional Operations
Coordinator, West Coast Region, Office
of National Marine Sanctuaries, 99
Pacific Street, STE 100F, Monterey, CA
93940. (831) 647–1920.
SUPPLEMENTARY INFORMATION:
I. Background
On November 20, 2008, NOAA issued
a final rule associated with the Joint
Management Plan Review (JMPR) of
GFNMS, MBNMS, and Cordell Bank
National Marine Sanctuary (73 FR
70488). Among other things, the rule
prohibited the introduction of
introduced species within or into both
the federal and state waters of GFNMS
and MBNMS, except for the catch and
release of striped bass in both
sanctuaries and from existing
commercial aquaculture activities
within the Tomales Bay region of
E:\FR\FM\19FER1.SGM
19FER1
Agencies
[Federal Register Volume 80, Number 33 (Thursday, February 19, 2015)]
[Rules and Regulations]
[Pages 8767-8778]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01321]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 80, No. 33 / Thursday, February 19, 2015 /
Rules and Regulations
[[Page 8767]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Parts 1024 and 1026
[Docket No. CFPB-2014-0028]
RIN 3170-AA48
Amendments to the 2013 Integrated Mortgage Disclosures Rule Under
the Real Estate Settlement Procedures Act (Regulation X) and the Truth
In Lending Act (Regulation Z) and the 2013 Loan Originator Rule Under
the Truth in Lending Act (Regulation Z)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule; Official Interpretations.
-----------------------------------------------------------------------
SUMMARY: This final rule modifies the 2013 TILA-RESPA Final Rule. This
rule extends the timing requirement for revised disclosures when
consumers lock a rate or extend a rate lock after the Loan Estimate is
provided and permits certain language related to construction loans for
transactions involving new construction on the Loan Estimate. This rule
also amends the 2013 Loan Originator Final Rule to provide for
placement of the Nationwide Mortgage Licensing System and Registry ID
(NMLSR ID) on the integrated disclosures. Additionally, the Bureau is
making non-substantive corrections, including citation and cross-
reference updates and wording changes for clarification purposes, to
various provisions of Regulations X and Z as amended or adopted by the
2013 TILA-RESPA Final Rule.
DATES: The rule is effective August 1, 2015. The final rule applies to
transactions for which the creditor or mortgage broker receives an
application on or after August 1, 2015.
FOR FURTHER INFORMATION CONTACT: Jaydee DiGiovanni, Policy and
Procedure Analyst; Richard Arculin and David Friend, Counsels; Office
of Regulations at (202) 435-7700.
SUPPLEMENTARY INFORMATION:
I. Summary of Final Rule
In November 2013, pursuant to sections 1098 and 1100A of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act),
the Bureau issued the Integrated Mortgage Disclosures under the Real
Estate Settlement Procedures Act (Regulation X) and the Truth in
Lending Act (Regulation Z) (2013 TILA-RESPA Final Rule),\1\ combining
certain disclosures that consumers receive in connection with applying
for and closing on a mortgage loan.
---------------------------------------------------------------------------
\1\ 78 FR 79730 (Dec. 31, 2013).
---------------------------------------------------------------------------
On October 10, 2014, the Bureau proposed several amendments to
Regulation Z provisions adopted by the 2013 TILA-RESPA Final Rule \2\
(the proposal):
---------------------------------------------------------------------------
\2\ 79 FR 64336 (Oct. 29, 2014).
---------------------------------------------------------------------------
To extend the timing requirement for creditors to provide
a revised Loan Estimate to consumers when consumers lock a rate or
extend a rate lock after the Loan Estimate is provided. The 2013 TILA-
RESPA Final Rule requires creditors to provide a revised Loan Estimate
with the revised interest rate, the points disclosed pursuant to Sec.
1026.37(f)(1), lender credits, and any other interest rate dependent
charges and terms on the date the interest rate is locked. The Bureau
proposed to extend the timing requirement to the next business day
after the rate is locked.
To provide for the placement on the Loan Estimate form of
language relating to construction loans in transactions involving new
construction that is required in order for creditors to redisclose
estimated charges.
To make non-substantive corrections, including minor
wording changes, corrected or updated citations and cross-references,
in the regulation and commentary adopted by the 2013 TILA-RESPA Final
Rule.
The Bureau also proposed to amend the 2013 Loan Originator
Final Rule \3\ to provide for placement of the NMLSR ID on the
integrated disclosures.
---------------------------------------------------------------------------
\3\ 78 FR 11280 (Feb. 15, 2013).
---------------------------------------------------------------------------
With respect to the proposal to allow creditors to redisclose the
Loan Estimate one business day after the interest rate is locked, the
Bureau is extending the timing requirement to three business days after
the rate is locked. With respect to all other aspects of the proposal,
the Bureau is adopting the amendments as proposed. The Bureau also is
adopting additional, non-substantive corrections identified since the
proposal was issued.
II. Background
A. The Integrated Disclosures Rulemaking
In July 2010, the Dodd-Frank Act was enacted. The Dodd-Frank Act
transferred rulemaking authority under both TILA and RESPA to the
Bureau. In addition, Dodd-Frank Act sections 1032(f), 1098, and 1100A
mandated that the Bureau establish a single disclosure scheme for use
by lenders or creditors in complying with the disclosure requirements
of both RESPA and TILA. Section 1098(2) of the Dodd-Frank Act amended
RESPA section 4(a) to require that the Bureau publish a single,
integrated disclosure for mortgage loan transactions, including ``the
disclosure requirements of this section and section 5, in conjunction
with the disclosure requirements of [TILA]. . . .'' \4\ Similarly,
section 1100A(5) of the Dodd-Frank Act amended TILA section 105(b) to
require that the Bureau publish a single, integrated disclosure for
mortgage loan transactions, including ``the disclosure requirements of
this title in conjunction with the disclosure requirements of [RESPA].
. . .'' \5\ The Dodd-Frank Act required the Bureau to issue for public
comment rules and model disclosures that integrated the
[[Page 8768]]
TILA and RESPA disclosures by July 21, 2012.\6\
---------------------------------------------------------------------------
\4\ 12 U.S.C. 2603(a).
\5\ 15 U.S.C. 1604(b). The amendments to RESPA and TILA
mandating a ``single, integrated disclosure'' are among numerous
conforming amendments to existing Federal laws found in subtitle H
of the Consumer Financial Protection Act of 2010. Subtitle C of the
Consumer Financial Protection Act, ``Specific Bureau Authorities,''
codified at 12 U.S.C. chapter 53, subchapter V, part C, contains a
similar provision. Specifically, section 1032(f) of the Dodd-Frank
Act provides that, by July 21, 2012, the Bureau ``shall propose for
public comment rules and model disclosures that combine the
disclosures required under [TILA] and sections 4 and 5 of [RESPA]
into a single, integrated disclosure for mortgage loan transactions
covered by those laws, unless the Bureau determines that any
proposal issued by the [Board] and [HUD] carries out the same
purpose.'' 12 U.S.C. 5532(f). The Bureau issued the 2012 TILA-RESPA
Proposal pursuant to that mandate and the parallel mandates
established by the conforming amendments to RESPA and TILA,
discussed above.
\6\ 12 U.S.C. 5532(f).
---------------------------------------------------------------------------
The Bureau issued proposed integrated disclosure forms and rules
for public comment on July 9, 2012 (the 2012 TILA-RESPA Proposal).\7\
On December 31, 2013, more than 17 years after Congress first directed
the Federal Reserve Board and the Department of Housing and Urban
Development (HUD) to integrate the disclosures under TILA and RESPA,
the Bureau published the 2013 TILA-RESPA Final Rule.\8\
---------------------------------------------------------------------------
\7\ See Press Release, Consumer Financial Protection Bureau,
CFPB proposes ``Know Before You Owe'' Mortgage Forms (July 9, 2012),
available at https://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-proposes-know-before-you-owe-mortgage-forms/; CFPB Mortgage Disclosure Team, CFPB Blog, Know Before You
Owe: Introducing our proposed mortgage disclosure forms (July 9,
2012), available at https://www.consumerfinance.gov/blog/know-before-you-owe-introducing-our-proposed-mortgage-disclosure-forms/.
\8\ 78 FR 79730 (Dec. 31, 2013).
---------------------------------------------------------------------------
B. Implementation Support
In early 2014, the Bureau initiated efforts to support industry
implementation of the 2013 TILA-RESPA Final Rule. These on-going
efforts include: (1) The publication of a plain-language compliance
guide and guide to forms to help industry understand the new rules,
including updates to the guides, as needed; (2) the publication of a
readiness guide for institutions to evaluate their readiness and
facilitate compliance with the new rules; (3) the publication of a
disclosure timeline that illustrates the process and timing
requirements of the new disclosure rules; (4) an ongoing series of
webinars to address common interpretive questions; (5) roundtable
meetings with industry, including creditors, settlement service
providers, and technology vendors, to discuss implementation; (6)
participation in conferences and forums; and (7) close collaboration
with State and Federal regulators on implementation of the 2013 TILA-
RESPA Final Rule, including coordination on consistent examination
procedures. More information regarding the Bureau's TILA-RESPA
implementation initiative can be found on the Bureau's regulatory
implementation Web site at www.consumerfinance.gov/regulatory-implementation.
