NAR supports a RESPA-TILA integration that adds transparency, simplifies disclosures, and reduces burdens to settlement service providers including real estate professionals. The Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) are confusing statutes with sometimes conflicting disclosures and procedures. A single reformed set of rules and initial disclosures would benefit settlement service providers and consumers and improve the settlement process.
When the Consumer Financial Protection Bureau (CFPB) issued its final rule to harmonize the RESPA/TILA (Know Before You Owe or KBYO) disclosures and regulations on November 20, 2013, it addressed many of NAR’s major concerns with the proposed rule. First, the CFPB significantly changed the proposed three-day waiting period to close transactions. That stipulation now only applies to major changes to the mortgage such as a change in the annual percentage rate (APR), the loan product itself changes (i.e. a fixed rate loan becomes an adjustable rate or interest only mortgage), or the lender adds a prepayment penalty. The CFPB also dropped the “all in” APR that would have changed the definition of the finance charge, which is used to calculate the annual percentage rate, or APR.
The new KBYO rules and forms took effect on October 3, 2015, streamlining valuable information and promoting money saving comparison-shopping for consumers. However, compliance issues remain, which is why NAR continues to advocate for clarity and direction from the CFPB. On June 7, 2016, NAR wrote to the CFPB requesting specific written guidance for improved KBYO implementation and on July 29, 2016, the CFPB issued a proposed rule addressing some of NAR’s concerns.
NAR members continue to face challenges with lenders’ and title companies’ growing reluctance to share the new required Closing Disclosure (CD) with real estate professionals. Highlighting this concern and more, NAR submitted comments on the proposed rule on October 18, 2016. While a final rule will not likely be issued until next year, after which additional information will be provided, NAR continues to work with industry advocating for CD sharing to ensure that consumers are able to enjoy the benefits and expertise real estate professionals bring to the sales transaction.