The Consumer Financial Protection Bureau (CFPB) is coming under industry pressure to delay finalizing a merger of the RESPA/TILA mortgage disclosure forms until the qualified mortgage and qualified residential mortgage rules are finalized.
The disclosure forms will not be “useable” until all the Dodd-Frank Act rules that affect disclosures are finalized, according to Anne Canfield, executive director of the Consumer Mortgage Coalition (CMC).
“The disclosures will only work if they are designed together” once all the rules are finalized, she told a House Financial Services subcommittee hearing Wednesday afternoon.
Subcommittee chairman Judy Biggert, R-Ill., asked CFPB deputy director Raj Date about waiting until the QM and QRM rules are finalized.
“I certainly understand the argument and the concept behind it—that a number of these rules ought to be finalized before the disclosures forms are final,” Date testified. “It is entirely possible that timetable is the one that will play out,” he added.
The American Bankers Association, Mortgage Bankers Association and other industry groups are urging the bureau to wait until the DFA rules that drive disclosures are finalized. This would allow all final disclosures to be implemented in an orderly fashion.
The CFPB official said the agency intends to finalize the QM rule before the end of January. The QM rule will determine which loans are safe enough for consumers and shield lenders that adhere to the QM underwriting standards from litigation. Six other regulators are working on the QRM rule, a determinant of which securitized loans will be exempt from risk retention.
The CFPB has been working on perfecting mortgage disclosure forms for over a year. Officials are planning to unveil the new disclosure forms by July 21 and will seek public comment. “At the same time, we will be issuing a proposed rule that provides detailed requirements and guidance for filling out the forms,” Date said.
The industry group CMC is recommending that CFPB delay any proposed rulemaking.
“Any proposed rules and disclosures that they come out with now will not make any sense and will not be useable,” Canfield said.