III. Comments
The Bureau received 31 comments from creditors, trade associations,
technology vendors, and others in response to the October 10, 2014
proposal to amend the 2013 TILA-RESPA Final Rule. Many of the comments
discussed issues beyond the scope of the proposal. The Bureau discusses
those comments that were responsive to the proposal in the section-by-
section analysis below. This final rule does not make any changes
outside the scope of the proposal, other than additional, non-
substantive corrections identified since the proposal was issued.
IV. Legal Authority
The Bureau is issuing this final rule pursuant to its authority
under TILA, RESPA, and the Dodd-Frank Act. Section 1061 of the Dodd-
Frank Act transferred to the Bureau the ``consumer financial protection
functions'' previously vested in certain other Federal agencies,
including the Board's consumer protection functions relating to TILA
mortgage disclosures and the HUD Secretary's consumer protection
functions relating to RESPA.\9\ The term ``consumer financial
protection function'' is defined to include ``all authority to
prescribe rules or issue orders or guidelines pursuant to any Federal
consumer financial law, including performing appropriate functions to
promulgate and review such rules, orders, and guidelines.'' \10\ Title
X of the Dodd-Frank Act, including section 1061 of the Dodd-Frank Act,
along with TILA, RESPA, and certain subtitles and provisions of title
XIV of the Dodd-Frank Act, are Federal consumer financial laws.\11\
Accordingly, the Bureau has authority to issue regulations pursuant to
TILA and RESPA, including the disclosure requirements added to those
statutes by title XIV of the Dodd-Frank Act, as well as title X of the
Dodd-Frank Act.
---------------------------------------------------------------------------
\9\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 124 Stat. 1376, section 1061(b)(7) (2010); 12
U.S.C. 5581(b)(7).
\10\ 12 U.S.C. 5581(a)(1).
\11\ Dodd-Frank Act section 1002(14), 12 U.S.C. 5481(14)
(defining ``Federal consumer financial law'' to include the
``enumerated consumer laws'' and the provisions of title X of the
Dodd-Frank Act); Dodd-Frank Act section 1002(12), 12 U.S.C. 5481(12)
(defining ``enumerated consumer laws'' to include TILA and RESPA);
Dodd-Frank Act section 1400(b), 15 U.S.C. 1601 note (defining
``enumerated consumer laws'' to include certain subtitles and
provisions of Title XIV).
---------------------------------------------------------------------------
A. The Integrated Disclosure Mandate
Section 1032(f) of the Dodd-Frank Act requires that, ``[n]ot later
than one year after the designated transfer date [of July 21, 2011],
the Bureau shall propose for public comment rules and model disclosures
that combine the disclosures required under [TILA] and sections 4 and 5
of [RESPA], into a single, integrated disclosure for mortgage loan
transactions covered by those laws, unless the Bureau determines that
any proposal issued by the [Board] and [HUD] carries out the same
purpose.'' \12\ In addition, the Dodd-Frank Act amended section 105(b)
of TILA and section 4(a) of RESPA to require the integration of the
TILA disclosures and the disclosures required by sections 4 and 5 of
RESPA.\13\ The purpose of the integrated disclosure is to facilitate
compliance with the disclosure requirements of TILA and RESPA and to
help the consumer understand the transaction by using readily
understandable language to simplify the technical nature of the
disclosures.\14\
---------------------------------------------------------------------------
\12\ 12 U.S.C. 5532(f).
\13\ Section 1100A of the Dodd-Frank Act amended TILA section
105(b) to provide that the ``Bureau shall publish a single,
integrated disclosure for mortgage loan transactions (including real
estate settlement cost statements) which includes the disclosure
requirements of this title in conjunction with the disclosure
requirements of the Real Estate Settlement Procedures Act of 1974
that, taken together, may apply to a transaction that is subject to
both or either provisions of law.'' 15 U.S.C. 1604(b). Section 1098
of the Dodd-Frank Act amended RESPA section 4(a) to require the
Bureau to publish a ``single, integrated disclosure for mortgage
loan transactions (including real estate settlement cost statements)
which includes the disclosure requirements of this section and
section 5, in conjunction with the disclosure requirements of the
Truth in Lending Act that, taken together, may apply to a
transaction that is subject to both or either provisions of law.''
12 U.S.C. 2603(a).
\14\ See Dodd-Frank Act sections 1098, 1100A.
---------------------------------------------------------------------------
Although Congress imposed this integrated disclosure requirement,
it did not harmonize the underlying statutes. In particular, TILA and
RESPA establish different timing requirements for disclosing mortgage
credit terms and costs to consumers and require that those disclosures
be provided by different parties. TILA generally requires that, within
three business days of receiving the consumer's application and at
least seven business days before consummation of certain mortgage
transactions, creditors must provide consumers a good faith estimate of
the costs of credit.\15\ If the annual percentage rate that was
initially disclosed becomes inaccurate, TILA requires creditors to
redisclose the information at least three business days before
consummation.\16\ These disclosures must be provided in final form at
consummation.\17\ RESPA also requires that the creditor or broker
provide consumers with a good faith estimate of settlement charges no
later
[[Page 8769]]
than three business days after receiving the consumer's application.
However, unlike TILA, RESPA requires that, at or before settlement,
``the person conducting the settlement'' (which may or may not be the
creditor) provide the consumer with a statement that records all
charges imposed upon the consumer in connection with the
settlement.\18\
---------------------------------------------------------------------------
\15\ TILA section 128(b)(2)(A); 15 U.S.C. 1638(b)(2)(A). This
requirement applies to extensions of credit that are both secured by
a dwelling and subject to RESPA.
\16\ TILA section 128(b)(2)(D); 15 U.S.C. 1638(b)(2)(D).
\17\ TILA section 128(b)(2)(B)(ii); 15 U.S.C. 1638(b)(2)(B)(ii).
\18\ RESPA sections 4(b), 5(c); 12 U.S.C. 2603(b), 2604(c).
---------------------------------------------------------------------------
The Dodd-Frank Act did not reconcile these and other statutory
differences. Therefore, to meet the Dodd-Frank Act's mandate to
integrate the disclosures required by TILA and RESPA, the Bureau was
required to do so. Dodd-Frank Act section 1032(f), TILA section 105(b),
and RESPA section 4(a) provide the Bureau with authority to issue
regulations that reconcile certain provisions of TILA and RESPA to
carry out Congress' mandate to integrate the statutory disclosure
requirements.
B. Other Rulemaking and Exception Authorities
This rule also relies on the rulemaking and exception authorities
specifically granted to the Bureau by TILA, RESPA, and the Dodd-Frank
Act, including the authorities discussed below.
Truth in Lending Act
TILA section 105(a). As amended by the Dodd-Frank Act, TILA section
105(a), 15 U.S.C. 1604(a), directs the Bureau to prescribe regulations
to carry out the purposes of TILA and provides that such regulations
may contain additional requirements, classifications, differentiations,
or other provisions and may further provide for such adjustments and
exceptions for all or any class of transactions that the Bureau judges
are necessary or proper to effectuate the purposes of TILA, to prevent
circumvention or evasion thereof, or to facilitate compliance
therewith. A purpose of TILA is ``to assure a meaningful disclosure of
credit terms so that the consumer will be able to compare more readily
the various credit terms available to him and avoid the uninformed use
of credit.'' \19\ This stated purpose is informed by Congress' finding
that ``economic stabilization would be enhanced and the competition
among the various financial institutions and other firms engaged in the
extension of consumer credit would be strengthened by the informed use
of credit[.]'' \20\ Thus, strengthened competition among financial
institutions is a goal of TILA.
---------------------------------------------------------------------------
\19\ TILA section 102(a); 15 U.S.C. 1601(a).
\20\ TILA section 102(a).
---------------------------------------------------------------------------
Historically, TILA section 105(a) has served as a broad source of
authority for rules that promote the informed use of credit through
required disclosures and substantive regulation of certain practices.
Dodd-Frank Act section 1100A clarified the Bureau's section 105(a)
authority by amending that section to provide express authority to
prescribe regulations that contain ``additional requirements'' that the
Bureau finds are necessary or proper to effectuate the purposes of
TILA, to prevent circumvention or evasion thereof, or to facilitate
compliance. This amendment clarified the Bureau's authority to
prescribe requirements beyond those specifically listed in the statute
that meet the standards outlined in TILA section 105(a). The Dodd-Frank
Act also clarified the Bureau's rulemaking authority over certain high-
cost mortgages pursuant to section 105(a). As amended by the Dodd-Frank
Act, TILA section 105(a) authority to make adjustments and exceptions
to the requirements of TILA applies to all transactions subject to
TILA, except with respect to the provisions of TILA section 129 that
apply to the high-cost mortgages referred to in TILA section 103(bb),
15 U.S.C. 1602(bb).\21\
---------------------------------------------------------------------------
\21\ 15 U.S.C. 1639. TILA section 129 contains requirements for
certain high-cost mortgages, established by the Home Ownership and
Equity Protection Act (HOEPA), which are commonly called HOEPA
loans.
