Understanding the RESPA-TILA Disclosure Rules

Making a purchase can be a time consuming process. Even buying a television—ensuring that the brand, picture and sound quality is all worth your hard earned money—can take many hours of research.

Unlike a television, a home is typically the biggest purchase a person makes throughout the course of their life. A lot of time is needed to go over the settlement disclosure, to make sure that it is exactly what they were expecting. If consumers notice erroneous information or something they didn’t expect while looking over final numbers at the closing table, occasionally buyers don’t raise a red flag because they are afraid they won’t get their home if they don’t sign the papers at that exact moment. Many times, this is the difference between satisfied and unsatisfied customers.

The Consumer Financial Protection Bureau (CFPB) is trying to change this. At the ‘Know Before You Owe’ Mortgage Field Hearing in Boston, MA, Director Richard Cordray spoke about the how the CFPB is “…putting in place rules that will help consumers shop around for the right mortgage.” The CFPB is doing this by renovating the current disclosure forms into the simple and straightforward ‘Know Before You Owe’ forms.

How RESPA – TILA Impacts Mortgage Professionals

These integrated disclosure forms will impact the various silos in the residential mortgage industry in many ways. One of the biggest impacts on lenders, title and escrow agents, realtors and consumers is that all the closing data will need to be synced and balanced seventy-two hours, or three days, before closing.

Buyers benefit from this new rule because they will have their deserved time to look over the biggest purchase of their life. This rule empowers them by taking the pressure off in the closing process.

The CFPB has stated that the new rules “will require creditors, mortgage brokers, and settlement agents to make extensive revisions to their software, to change their dealings and information sharing practices with each other and other settlement service providers, and to retrain their staffs.” In addition, all industry participants are also burdened by implementing the new and amended mortgage rules that became effective in January of 2014.

To fully comply with the new regulations, lenders need to be able to collaborate on all the information and deliver it to the buyer on time. Most lenders currently struggle with getting the settlement statement balanced with the escrow agent and delivered to the buyer the day of closing. This is primarily because of the difficulty in communicating and collaborating efficiently with all of the internal and external stakeholders involved in ensuring the accuracy of the Settlement Statement.

Lender Technology for RESPA – TILA

Lenders need a secure, efficient system that ensures they have the ability to get the settlement statement to the buyer on time. This system does not need to replace what banks already have with a LOS; it would simply need to be a bridge that connects every other system together. These big picture ideals of transparency, collaboration and communication are what ATS Secured stands for. The ATS Secured solution takes on the big ideas like communication across any platform, an end-to-end payment verification system and the capacity to track documents and data with proper controls and transparency.

These ideals are possible with technology. The financial industry as a whole needs to embrace these coming regulations and work together to ensure a smooth transition because the implementation date will be here before they know it.

This is bigger than simply buying a new television—this is the biggest purchase a person usually makes.

Is your industry ready for the upcoming changes?

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