RMA Seeks Clarification on Amendments to Mortgage Disclosure Requirements

Philadelphia, PA (October 20, 2016)—

The Risk Management Association (RMA) has submitted a comment letter to the Consumer Financial Protection Bureau regarding the CFPB’s proposed Amendments to Federal Mortgage Disclosure Requirements under the Truth in Lending Act (“Regulation Z”). The letter, filed earlier this week, notes several instances where clarifying the CFPB’s language would better enable practitioners to meet the Bureau’s expectations, benefitting customers and the industry.

RMA seeks clarification on language referencing finance charge tolerances, the Total Interest Percentage (“TIP”) Calculation, and Subordinate Financing, among other points.  

An example of a clarification requested by RMA is the CFPB’s treatment of the term “paid by or imposed on.” The letter states that the CFPB intends to make no distinction between “paid by or imposed on” and the term “payable,” a position that could require the listing of charges in loan estimates that are actually paid by the creditor and not the consumer.

“If a lender-incurred cost were itemized separately on the loan estimate when such cost is not directly paid by the borrower, it is likely to confuse the borrower and be misleading when the borrower is comparing loan estimates from different lenders,” the RMA letter states. “RMA respectfully submits that when providing a loan estimate, disclosure of the interest rate and the actual closing costs to be paid by the borrower is sufficient for the borrower to ‘shop’ among lenders and make an informed credit decision.”

The RMA letter also notes disagreement in the industry as to whether the CFPB is altering finance charge tolerances for refinances. If the CFPB is in fact altering finance charge tolerances for refinances, RMA is seeking an explanation for why it is doing so for refinances and not home purchase loans.

The amendments are intended to memorialize past informal guidance regarding the TILA-RESPA Integrated Disclosure Rule (“TRID”) and make additional clarifications and technical amendments, as well as to propose certain substantive changes in instances in which the Bureau has identified potential discrete solutions to specific implementation challenges.

Overall, the Association says in its comment letter, “RMA is generally supportive of the Bureau’s attempt to memorialize past informal guidance and clarify aspects of TRID.” 

RMA submits such comment letters as a way to share the thoughts and concerns of members and the industry with regulatory agencies. Because the association does not lobby, it is viewed by regulators as an accurate and valuable source of industry feedback. Earlier this year RMA submitted comment letters on proposed rules regarding Incentive-based Compensation Arrangements and a prohibition on class-action waivers in pre-dispute arbitration agreements with consumers. 

About RMA 
Founded in 1914, The Risk Management Association is a not-for-profit, member-driven professional association whose sole purpose is to advance the use of sound risk management principles in the financial services industry. RMA promotes an enterprise approach to risk management that focuses on credit risk, market risk and operational risk. Headquartered in Philadelphia, Pennsylvania, RMA has 2,500 institutional members that include banks of all sizes as well as nonbank financial institutions. They are represented in the Association by 18,000 individuals located throughout North America, Europe, Australia, and Asia/Pacific.

Media Contacts
Stephen Krasowski, skrasowski@rmahq.org, 215-446-4095 
Frank Devlin, fdevlin@rmahq.org, 215-446-4137