---------------------------------------------------------------------------
TILA section 129B(e). Dodd-Frank Act section 1405(a) amended TILA
to add new section 129B(e), 15 U.S.C. 1639B(e). That section authorizes
the Bureau to ``prohibit or condition terms, acts, or practices
relating to residential mortgage loans that the Bureau finds to be
abusive, unfair, deceptive, predatory, necessary or proper to ensure
that responsible, affordable mortgage credit remains available to
consumers in a manner consistent with the purposes of this section and
section 129C [of TILA], necessary or proper to effectuate the purposes
of this section and section 129C [of TILA], to prevent circumvention or
evasion thereof, or to facilitate compliance with such sections, or are
not in the interest of the borrower.'' In developing rules under TILA
section 129B(e), the Bureau has considered the broad mandate of section
129B.
Real Estate Settlement Procedures Act
Section 19(a) of RESPA, 12 U.S.C. 2617(a), authorizes the Bureau to
prescribe such rules and regulations and to make such interpretations
and grant such reasonable exemptions for classes of transactions as may
be necessary to achieve the purposes of RESPA. In enacting RESPA,
Congress sought ``to insure that consumers . . . are provided with
greater and more timely information on the nature and costs of the
settlement process and protected from unnecessarily high settlement
charges caused by certain abusive practices in some areas of the
country.'' \22\ RESPA section 19(a) has served as a broad source of
authority to prescribe disclosures and substantive requirements to
carry out the purposes of RESPA.
---------------------------------------------------------------------------
\22\ RESPA section 2(a); 12 U.S.C. 2601(a).
---------------------------------------------------------------------------
In developing rules under RESPA section 19(a), the Bureau has
considered the purposes of RESPA. One purpose of RESPA is ``to effect
certain changes in the settlement process for residential real estate
that will result in more effective advance disclosure to home buyers
and sellers of settlement costs.'' \23\
---------------------------------------------------------------------------
\23\ RESPA section 2(b); 12 U.S.C. 2601(b).
---------------------------------------------------------------------------
Dodd-Frank Act
Dodd-Frank Act section 1021. Section 1021(a) of the Dodd-Frank Act
provides that the Bureau shall seek to implement and, where applicable,
enforce Federal consumer financial law consistently for the purpose of
ensuring that all consumers have access to markets for consumer
financial services and that markets for consumer financial products and
services are fair, transparent, and competitive.\24\ In addition,
section 1021(b) of the Dodd-Frank Act provides that the Bureau is
authorized to exercise its authorities under Federal consumer financial
law for the purposes of ensuring, with respect to consumer financial
products and services, that, among other things: (1) Consumers are
provided with timely and understandable information to make responsible
decisions about financial transactions; (2) consumers are protected
from unfair, deceptive, or abusive acts and practices and from
discrimination; (3) outdated, unnecessary, or unduly burdensome
regulations are regularly identified and addressed in order to reduce
unwarranted regulatory burdens; (4) Federal consumer financial law is
enforced consistently, without regard to the status of a person as a
depository institution, in order to promote fair competition; and (5)
markets for consumer financial products and services operate
transparently and efficiently to facilitate access and
[[Page 8770]]
innovation.\25\ In developing this rulemaking, the Bureau has sought to
ensure that it is consistent with the purposes of Dodd-Frank Act
section 1021(a) and with the objectives of Dodd-Frank Act section
1021(b), specifically including Dodd-Frank Act section 1021(b)(1) and
(3).
---------------------------------------------------------------------------
\24\ 12 U.S.C. 5511(a).
\25\ 12 U.S.C. 5511(b).
---------------------------------------------------------------------------
Dodd-Frank Act section 1022(b). Section 1022(b)(1) of the Dodd-
Frank Act authorizes the Bureau to prescribe rules ``as may be
necessary or appropriate to enable the Bureau to administer and carry
out the purposes and objectives of the Federal consumer financial laws,
and to prevent evasions thereof.'' \26\ Section 1022(b)(2) of the Dodd-
Frank Act prescribes certain standards for rulemaking that the Bureau
must follow in exercising its authority under section 1022(b)(1).\27\
As discussed above, TILA and RESPA are Federal consumer financial laws.
Accordingly, in finalizing this rule, the Bureau is exercising its
authority under Dodd-Frank Act section 1022(b) to prescribe rules under
TILA, RESPA, and title X of the Dodd-Frank Act that carry out the
purposes and objectives and prevent evasion of those laws. See part VI
for a discussion of the Bureau's standards for rulemaking under Dodd-
Frank Act section 1022(b)(2).
---------------------------------------------------------------------------
\26\ 12 U.S.C. 5512(b)(1).
\27\ 12 U.S.C. 5512(b)(2).
---------------------------------------------------------------------------
Dodd-Frank Act section 1032. Section 1032(a) of the Dodd-Frank Act
provides that the Bureau ``may prescribe rules to ensure that the
features of any consumer financial product or service, both initially
and over the term of the product or service, are fully, accurately, and
effectively disclosed to consumers in a manner that permits consumers
to understand the costs, benefits, and risks associated with the
product or service, in light of the facts and circumstances.'' \28\ The
authority granted to the Bureau in section 1032(a) is broad and
empowers the Bureau to prescribe rules regarding the disclosure of the
``features'' of consumer financial products and services generally.
Accordingly, the Bureau may prescribe rules containing disclosure
requirements even if other Federal consumer financial laws do not
specifically require disclosure of such features.
---------------------------------------------------------------------------
\28\ 12 U.S.C. 5532(a).
---------------------------------------------------------------------------
Dodd-Frank Act section 1032(c) provides that, in prescribing rules
pursuant to section 1032, the Bureau ``shall consider available
evidence about consumer awareness, understanding of, and responses to
disclosures or communications about the risks, costs, and benefits of
consumer financial products or services.'' \29\ Accordingly, in
developing the 2013 TILA-RESPA Final Rule and amendments thereto under
Dodd-Frank Act section 1032(a), the Bureau considered available
studies, reports, and other evidence about consumer awareness,
understanding of, and responses to disclosures or communications about
the risks, costs, and benefits of consumer financial products or
services. Moreover, the Bureau has considered the evidence developed
through its consumer testing of the integrated disclosures as well as
prior testing done by the Board and HUD regarding TILA and RESPA
disclosures. See part III of the 2013 TILA-RESPA Final Rule for a
discussion of the Bureau's consumer testing.\30\
---------------------------------------------------------------------------
\29\ 12 U.S.C. 5532(c).
\30\ 78 FR 79730, 79741 (Dec. 31, 2013).
---------------------------------------------------------------------------
Dodd-Frank Act section 1405(b). Section 1405(b) of the Dodd-Frank
Act provides that, ``[n]otwithstanding any other provision of [title
XIV of the Dodd-Frank Act], in order to improve consumer awareness and
understanding of transactions involving residential mortgage loans
through the use of disclosures, the Bureau may, by rule, exempt from or
modify disclosure requirements, in whole or in part, for any class of
residential mortgage loans if the Bureau determines that such exemption
or modification is in the interest of consumers and in the public
interest.'' \31\ Section 1401 of the Dodd-Frank Act, which amends TILA
section 103(cc)(5), 15 U.S.C. 1602(cc)(5), generally defines a
residential mortgage loan as any consumer credit transaction that is
secured by a mortgage on a dwelling or on residential real property
that includes a dwelling other than an open-end credit plan or an
extension of credit secured by a consumer's interest in a timeshare
plan. Notably, the authority granted by section 1405(b) applies to
``disclosure requirements'' generally and is not limited to a specific
statute or statutes. Accordingly, Dodd-Frank Act section 1405(b) is a
broad source of authority to exempt from or modify the disclosure
requirements of TILA and RESPA.
---------------------------------------------------------------------------
\31\ 15 U.S.C. 1601 note.
---------------------------------------------------------------------------
In developing rules for residential mortgage loans under Dodd-Frank
Act section 1405(b), the Bureau has considered the purposes of
improving consumer awareness and understanding of transactions
involving residential mortgage loans through the use of disclosures and
the interests of consumers and the public.
V. Section-by-Section Analysis
A. General--Non-Substantive Corrections
The Bureau proposed non-substantive corrections, including citation
and cross-reference updates and wording changes for clarification
purposes, in Regulation X and Regulation Z. The Bureau received
comments that supported these proposed changes. The Bureau is adopting
as proposed the non-substantive corrections to regulatory text in
Sec. Sec. 1024.5(d), 1026.37(o), and 1026.38(e); commentary to
Sec. Sec. 1026.37(b), (c), and (h) and 1026.38(a) and (e); and
appendix H. The Bureau also is making non-substantive clarifications to
the commentary to Sec. 1026.38(g) for the reasons discussed in the
section-by-section analysis below, as well as other, non-substantive
corrections and wording clarifications to regulatory text in Sec.
1026.38(j) and (t).
