Wednesday, November 5, 2014

Prepare today for looming TILA/RESPA changes

by Jon Bundy, CUNA Mutual Group's Regulatory Compliance Manager

The Consumer Financial Protection Bureau (CFPB)’s TILA/RESPA Integrated Disclosure Rule is the largest mortgage lending regulatory compliance change seen by credit unions in recent times. Specifically, the rule will impact credit unions’ relationships with their system, document, and service providers, and, most importantly, their members and credit union staff.

Credit unions must act now to prepare for the combined disclosure rule stemming from the Dodd-Frank Act’s changes to the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).

The new disclosures are not merely replacing or combining the existing disclosures. The regulations require loan disclosures to change dynamically to reflect each borrower’s unique loan features, which means the new documents will have new data elements, calculations, and restrictions, and incorporate dynamic elements based on loan type, loan feature, and loan purpose.

Taking everything into consideration, there could be thousands of permutations of the new disclosures because of the dynamic nature of the documents.

To be fully prepared, credit unions must:

  • Start making and documenting business decisions regarding the type of lending programs offered and fees and services charged.
  • Update systems with new data fields and calculations and work with system and document providers to make sure they are on track.
  • Establish procedures to guarantee service providers and settlement agents are walking in step with your credit union to address restrictions and timing limitations.
  • Make sure document providers get your new disclosures to you in time to test and train.
  • Determine who is in charge--know your compliance resources.
  • Know how each department will be impacted and how third-party partners can help.

The compliance deadline is looming--the TILA/RESPA rule becomes effective and must be complied with on Aug. 1, 2015. Don’t get caught unprepared, start having these discussions today.

Jon Bundy is compliance manager of service products for CUNA Mutual Group, responsible for the development of lending and deposit products and assisting credit union leaders with maintaining regulatory compliance through their policies and procedures.