CFPB Disclosure Regime
Could Force Smaller Lenders Out of Mortgages
Small lenders are concerned that they will be forced out of business by the Consumer Financial Protection Bureau's rule to merge various disclosure documents. Though it sounds simple, the process could be more difficult than complying with the qualified mortgage rule in that it requires so many systems to be altered. During a recent American Bankers Association conference, Joshua Weinberg, senior vice president at First Choice Bank in Lawrenceville, N.J., said, "[This] eats QM for breakfast. There are significantly more ramifications not just on the disclosure elements, but from the business process side." The new disclosure rules that combine the requirements of the Truth-in-Lending Act and the Real Estate Settlement Procedures Act will go into effect Aug. 1, but many lenders will not be ready. In particular, the rules open up a private right of action under which lenders can be held liable for errors in the new merged Closing Disclosure document. "It doesn't take very many lawsuits to really feel the pain," says Donald Lampe, a partner at Morrison & Foerster. In response, more smaller lenders plan to outsource their mortgage operations.
From "CFPB Disclosure Regime Could Force Smaller Lenders Out of Mortgages"
American Banker (04/15/15) Collins, Brian
Small lenders are concerned that they will be forced out of business by the Consumer Financial Protection Bureau's rule to merge various disclosure documents. Though it sounds simple, the process could be more difficult than complying with the qualified mortgage rule in that it requires so many systems to be altered. During a recent American Bankers Association conference, Joshua Weinberg, senior vice president at First Choice Bank in Lawrenceville, N.J., said, "[This] eats QM for breakfast. There are significantly more ramifications not just on the disclosure elements, but from the business process side." The new disclosure rules that combine the requirements of the Truth-in-Lending Act and the Real Estate Settlement Procedures Act will go into effect Aug. 1, but many lenders will not be ready. In particular, the rules open up a private right of action under which lenders can be held liable for errors in the new merged Closing Disclosure document. "It doesn't take very many lawsuits to really feel the pain," says Donald Lampe, a partner at Morrison & Foerster. In response, more smaller lenders plan to outsource their mortgage operations.
From "CFPB Disclosure Regime Could Force Smaller Lenders Out of Mortgages"
American Banker (04/15/15) Collins, Brian
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