B. Regulation Z
Section 1026.19--Certain Mortgage and Variable-Rate Transactions
19(e) Mortgage Loans Secured By Real Property--Early Disclosures
19(e)(3) Good Faith Determination For Estimates of Closing Costs
19(e)(3)(iv) Revised Estimates
19(e)(3)(iv)(D) Interest Rate Dependent Charges
Proposed Rule
Pursuant to the Bureau's authority as described in the 2012 TILA-
RESPA Proposal \32\ and the 2013 TILA-RESPA Final Rule \33\, the Bureau
proposed to amend Sec. 1026.19(e)(3)(iv)(D) to modify the timing
requirement for creditors to provide a revised Loan Estimate to
consumers when the interest rate is locked after the provision of the
Loan Estimate. Section Sec. 1026.19(e)(3)(iv)(D), as adopted by the
2013 TILA-RESPA Final Rule, requires creditors to provide the revised
disclosure with the revised interest rate, the points disclosed
pursuant to Sec. 1026.37(f)(1), lender credits, and any other interest
rate dependent charges and terms on the date the interest rate is
locked. The Bureau proposed to change the timing requirement to the
next business day after the rate is locked. As discussed in detail
below, this final rule amends Sec. 1026.19(e)(3)(iv)(D) to provide
creditors with three business days, rather than one business day, to
provide the revised Loan Estimate. This amendment harmonizes the timing
requirement in Sec. 1026.19(e)(3)(iv)(D)
[[Page 8771]]
with other timing requirements for redisclosure adopted in the 2013
TILA-RESPA Final Rule and is consistent with current law and practice
pursuant to Sec. 1024.7(f)(5), under which creditors have three
business days from rate lock to provide a revised Good Faith Estimate.
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\32\ 77 FR 51116, 51165-51169 (Aug. 23, 2012).
\33\ 78 FR 79730, 79816-79822 (Dec. 31, 2013).
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As discussed in the proposal, the Bureau proposed to allow
creditors an additional business day to provide the revised Loan
Estimate because it received information suggesting that creditors may
not control when a rate is locked to the same extent the Bureau
believed when it issued the 2013 TILA-RESPA Final Rule. The Bureau also
learned that operational challenges due to the same-day redisclosure
requirement in Sec. 1026.19(e)(3)(iv)(D) could restrict the
flexibility many creditors currently provide consumers to lock their
interest rates and could result in creditors imposing time restrictions
on when consumers may lock their rates (e.g., ``cut-off'' times). Given
the potential consequences of losing the ability to reset the
applicable tolerances for interest rate dependent charges pursuant to
Sec. 1026.19(e)(3), the Bureau believes creditors could respond to the
same-day timing requirement adopted by the 2013 TILA-RESPA Final Rule
by limiting consumers' ability to lock rates at the time of their
choice and imposing cut-off times that only allow consumers to lock
interest rates on business days during preset hours. Accordingly, the
Bureau reconsidered the same-day redisclosure requirement and proposed
to amend Sec. 1026.19(e)(3)(iv)(D) and its commentary to adjust this
timing requirement.
Currently, some creditors permit the consumer, or loan originator
working on behalf of the consumer, to lock the interest rate
unilaterally at any point during a business day or even after normal
business hours. The Bureau believes this flexibility is beneficial to
consumers because it allows them to lock interest rates on a date and
time of their choosing, without time restrictions imposed by the
creditor. The same-day redisclosure requirement could reduce consumers'
ability to determine when their rates are locked, if creditors respond
by either imposing cut-off times after which consumers are unable to
lock their interest rates until the next business day or refusing to
lock the rate contractually until the business day after the consumer
requests a rate lock.
As explained in the proposal, the Bureau believes that, if
creditors impose cut-off times, consumers would be limited to certain
times of day that they or their representatives could lock interest
rates. This could result in consumers, particularly those who are in
different time zones than their creditors, missing the applicable time
window to lock on a day of their choice and having to wait until the
next business day to do so. Alternatively, the Bureau believes some
creditors may be able to provide a revised Loan Estimate on the date
that a rate lock agreement is formed if those creditors allow consumers
to request the rate only at a time of the creditors' choosing and then
later execute or form a binding agreement with the consumers. However,
the Bureau believes this result could present other challenges to
consumers. For example, consumers may be confused if they believe they
are locking an interest rate at a certain time but in fact are merely
requesting rates that are not contractually binding until the creditor
accepts the request at some later time. Accordingly, the Bureau stated
in the proposal that it believed the same-day redisclosure requirement
warranted reconsideration because it could create implementation
challenges to industry that may result in reduced consumer flexibility
in locking or resetting floating interest rates.
The Bureau maintained, however, that the same-day redisclosure
requirement could benefit consumers by allowing them to have more time
to evaluate the revised Loan Estimate. The Bureau also noted that
creditors should be able to provide a revised Loan Estimate based on
interest rate dependent charges more quickly in comparison to other
types of redisclosures because creditors may not need to obtain
information from other parties, such as third-party vendors.
Accordingly, the Bureau proposed a next-business-day timing
requirement, on the ground that providing for redisclosure on the next
business day after the rate is locked could provide consumer benefits
without the operational challenges to creditors presented by a same-day
redisclosure requirement.
The Bureau sought comment on whether consumers could be harmed if
creditors were given until the next business day to provide a revised
Loan Estimate or if consumers would benefit from the same-day
requirement. Additionally, the Bureau sought comment on whether a
single business day is sufficient for creditors to deliver or place in
the mail a revised Loan Estimate while preventing any unintended
consequences, such as restricting the timing flexibility of consumers
to lock the interest rate, and whether consumers would be harmed if
redisclosures were permitted more than one business day after the
interest rate was locked.
Comments
The Bureau received comments from industry trade associations,
creditors, technology vendors, and other industry representatives
addressing these proposed changes. All comments supported the proposal
to relax the timing requirement, but most advocated for extending it to
three business days. The Bureau received no comments that opposed the
proposal or that raised concerns about extending the timing requirement
beyond the next business day.
Most commenters argued that a next-business-day requirement
presents many of the same operational challenges to industry as a same-
day redisclosure requirement. For example, a credit union stated that
one business day does not allow creditors sufficient time to address
potential software issues or conduct quality control review of a
revised Loan Estimate. Another industry commenter stated that it takes
time to update fees and verify that the correct information is printed
on the disclosures generated by older loan operating systems. A
national banking trade association noted that consumers with ``self-
lock'' capability commonly make mistakes in locking rates or attempt to
lock through an incorrect channel, which requires creditors to verify
the consumer's intent to lock the rate. Consumers also may leave an
ambiguous voicemail or email that the creditor needs to verify is a
rate lock request. This commenter explained that a single business day
is not always enough time for a creditor both to verify the consumer's
intent and also to issue a revised disclosure. Consequently, a next-
business-day deadline could still result in creditors imposing cut-off
times for consumers to lock interest rates.
Additionally, trade associations, banks, and an individual industry
commenter working for a creditor stated that smaller institutions in
particular may have difficulty redisclosing on the next business day
after the rate lock due to staffing level constraints. Commenters noted
that, in some cases, a single individual may be responsible for
creating the disclosures, and staffing levels may also be affected by
inclement weather, Saturday business hours, and employee training. A
credit union commenter noted that the next-business-day requirement
could burden small lending operations that do not have a full-time
employee to prepare disclosures on Saturdays and around the holidays.
Accordingly, these small
[[Page 8772]]
creditors may require additional staff to meet the next-business-day
delivery requirement.
Commenters argued that expanding the timing requirement to three
business days would facilitate compliance for industry and consumer
understanding because it would provide consistent timing rules for
redisclosures. A bank stated that the three-business-day timeframe is
the standard in operating procedures and systems and is also well-
established among industry professionals. Commenters noted that a next-
business-day requirement for rate locks would result in different
timing requirements for rate-lock-based redisclosure as opposed to
other events that permit redisclosure, such as ``changed
circumstances'' described in Sec. 1026.19(e)(3)(iv)(A). These other
triggering events for redisclosure may occur around the time of a rate
lock. Commenters noted that consumer confusion could result if a
changed circumstance occurs on the same date that the rate is locked
and the creditor needs to produce two different revised disclosures on
two different dates. These commenters stated that the provision of two
revised Loan Estimates to a consumer within the same week could cause
confusion as to which Loan Estimate reflects the most recent and
accurate information.
Finally, commenters questioned the benefit to consumers of
receiving a revised Loan Estimate for rate-lock-related changes two
business days earlier than is required for other redisclosure events,
such as ``changed circumstances'' described in Sec.
1026.19(e)(3)(iv)(A). Commenters argued that allowing creditors two
extra business days to provide a revised Loan Estimate does not pose
risks or harms to consumers. A national banking trade association
stated that consumers get little benefit from receiving the revised
Loan Estimate earlier because a consumer has most likely completed the
shopping process by the time the consumer requests a rate lock. These
commenters generally asserted that the benefit to consumers, if any, of
receiving the revised disclosure earlier does not outweigh the costs
associated with the requirement to provide redisclosures by the next
business day.
Final Rule
The Bureau is adopting proposed Sec. 1026.19(e)(3)(iv)(D),
modified to extend the timing requirement to no later than three
business days after the date the interest rate is locked. The Bureau
also is making conforming modifications to proposed comments
19(e)(3)(iv)(D)-1 and 19(e)(4)(i)-2, which provide illustrations of the
timing requirement.
