Pub. 4 2015 Issue 5

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 32 I S YOUR FINANCIAL INSTITUTION READY FOR the changes coming on October 3, 2015? This has been a common question in banking circles for several months and has caused anxiety for more than a few people. Financial institutions must be prepared to offer the new Loan Estimate and Closing Disclosure on most closed-end consumer credit transactions secured by real property on applications submitted on or after October 3, 2015. This is a significant change from standard practice for many institutions over the past 40 years. The changes include the new Loan Estimate, which will replace the initial Truth in Lending disclosure and Good Faith Estimate. The HUD-1 Settlement Statement and final Truth in Lending disclosure also are being replaced by the new Closing Disclosure. According to the Consumer Financial Protection Bureau (CFPB), the goal is to streamline the application process while offering borrowers a better understanding of mortgage loan costs and terms. There are a few exceptions to providing the updated disclosures, which are discussed later, but let’s focus on a few of the key changes your institution should be preparing to address. Loan Estimate The Loan Estimate will provide borrowers an overview of the loan terms and an estimate of the costs of the loan. The creditor must deliver or mail the Loan Estimate no later than three business days after the receipt of an application and at least seven business days before the loan closes. If there are any permissible revisions to the Loan Estimate, the creditor must make the updates no later than three business days after receiving the information. Note: For purposes of providing the Loan Estimate, a business day is defined as a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. INTEGRATING THE REAL ESTATE SETTLEMENT ACT/TRUTH IN LENDING ACT DISCLOSURE By: Billy Seitz, BKD, LLP, bseitz@bkd.com