Regulatory Cliff Now Has an Extended Effective Date

The Consumer Financial Protection Bureau (CFPB) extended the effective date for several mortgage disclosures that are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The disclosure requirements will be integrated into the CFPB’s final mortgage disclosure forms which are expected to be finalized during the first quarter of 2013.

If the CFPB had not provided the final rule extending the effective date, the Dodd-Frank Act would have required financial institutions to start making these disclosures on Jan. 21, 2013. This would have led to credit unions having to come up with their own versions of the required disclosures and then changing to the integrated Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) form once the final rules took effect.

In particular the following Dodd-Frank Act provisions have been delayed until the final TILA-RESPA rules are in effect:

  • Warning regarding negative amortization features;
  • Disclosure of State law anti-deficiency protections;
  • Disclosure regarding creditor’s partial payment policy prior to consummation and, for new creditors due to loan transfer, after consummation;
  • Disclosure regarding mandatory escrow or impound accounts;
  • Disclosure prior to consummation regarding waiver of escrow in connection with the transaction;
  • Disclosure of monthly payment, including escrow, at initial and fully-indexed rate for variable-rate residential mortgage loan transactions;
  • Repayment analysis disclosure to include amount of escrow payments for taxes and insurance;
  • Disclosure of settlement charges and fees and the approximate amount of the wholesale rate of funds;
  • Disclosure of mortgage originator fees and the amount of fees paid by the consumer and the creditor;
  • Disclosure of total interest as a percentage of principal; and
  • Optional disclosure of appraisal management company fees.

Even with the extension of these particular requirements, other Dodd-Frank Act requirements will have final rules completed before Jan. 21, 2013. These provisions include:

  • Notice of reset of adjustable rate mortgage;
  • Loan originator identifier to be included on all mortgage documents;
  • Notification and requirements regarding appraisals for higher-risk mortgages;
  • Equal Credit Opportunity Act (ECOA) notification of right and delivery of appraisal or valuation of a mortgage loan;
  • Post-consummation escrow cancellation disclosures;
  • Ability-to-repay rules, including qualified mortgage;
  • Mortgage servicing rules; and
  • Mortgage originator standards and compensation.

Even though the delayed implementation dates help credit unions avoid the Regulatory Cliff, according to Northwest Credit Union Association Director of Compliance Services David Curtis, “It is still a very steep slope ahead. Double black diamond for the ski bums like me.”

Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Advocacy News, Compliance News, NCUA.