The Bureau considered the comments received and determined that
extending the timing requirement to no later than three business days
after the interest rate is locked will reduce the burden on industry
and facilitate compliance without harming consumers, and also may
provide benefits to consumers. The Bureau believes that creditors would
experience operational challenges in providing redisclosures by the
next business day that could be alleviated by extending the timing
requirement for redisclosure to three business days. Moreover,
extending the redisclosure deadline to three business days after the
rate is locked harmonizes the timing requirement in Sec.
1026.19(e)(3)(iv)(D) with the other timing requirements for
redisclosure. Harmonizing the redisclosure requirements could
facilitate compliance and compliance monitoring and could reduce
consumer confusion. Furthermore, allowing creditors to have three
business days from the date the rate is locked to issue a revised
disclosure would enable small creditors with limited staffing levels to
prepare and review revised disclosures without the difficulties and
challenges that may have arisen under the proposed rule.
The Bureau does not believe a risk of potential consumer harm
arises in extending the period for redisclosure to three business days.
While the Bureau expressed, in the preambles to the 2012 TILA-RESPA
Proposal and the 2013 TILA-RESPA Final Rule, a concern about potential
rent-seeking behavior through rate arbitrage (e.g., delaying the rate
lock in order to increase the interest rate offered to the consumer or
otherwise increase the spread between market interest rates and the
rate offered the consumer), the Bureau also acknowledged that it had
seen no evidence nor received any data or reports suggesting such a
practice under the existing Regulation X disclosure practice, which
employs a three-business-day deadline. The Bureau has not identified
any risks to consumers--nor were any raised by commenters in response
to the Bureau's request for comment on potential risks to consumers.
Accordingly, the Bureau is adopting Sec. 1026.19(e)(3)(iv)(D) to
state that, no later than three business days after the date the
interest rate is locked, the creditor shall provide a revised version
of the disclosures required under Sec. 1026.19(e)(1)(i) to the
consumer with the revised interest rate, the points disclosed pursuant
to Sec. 1026.37(f)(1), lender credits, and any other interest rate
dependent charges and terms. The Bureau also is adopting modified
versions of proposed comments 19(e)(3)(iv)(D)-1 and 19(e)(4)(i)-2 to
reflect this change.
Section 1026.36--Prohibited Acts or Practices and Certain Requirements
for Credit Secured by a Dwelling
36(g) Name and NMLSR ID on Loan Documents
36(g)(2)
36(g)(2)(ii)
The Bureau proposed to amend Sec. 1026.36(g)(2)(ii) to conform to
the requirements adopted by the 2013 Loan Originator Final Rule.
Section 1026.36(g)(2) lists the specific loan documents that must
contain the loan originator's name and NMLSR ID. When the Bureau issued
the 2013 Loan Originator Final Rule in January 2013, it reserved Sec.
1026.36(g)(2)(ii) for references to the integrated disclosures the
Bureau was expecting to adopt in the final rule implementing the 2012
TILA-RESPA Proposal. The disclosures referenced are those required by
Sec. 1026.19(e) and (f) as adopted by the 2013 TILA-RESPA Final Rule.
The Bureau proposed amending Sec. 1026.36(g)(2)(ii) to include the
disclosures described in Sec. 1026.19(e) and (f), as adopted by the
2013 TILA-RESPA Final Rule. The Bureau received comments from industry
and trade associations in support of this proposed change and none that
opposed it or suggested further modifications. Accordingly, the Bureau
is adopting Sec. 1026.36(g)(2)(ii) as proposed.
Section 1026.37--Content of Disclosure for Certain Mortgage
Transactions (Loan Estimate)
37(m) Other Considerations
Proposed Rule
The Bureau proposed adding Sec. 1026.37(m)(8) to provide for a
statement notifying the consumer that a revised disclosure may be
provided for a construction loan in a transaction involving new
construction where the creditor reasonably expects settlement to occur
more than 60 days after the provision of the initial Loan Estimate.\34\
As explained in the proposal, Sec. 1026.19(e)(3)(iv)(F) provides that
a creditor may issue revised disclosures at any time prior to 60 days
before consummation if the original disclosure clearly and
conspicuously states that a revised disclosure may be provided.
[[Page 8773]]
Except as provided by Sec. 1026.19(f), the creditor may not issue a
revised disclosure if the original disclosure did not contain such a
statement.
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\34\ Transactions covered by this provision are described in
Sec. 1026.19(e)(3)(iv)(F) and comment 19(e)(3)(iv)(F)-1.
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The Bureau proposed to add new Sec. 1026.37(m)(8), under the
master heading ``Additional Information About This Loan'' and the
heading ``Other Considerations,'' and new comment 37(m)(8)-1 to state
that placement of the language in this section of the form satisfies
the ``clear and conspicuous'' standard set forth in Sec.
1026.19(e)(3)(iv)(F). The Bureau stated that it believes the Sec.
1026.19(e)(3)(iv)(F) language is appropriately placed in this part of
the disclosure mandated by Sec. 1026.37, but sought comment on whether
the language would be more appropriately placed elsewhere on the form.
Comments
The Bureau received comments from trade associations, creditors,
and a technology vendor. All commenters supported the proposal.
Commenters generally stated that including the language concerning
construction loans in transactions that involve a new construction on
the Loan Estimate should facilitate construction lending. Most agreed
with the proposed content and placement of the language. A few
commenters made minor suggestions for additional clarity or suggested
alternative placement on the form. For example, two trade associations
recommended that the Bureau provide additional clarifying language on
the nature of the disclosure, as well as additional clarification
regarding placement on the form or provision of a sample disclosure
illustrating this language on the form.
Final Rule
The Bureau has considered the comments and is adopting Sec.
1026.37(m)(8) and comment 37(m)(8)-1 as proposed, with minor wording
changes for clarification. The Bureau believes that the proposed
language and its placement is appropriate and allows creditors to
preserve their ability to redisclose estimates for construction loans
in transactions that involve a new construction, as provided in Sec.
1026.19(e)(3)(iv)(F). With respect to the requests for additional
clarifying language or a sample disclosure illustrating the language on
the form, the Bureau does not believe that additional language or a new
sample disclosure is necessary. The Bureau notes that proposed Sec.
1026.37(m)(8) and comment 37(m)(8)-1 contain language already
promulgated under Sec. 1026.19(e)(3)(iv)(F) and would not require any
additional consumer testing. Further, comment 37(m)(8)-1 provides that
placement of the new construction language in this section of the Loan
Estimate satisfies the clear and conspicuous standard set forth in
Sec. 1026.19(e)(3)(iv)(F).
Section 1026.38--Content of Disclosure for Certain Mortgage
Transactions (Closing Disclosure)
38(g) Closing Cost Details; Other Costs
38(g)(2) Prepaids
Section 1026.38(g)(2) requires creditors to disclose certain
prepaid items disclosed on the Loan Estimate pursuant to Sec.
1026.37(g)(2), including prepaid interest. Neither the regulation nor
the model Closing Disclosure forms in appendix H provide for disclosure
of the interest rate for prepaid interest. Rather, the model forms
provide that prepaid interest is to be disclosed on the Closing
Disclosure as a per diem sum amount along with a range of dates,
without disclosing the applicable interest rate, prescribed as:
``Prepaid Interest (___per day from _____to _____).''
One industry commenter noted that comment 38(g)(2)-4, which
describes the interest rate that should be used to calculate per diem
interest, implies that the interest rate must be disclosed pursuant to
Sec. 1026.38(g)(2). This commenter recommended that the Bureau clarify
that creditors are not required to disclose an interest rate for
purposes of this disclosure.
The Bureau agrees that the interest rate should not be disclosed in
the prepaid interest disclosure pursuant to Sec. 1026.38(g)(2).
Rather, creditors should disclose amounts of prepaid interest as per
diem sum amounts based on the interest rate disclosed under Sec.
1026.38(b), which is determined by Sec. 1026.37(b). Accordingly, the
Bureau is amending comment 38(g)(2)-4 to clarify that the comment
addresses the interest rate that is used to determine amounts of
prepaid interest, but does not require disclosure of the interest rate
itself.
VI. Dodd-Frank Act Section 1022(b)(2)
A. Overview
In developing this rule, the Bureau has considered potential
benefits, costs, and impacts.\35\ The Bureau has consulted, or offered
to consult with, the prudential regulators, the Securities and Exchange
Commission, HUD, the Federal Housing Finance Agency, the Federal Trade
Commission, the U.S. Department of Veterans Affairs, the U.S.
Department of Agriculture, and the Department of the Treasury,
including regarding consistency with any prudential, market, or
systemic objectives administered by such agencies.
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\35\ Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act
calls for the Bureau to consider the potential benefits and costs of
a regulation to consumers and covered persons, including the
potential reduction of access by consumers to consumer financial
products or services; the impact on depository institutions and
credit unions with $10 billion or less in total assets as described
in section 1026 of the Dodd-Frank Act; and the impact on consumers
in rural areas.
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The Bureau is adding or amending two main provisions in this rule.
