The Real Estate Settlement Procedures Act (RESPA) was enacted by Congress in 1974 in order to promote "more effective advance disclosure to home buyers and sellers of settlement costs." 12 U.S.C. § 2601(b)(1). In particular, RESPA requires the issuance of forms to the borrower that "conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement." 12 U.S.C. § 2603(a). The related Truth-in-Lending Act (TILA) of 1968 requires that, "in the case of any consumer credit transaction," the lender "shall clearly and conspicuously disclose" to the borrower certain material terms and shall provide notice of right to cancel. 15 U.S.C. § 1635(a).
For decades, these two laws have operated concurrently. The Dodd-Frank Wall Street Reform & Consumer Protection Act ("Dodd-Frank") directs the Consumer Financial Protection Bureau ("CFPB") to promulgate rules combining the disclosure requirements of RESPA and TILA. The combined rule, entitled the "TILA-RESPA Integrated Disclosure Rule" or "TRID" is set to take effect on October 3, 2015. Under TRID, the currently required initial TILA disclosures and the RESPA Good Faith Estimate must be combined into the new Loan Estimate form, and the currently required final TILA disclosures and the HUD-1 form must be combined into the new Closing Disclosures form. The new forms are meant to give consumers more time to review the particulars of a mortgage transaction prior to closing: the Loan Estimate must be provided to a borrower three days after they apply for a loan and the Closing Disclosure must be provided three days prior to the closing. The Loan Estimate and Closing Disclosure forms have various new and modified disclosure requirements, which can be found on the CFPB website.
The Final TRID Rule was initially scheduled to be implemented on July 1, 2015, but has been officially delayed until October 3, 2015. The CFPB specifically decided to implement TRID on a Saturday with the goal of smoother implementation, as lenders and other industry stakeholders will have time over the weekend to launch and test new system configurations.
Fitch Law Partners LLP will continue to monitor developments in this area of the law as they unfold. For more information about our banking law practice, please visit our banking law page.