Attention Lenders! The TILA-RESPA Integrated Disclosure Rule Is Taking Effect: Two New Disclosure Forms Are Required for Most Closed-End Consumer Mortgage Loans

On October 3, 2015, a new mortgage rule issued by the Consumer Financial Protection Bureau (CFPB) will take effect. The purpose of the rule is to reduce the confusion surrounding, and increase the consistency regarding, mandatory disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

The CFPB first issued the final rule, formally the Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z), in November of 2013, and it was published on December 31, 2013. The CFPB issued the rule, also called the "Know Before You Owe Mortgage Rule" or the "TILA-RESPA Integrated Disclosure Rule," in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which directed the CFPB to integrate the mortgage loan disclosure forms required under TILA and RESPA. As the CFPB explained, over the course of more than 30 years, two different federal agencies had developed two separate disclosure forms that lenders were required to provide consumers applying for a mortgage. As a result, the "information on these forms is overlapping and the language is inconsistent," and "[n]ot surprisingly, consumers often find the forms confusing." The new rule aims to clear up the confusion and inconsistency.