First, the Bureau is amending Sec. 1026.19(e)(3)(iv)(D) which, as
adopted by the 2013 TILA-RESPA Final Rule, requires creditors to
provide a revised version of the disclosures required under paragraph
Sec. 1026.19(e)(1)(i) to the consumer with the revised interest rate,
the points disclosed pursuant to Sec. 1026.37(f)(1), lender credits,
and any other interest rate dependent charges and terms, on the date
the rate is locked. As discussed in the section-by-section analysis
above, the Bureau believes that this requirement, if unchanged, is
likely to result in at least some creditors imposing cut-off times that
only allow consumers to lock their interest rates only on business days
and during preset hours due to the costs associated with providing the
disclosure to the consumer on the date when the interest rate is
locked. The Bureau believes that consumers are unlikely to choose
creditors based on the creditors' policies regarding interest rate
locks and, moreover, that consumers would be unlikely to know whether
their creditors will allow interest rate locks at flexible times until
the consumer actually attempts to lock the rate. Thus, consumers of
creditors who will not allow locks at flexible times will experience
inconvenience. Given that consumers are unlikely to know of this
practice until they attempt to lock the rate, this practice is unlikely
to be corrected or influenced by market competition.
Given these concerns, the Bureau proposed to relax the same-day
timing requirement and give creditors until the next business day after
the rate is locked to provide a revised version of the disclosures to
consumers. As described in the section-by-section analysis above, in
light of the comments received, the Bureau is instead finalizing an
amendment to the provision that affords creditors three business days
after the rate is locked to provide a revised version of the
disclosures.
In response to the proposal, several commenters noted that the
proposed next-business-day requirement presents many of the same
operational challenges
[[Page 8774]]
to industry as a same-day redisclosure requirement. These commenters
suggested that three business days would provide adequate time for
creditors to issue revised disclosures, but that one business day would
not. No commenters suggested that extending the timing requirement
beyond the next business day would impact consumers adversely.
The Bureau is adopting proposed Sec. 1026.19(e)(3)(iv)(D),
modified to extend the timing requirement to no later than three
business days after the date the interest rate is locked. The change
will harmonize the timing requirement in Sec. 1026.19(e)(3)(iv)(D)
with the other timing requirements for redisclosure and thus may
facilitate compliance and compliance monitoring and also may reduce
consumer confusion. Small creditors, in particular, may find it easier
to comply with a three-day redisclosure timing requirement. Finally,
the Bureau believes that the next-business-day requirement might not
give creditors adequate time to confirm the consumer's intentions where
the consumer's attempts to lock the rate through an incorrect channel,
or the communication requesting a rate lock (e.g., a voicemail or email
left with the creditor) is ambiguous. The Bureau does not possess the
data necessary to estimate the impact of the change to three full
business days quantitatively.
Second, the Bureau is adding a new provision that allows for a
specific statement related to construction loans in transactions
involving new construction to be placed on the Loan Estimate. For these
loans, the 2013 TILA-RESPA Final Rule requires that creditors include a
statement on the Loan Estimate in order to preserve their ability to
redisclose estimates prior to settlement. However, this language is
found only in Sec. 1026.19(e)(3)(iv)(F), which governs timing and
procedure, and no corresponding provision exists in the section that
governs the content of the disclosures. Without this new provision,
creditors will have lower incentives to originate these construction
loans, especially if they believe that the Loan Estimate might need to
be revised. Consumers either will not be able to get a commitment to
fund construction loans until most of the uncertainty about the terms
is resolved or creditors will price in a premium, to account for the
creditor's inability to redisclose estimates after the initial 60 days.
The Bureau believes that both amendments, extending the time for
rate lock redisclosure and adding language on new construction loans,
provide options that a financial institution is free to undertake or
not to undertake, and thus present no cost to creditors. The Bureau
believes that both provisions present some benefits to creditors. The
Bureau believes that the first provision could present both benefits
and costs to consumers, while the second provision presents benefits to
consumers.
B. Potential Benefits and Costs to Consumers and Covered Persons
Relaxing the Same-day Redisclosure Requirement for Interest Rate Locks
This amendment provides an option to creditors: creditors may
continue to provide revised disclosures on the date the rate is locked
if they so choose. Therefore, some creditors will benefit from this
amendment by not having to redisclose on the date the rate is locked,
while other creditors may continue to redisclose on the date the rate
is locked if they so choose, and are as well off as they would have
been without this amendment. All creditors will enjoy increased
flexibility. No creditors will face increased costs.
Under the current rule, the Bureau believes that some creditors
could continue offering flexible time periods for interest rate locks,
but others, for example, might choose to impose cut-off times that only
permit consumers to lock interest rates on business days and at times
early in the day in order to ease their compliance costs. Other
creditors might change their existing practices and allow consumers to
request a rate lock at any time, but only contractually lock the
interest rate on the business day after the consumer requests a rate
lock, instead of on the date the rate lock is requested. Consumers of
these creditors could benefit from this amendment through the increased
convenience of being able to lock the interest rate at more flexible
times.
Consumers of creditors that would continue to allow flexibility in
locking interest rates might experience a cost from the amendment:
their revised Loan Estimate may not be provided until up to three
business days later. However, some of these creditors may still provide
a revised Loan Estimate on the date that the interest rate is locked,
for example, because they have already put in place the system to
provide the redisclosures on the date the rate is locked and do not
want to change their systems. If the creditor does not provide the
revised Loan Estimate until up to three business days later, then the
potential consumer harm is the time difference between when the
consumer would receive the revised disclosures.
While the Bureau does not possess any data, and is not aware of a
source to obtain data, that would enable it to report the quantitative
effects of this amendment, it believes any harm to consumers from the
extension of the rate-lock-redisclosure timing requirement is minor.
Under current law and practice pursuant to Sec. 1024.7(f)(5),
creditors have three business days from rate lock to redisclose, and
the Bureau has not received any data or reports of consumer harm
resulting from a three business day turnaround time for
redisclosure.\36\
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\36\ See 77 FR 51116, 51173 (Aug. 23, 2012).
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Specific Language on Construction Loans' Loan Estimates
The Bureau believes that without this new provision, creditors that
ordinarily originate construction loans in transactions involving a new
construction would be forced either to originate only those
construction loans for which the creditor is certain that no
redisclosure prior to settlement will be necessary, or to price in the
risk of having to cure any amounts charged over the estimates initially
provided more than 60 days before settlement, absent some other type of
a redisclosure triggering event. Creditors that choose the second
option, including the estimated cost of cure in their pricing, risk
miscalibrating the pricing and losing consumers to less risk-averse
competitors or facing unanticipated costs if they are required to cure
any amounts that the consumer is charged for settlement charges that
exceed the initial estimated amounts. In all events, creditors risk
losing consumers to other options. Accordingly, this new provision
presents benefits to the creditors that decide to originate these
construction loans and presents no costs.
As noted above, under the current rule, a consumer who needs a
construction loan may only be able to obtain a construction loan where
the creditor has priced in the risk of having to cure any amounts
charged over the estimates initially provided over 60 days before
settlement, which would be a cost to consumers. On the other hand,
without this new provision, the Loan Estimate would have provided
consumers more certainty concerning loan terms and settlement costs
because creditors would be limited in their ability to redisclose and
change the terms or costs of the loan. Where creditors misgauged the
initial Loan Estimate, consumers might be entitled to receive a cure.
However, the Bureau
[[Page 8775]]
believes that these benefits to consumers are marginal, given that
construction loans are inherently volatile and subject to events beyond
the creditor's control. As a result, the Bureau believes that creditors
barred from redisclosing a Loan Estimate provided more than 60 days
prior to consummation would be less likely to originate such loans and
that any increased certainty, where creditors were willing to commit to
new construction loans well in advance of consummation, would come at
the price of increased costs to consumers.
The Bureau does not possess any data, and is not aware of a source
to obtain data, that would enable it to report the number of
transactions affected or to quantify the extent of creditor and
consumer benefits.
C. Impact on Covered Persons With No More Than $10 Billion in Assets
The amendment regarding interest rate locks could have two
particular effects on covered persons with no more than $10 billion in
assets. First, covered persons with no more than $10 billion in assets
are more likely to benefit from this provision to the extent that
redisclosure of the Loan Estimate on the date the interest rate is
locked may require software and business processes upgrade costs.
Larger covered persons are more likely to originate a sufficient number
of transactions to make it worth implementing these changes, as opposed
to choosing to offer interest rate locks to consumers only at set times
during business hours.
In addition, creditors located in more than one time zone might
have to offer a shorter preset adjustment time to some customers (for
example, if the location of the rate lock operation is in the Eastern
Time zone), but covered persons with no more than $10 billion in assets
are more likely to be located in a single time zone. From this
perspective, covered persons with no more than $10 billion in assets
are less likely to benefit from this amendment. The Bureau does not
possess data to quantify either of the two possible aforementioned
effects of the provision on covered persons with no more than $10
billion in assets.
The Bureau believes that covered persons with no more than $10
billion in assets will not be differentially affected by the new
provision regarding construction loans.
D. Impact on Access to Credit
The Bureau does not believe that there will be an adverse impact on
access to credit resulting from either of the changes adopted by this
final rule. There may be an expansion of access to credit, if the
second provision facilitates the making of construction loans as the
Bureau anticipates.
E. Impact on Rural Areas
The Bureau believes that rural areas might benefit more than urban
areas from the provision for construction loans and the amendment to
the existing provision for rate lock redisclosure. Competition may
drive creditors to originate construction loans despite the possible
redisclosure issues and to provide interest rate locks throughout the
day despite the same-day redisclosure requirement. Thus, rural areas
are more likely to benefit from these two provisions, to the extent
that there are fewer creditors operating in rural areas than in urban
areas and to the extent that competition would affect these issues.
VII. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (the RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996, requires each
agency to consider the potential impact of its regulations on small
entities, including small businesses, small governmental units, and
small nonprofit organizations. The RFA defines a ``small business'' as
a business that meets the size standard developed by the Small Business
Administration pursuant to the Small Business Act. The RFA generally
requires an agency to conduct an initial regulatory flexibility
analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of
any rule subject to notice-and-comment rulemaking requirements, unless
the agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. The Bureau also is
subject to certain additional procedures under the RFA involving the
convening of a panel to consult with small business representatives
prior to proposing a rule for which an IRFA is required.
An IRFA is not required for this rule because it will not have a
significant economic impact on any small entities. The Bureau does not
expect the rule to impose costs on covered persons. All methods of
compliance under current law will remain available to small entities
when these provisions become effective. Thus, a small entity that is in
compliance with current law need not take any additional action.
Accordingly, the undersigned certifies that this final rule will
not have a significant economic impact on a substantial number of small
entities.
VIII. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), Federal agencies are generally required to seek the Office of
Management and Budget (OMB) approval for information collection
requirements prior to implementation. The collections of information
related to Regulations Z and X have been previously reviewed and
approved by OMB in accordance with the PRA and assigned OMB Control
Numbers 3170-0015 (Regulation Z) and 3170-0016 (Regulation X). Under
the PRA, the Bureau may not conduct or sponsor and, notwithstanding any
other provision of law, a person is not required to respond to an
information collection unless the information collection displays a
valid control number assigned by OMB.
The Bureau has determined that this final rule would not impose any
new or revised information collection (recordkeeping, reporting, or
disclosure) requirements on covered entities or members of the public
that would constitute collections of information requiring OMB approval
under the PRA.
List of Subjects
12 CFR Part 1024
Condominiums, Consumer protection, Housing, Mortgage servicing,
Mortgages, Reporting and recordkeeping requirements.
12 CFR Part 1026
Advertising, Consumer protection, Credit, Credit unions, Mortgages,
National banks, Recordkeeping and recordkeeping requirements,
Reporting, Savings associations, Truth in lending.
Authority and Issuance
For the reasons set forth in the preamble, the Bureau amends
Regulation X, 12 CFR part 1024, and Regulation Z, 12 CFR part 1026, as
set forth below:
PART 1024--REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X)
0
1. The authority citation for part 1024 continues to read as follows:
Authority: 12 U.S.C. 2603-2605, 2607, 2609, 2617, 5512, 5532,
5581.
Subpart A--General Provisions
0
2. Section 1024.5 is amended by revising paragraph (d) introductory
text to read as follows:
Sec. 1024.5 Coverage of RESPA.
* * * * *
[[Page 8776]]
(d) Partial exemptions for certain mortgage loans. Sections 1024.6,
1024.7, 1024.8, 1024.10, and 1024.33(a) do not apply to a federally
related mortgage loan:
* * * * *
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
3. The authority citation for part 1026 continues to read as follows:
Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 5511,
5512, 5532, 5581; 15 U.S.C. 1601 et seq.
Subpart C--Closed-End Credit
0
4. Section 1026.19 is amended by revising paragraph (e)(3)(iv)(D) to
read as follows:
Sec. 1026.19 Certain mortgage and variable-rate transactions.
* * * * *
(e) * * *
(3) * * *
(iv) * * *
(D) Interest rate dependent charges. The points or lender credits
change because the interest rate was not locked when the disclosures
required under paragraph (e)(1)(i) of this section were provided. No
later than three business days after the date the interest rate is
locked, the creditor shall provide a revised version of the disclosures
required under paragraph (e)(1)(i) of this section to the consumer with
the revised interest rate, the points disclosed pursuant to Sec.
1026.37(f)(1), lender credits, and any other interest rate dependent
charges and terms.
* * * * *
Subpart E--Special Rules for Certain Home Mortgage Transactions
0
5. Section 1026.36 is amended by adding paragraph (g)(2)(ii) to read as
follows:
Sec. 1026.36 Prohibited acts or practices and certain requirements
for credit secured by a dwelling.
* * * * *
(g) * * *
(2) * * *
(ii) The disclosures required by Sec. 1026.19 (e) and (f);
* * * * *
0
6. Section 1026.37 is amended by adding paragraph (m)(8) and revising
paragraph (o)(4)(i)(A) to read as follows:
Sec. 1026.37 Content of disclosures for certain mortgage transactions
(Loan Estimate).
* * * * *
(m) * * *
(8) Construction loans. In transactions involving new construction,
where the creditor reasonably expects that settlement will occur more
than 60 days after the provision of the loan estimate, at the
creditor's option, a clear and conspicuous statement that the creditor
may issue a revised disclosure any time prior to 60 days before
consummation, pursuant to Sec. 1026.19(e)(3)(iv)(F).
* * * * *
(o) * * *
(4) * * *
(i) * * *
(A) The dollar amounts required to be disclosed by paragraphs
(b)(6) and (7), (c)(1)(iii), (c)(2)(ii) and (iii), (c)(4)(ii), (f),
(g), (h), (i), and (l) of this section shall be rounded to the nearest
whole dollar, except that the per diem amount required to be disclosed
by paragraph (g)(2)(iii) of this section and the monthly amounts
required to be disclosed by paragraphs (g)(3)(i) through (iii) and
(g)(3)(v) of this section shall not be rounded.
* * * * *
0
7. Section 1026.38 is amended by revising paragraphs (e)(3)(iii)(A),
(e)(4)(ii), (j)(2)(iv), (k)(2)(v), (k)(2)(vi), and (t)(4)(ii) to read
as follows:
Sec. 1026.38 Content of disclosures for certain mortgage transactions
(Closing Disclosure).
* * * * *
(e) * * *
(3) * * *
(iii) * * *
(A) If the amount disclosed under paragraph (e)(3)(ii) of this
section is different than the amount disclosed under paragraph
(e)(3)(i) of this section (unless the difference is due to rounding), a
statement of that fact, along with a statement that the consumer paid
such amounts prior to consummation of the transaction; or
* * * * *
(4) * * *
(ii) Under the subheading ``Final,'' the total amount of payoffs
and payments made to third parties disclosed pursuant to paragraph
(t)(5)(vii)(B) of this section, to the extent known, disclosed as a
negative number;
* * * * *
(j) * * *
(2) * * *
(iv) The amount of any existing loans that the consumer is
assuming, or any loans subject to which the consumer is taking title to
the property, labeled ``Existing Loan(s) Assumed or Taken Subject to'';
* * * * *
(k) * * *
(2) * * *
(v) The amount of any loan secured by a first lien on the property
that will be paid off as part of the real estate closing, labeled
``Payoff of First Mortgage Loan'';
(vi) The amount of any loan secured by a second lien on the
property that will be paid off as part of the real estate closing,
labeled ``Payoff of Second Mortgage Loan'';
* * * * *
(t) * * *
(4) * * *
(ii) Percentages. The percentage amounts required to be disclosed
under paragraphs (b), (f)(1), (n), and (o)(5) of this section shall not
be rounded and shall be disclosed up to two or three decimal places.
The percentage amount required to be disclosed under paragraph (o)(4)
of this section shall not be rounded and shall be disclosed up to three
decimal places. If the amount is a whole number then the amount
disclosed shall be truncated at the decimal point.
* * * * *
0
8. Appendix H to part 1026 is amended by revising the Description in H-
24(G) to read as follows.
Appendix H to Part 1026--Closed-End Forms and Clauses
* * * * *
H-24(G) Mortgage Loan Transaction Loan Estimate--Modification to
Loan Estimate for Transaction Not Involving Seller--Model Form
Description: This is a blank model Loan Estimate that
illustrates the application of the content requirements in Sec.
1026.37, with the optional alternative tables permitted by Sec.
1026.37(d)(2) and (h)(2) for transactions without a seller. This
form provides one variation of page one, four variations of page
two, and four variations of page three, reflecting the variable
content requirements in Sec. 1026.37.
* * * * *
0
9. In Supplement I to part 1026:
0
a. Under Section 1026.19--Certain Mortgage and Variable-Rate
Transactions:
0
i. Under paragraph 19(e)(3)(iv)(D), paragraph 1 is revised.
0
ii. Under paragraph 19(e)(4)(i), paragraph 2 is revised.
0
b. Under Section 1026.37--Content of Disclosures for Certain Mortgage
Transactions (Loan Estimate):
0
i. Under paragraph 37(b)(6), paragraph 1 is revised.
0
ii. Under paragraph 37(c)(2)(ii), paragraph 2 is revised.
0
ii. Under paragraph 37(c)(2)(iii), paragraph 1 is revised.
0
iii. Under paragraph 37(c)(4)(iv), paragraph 2 is revised.
0
iv. Under paragraph 37(h)(1)(ii), paragraph 1 is revised.
[[Page 8777]]
0
v. Under paragraph 37(m), the subheading 37(m)(8) Construction loans
and paragraph 1 are added.
0
vi. Under paragraph 37(n), paragraph 2 is revised.
0
c. Under Section 1026.38--Content of Disclosures for Certain Mortgage
Transactions (Closing Disclosure):
0
i. Under paragraph 38(a)(3)(vi), paragraph 2 is added.
0
ii. Under paragraph 38(e)(1)(iii)(A), paragraph 1 is revised.
0
iii. Under paragraph 38(e)(2)(iii)(A), paragraph 3 is added.
0
iv. Under paragraph 38(g)(2), paragraph 4 is revised.
The revisions and additions read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Subpart C--Closed-End Credit
* * * * *
Section 1026.19--Certain Mortgage and Variable-Rate Transactions
* * * * *
19(e)(3)(iv)(D) Interest Rate Dependent Charges
1. Requirements. If the interest rate is not locked when the
disclosures required by Sec. 1026.19(e)(1)(i) are provided, a valid
reason for revision exists when the interest rate is subsequently
locked. No later than three business days after the date the interest
rate is locked, Sec. 1026.19(e)(3)(iv)(D) requires the creditor to
provide a revised version of the disclosures required under Sec.
1026.19(e)(1)(i) reflecting the revised interest rate, the points
disclosed pursuant to Sec. 1026.37(f)(1), lender credits, and any
other interest rate dependent charges and terms. The following examples
illustrate this requirement:
i. Assume a creditor sets the interest rate by executing a rate
lock agreement with the consumer. If such an agreement exists when the
original disclosures required under Sec. 1026.19(e)(1)(i) are
provided, then the actual points and lender credits are compared to the
estimated points disclosed pursuant to Sec. 1026.37(f)(1) and lender
credits included in the original disclosures provided under Sec.
1026.19(e)(1)(i) for the purpose of determining good faith pursuant to
Sec. 1026.19(e)(3)(i). If the consumer enters into a rate lock
agreement with the creditor after the disclosures required under Sec.
1026.19(e)(1)(i) were provided, then Sec. 1026.19(e)(3)(iv)(D)
requires the creditor to provide, no later than three business days
after the date that the consumer and the creditor enter into a rate
lock agreement, a revised version of the disclosures required under
Sec. 1026.19(e)(1)(i) reflecting the revised interest rate, the points
disclosed pursuant to Sec. 1026.37(f)(1), lender credits, and any
other interest rate dependent charges and terms. Provided that the
revised version of the disclosures required under Sec.
1026.19(e)(1)(i) reflect any revised points disclosed pursuant to Sec.
1026.37(f)(1) and lender credits, the actual points and lender credits
are compared to the revised points and lender credits for the purpose
of determining good faith pursuant to Sec. 1026.19(e)(3)(i).
* * * * *
19(e)(4)(i) General Rule
* * * * *
2. Relationship to Sec. 1026.19(e)(3)(iv)(D). If the reason for
the revision is provided under Sec. 1026.19(e)(3)(iv)(D),
notwithstanding the three-business-day rule set forth in Sec.
1026.19(e)(4)(i), Sec. 1026.19(e)(3)(iv)(D) requires the creditor to
provide a revised version of the disclosures required under Sec.
1026.19(e)(1)(i) no later than three business days after the date the
interest rate is locked. See comment 19(e)(3)(iv)(D)-1.
* * * * *
Subpart E--Special Rules for Certain Home Mortgage Transactions
* * * * *
Section 1026.37--Content of Disclosures for Certain Mortgage
Transactions (Loan Estimate)
* * * * *
37(b)(6) Adjustments After Consummation
1. Periods not in whole years. For guidance on how to disclose
increases after consummation that occur after a number of months less
than 24 but that do not equate to a number of whole years or within a
number of days less than a week, see the guidance provided in comment
37(a)(10)-3. For increases that occur after more than 24 months, see
the guidance provided in comment 37(b)(8)-1.
* * * * *
Paragraph 37(c)(2)(ii)
* * * * *
2. Relationship to principal and interest disclosure. The creditor
discloses mortgage insurance premiums pursuant to Sec.
1026.37(c)(2)(ii) on the same periodic basis that payments for
principal and interest are disclosed pursuant to Sec.
1026.37(c)(2)(i), even if mortgage insurance premiums are actually paid
on some other periodic basis.
Paragraph 37(c)(2)(iii)
1. Escrow disclosure. The disclosure described in Sec.
1026.37(c)(2)(iii) is required only if the creditor will establish an
escrow account for the payment of some or all of the charges described
in Sec. 1026.37(c)(4)(ii). If no escrow account for the payment of
some or all such charges will be established, the creditor discloses
the escrow amount as ``0.'' If an escrow account is established for the
payment of amounts described in Sec. 1026.37(c)(4)(ii), but no escrow
payment is required with a particular periodic payment (such as with a
final balloon payment) or range of payments, the escrow payment should
be disclosed as ``--.''
* * * * *
Paragraph 37(c)(4)(iv)
* * * * *
2. Amounts paid by the creditor using escrow account funds. Section
1026.37(c)(4)(iv) requires the creditor to disclose an indication of
whether the amounts disclosed pursuant to Sec. 1026.37(c)(4)(ii) will
be paid by the creditor using escrow account funds. If the amount
disclosed pursuant to Sec. 1026.37(c)(4)(ii) requires the creditor to
disclose a description of more than one amount and only some of those
amounts will be paid by the creditor using escrow account funds, the
creditor may indicate that only some of those amounts will be paid
using escrow account funds, such as by using the word ``some.''
* * * * *
37(h)(1)(ii) Closing Costs Financed
1. Calculating amount. The amount of closing costs financed
disclosed under Sec. 1026.37(h)(1)(ii) is determined by subtracting
the estimated total amount of payments to third parties not otherwise
disclosed pursuant to Sec. 1026.37(f) and (g) from the total loan
amount disclosed pursuant to Sec. 1026.37(b)(1). If the result of the
calculation is a positive number, that amount is disclosed as a
negative number under Sec. 1026.37(h)(1)(ii), but only to the extent
that it does not exceed the total amount of closing costs disclosed
under Sec. 1026.37(g)(6). If the result of the calculation is zero or
negative, the amount of $0 is disclosed under Sec. 1026.37(h)(1)(ii).
* * * * *
[[Page 8778]]
37(m)(8) Construction Loans
1. Clear and conspicuous statement regarding redisclosure for
construction loans. For construction loans in transactions involving
new construction, where the creditor reasonably expects the settlement
date to be 60 days or more after the provision of the disclosures
required under Sec. 1026.19(e)(1)(i), providing the statement, ``You
may receive a revised Loan Estimate at any time prior to 60 days before
consummation'' under the master heading ``Additional Information About
This Loan'' and the heading ``Other Considerations'' pursuant to Sec.
1026.37(m)(8) satisfies the requirements set forth in Sec.
1026.19(e)(3)(iv)(F) that the statement be made clearly and
conspicuously on the disclosure.
37(n) Signature Statement
* * * * *
2. Multiple consumers. If there is more than one consumer who will
be obligated in the transaction, the first consumer signs as the
applicant and each additional consumer signs as a co-applicant. If
there is not enough space under the heading ``Confirm Receipt'' to
provide signature lines for every consumer in the transaction, the
creditor may add additional signature pages, as needed, at the end of
the form for the remaining consumers' signatures. However, the creditor
is required to disclose the heading and statement required by Sec.
1026.37(n)(1) on such additional pages.
* * * * *
Section 1026.38--Content of Disclosures for Certain Mortgage
Transactions (Closing Disclosure)
* * * * *
38(a)(3)(vi) Property
* * * * *
2. Multiple properties. Where more than one property secures the
credit transaction, Sec. 1026.38(a)(3)(vi) requires disclosure of all
property addresses. If the addresses of all properties securing the
transaction do not fit in the space allocated on the Closing
Disclosure, an additional page with the addresses of all such
properties may be appended to the end of the form.
* * * * *
Paragraph 38(e)(1)(iii)(A)
1. Statements of increases or decreases. Section
1026.38(e)(1)(iii)(A) requires a statement of whether the amount
increased or decreased from the estimated amount. The statement, ``This
amount increased,'' in which the word ``increased'' is in boldface font
and is replaced with the word ``decreased'' as applicable, complies
with this requirement.
* * * * *
Paragraph 38(e)(2)(iii)(A)
* * * * *
3. Statements regarding excess amount and any credit to the
consumer. Section 1026.38(e)(2)(iii)(A) requires a statement that an
increase in closing costs exceeds legal limits by the dollar amount of
the excess and a statement directing the consumer to the disclosure of
lender credits under Sec. 1026.38(h)(3) if a credit is provided under
Sec. 1026.19(f)(2)(v). See form H-25(F) in appendix H to this part for
examples of such statements.
* * * * *
38(g)(2) Prepaids
* * * * *
4. Interest rate for prepaid interest. The dollar amounts disclosed
pursuant to Sec. 1026.38(g)(2) must be based on the interest rate
disclosed under Sec. 1026.38(b), as required by Sec. 1026.37(b)(2).
* * * * *
Dated: January 18, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2015-01321 Filed 2-18-15; 8:45 am]
BILLING CODE 4810-AM-P