[Federal Register Volume 80, Number 123 (Friday, June 26, 2015)]
[Proposed Rules]
[Pages 36727-36733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15836]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 80, No. 123 / Friday, June 26, 2015 / 
Proposed Rules  

[[Page 36727]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Parts 1024 and 1026

[Docket No. CFPB-2015-0029]
RIN 3170-AA48


2013 Integrated Mortgage Disclosures Rule Under the Real Estate 
Settlement Procedures Act (Regulation X) and the Truth in Lending Act 
(Regulation Z) and Amendments; Delay of Effective Date

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Proposed rule with request for public comment.

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SUMMARY: The Consumer Financial Protection Bureau (Bureau) is proposing 
to delay the August 1, 2015, effective date of the Integrated Mortgage 
Disclosures Rule Under the Real Estate Settlement Procedures Act 
(Regulation X) and the Truth in Lending Act (Regulation Z) (TILA-RESPA 
Final Rule) and the related Amendments to the 2013 Integrated Mortgage 
Disclosures Rule Under the Real Estate Settlement Procedures Act 
(Regulation X) and the Truth In Lending Act (Regulation Z) and the 2013 
Loan Originator Rule Under the Truth in Lending Act (Regulation Z) 
(TILA-RESPA Amendments) to October 3, 2015. In light of certain 
procedural requirements under the Congressional Review Act (CRA), the 
TILA-RESPA Final Rule and the TILA-RESPA Amendments cannot take effect 
on August 1, 2015. Under the CRA, and unless the Bureau takes the 
action proposed in this document, the rule will take effect 60 days 
after the date on which Congress received the rule. The Bureau requests 
comment on a proposal to extend the effective date of both the TILA-
RESPA Final Rule and the TILA-RESPA Amendments to October 3, 2015.

DATES: Comments must be received on or before July 7, 2015.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2015-
0029 or RIN 3170-AA48, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include Docket 
No. CFPB-2015-0029 and/or RIN 3170-AA48 in the subject line of the 
email.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 
20552.
     Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1275 First 
Street NE., Washington, DC 20002.
     Instructions: All submissions should include the agency 
name and docket number or Regulatory Information Number (RIN) for this 
rulemaking. Because paper mail in the Washington, DC area and at the 
Bureau is subject to delay, commenters are encouraged to submit 
comments electronically. In general, all comments received will be 
posted without change to http://www.regulations.gov. In addition, 
comments will be available for public inspection and copying at 1275 
First Street NE., Washington, DC 20002, on official business days 
between the hours of 10 a.m. and 5 p.m. Eastern Time. You can make an 
appointment to inspect the documents by telephoning (202) 435-7275. All 
comments, including attachments and other supporting materials, will 
become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or social 
security numbers, should not be included. Comments generally will not 
be edited to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Lea Mosena, Counsel, Legal Division, 
at (202) 435-7700.

SUPPLEMENTARY INFORMATION: 

I. Summary of the Proposed Rule

    In November 2013, pursuant to sections 1098 and 1100A of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), 
the Bureau issued the Integrated Mortgage Disclosures Under the Real 
Estate Settlement Procedures Act (Regulation X) and the Truth in 
Lending Act (Regulation Z) (TILA-RESPA Final Rule), combining certain 
disclosures that consumers receive in connection with applying for and 
closing on a mortgage loan.\1\ On October 10, 2014, the Bureau proposed 
the Amendments to the 2013 Integrated Mortgage Disclosures Rule Under 
the Real Estate Settlement Procedures Act (Regulation X) and the Truth 
In Lending Act (Regulation Z) and the 2013 Loan Originator Rule Under 
the Truth in Lending Act (Regulation Z) (TILA-RESPA Amendments),\2\ 
which was finalized on January 18, 2015.\3\ The TILA-RESPA Final Rule 
and the TILA-RESPA Amendments had effective dates of August 1, 2015. 
Because of an administrative error on the Bureau's part in complying 
with the CRA with respect to the TILA-RESPA Final Rule, the TILA-RESPA 
Final Rule cannot take effect until at the earliest August 15, 2015 
(CRA Effective Date). This proposed rule seeks comment on whether the 
Bureau should delay the effective date of both the TILA-RESPA Final 
Rule and the TILA-RESPA Amendments to October 3, 2015. The Bureau also 
proposes certain technical amendments to the Official Interpretations 
to Regulation Z to reflect the proposed new effective date.
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    \1\ 78 FR 79730 (Dec. 31, 2013). The TILA-RESPA Final Rule 
finalized a proposal the Bureau had issued on July 9, 2012 77 FR 
51116 (Aug. 23, 2012) (2012 TILA-RESPA Proposal).
    \2\ 79 FR 64336 (Oct. 29, 2014).
    \3\ 80 FR 8767 (Feb. 19, 2015).
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II. Background

A. The TILA-RESPA Integrated Disclosures Rulemaking

    Dodd-Frank Act sections 1032(f), 1098, and 1100A mandated that the 
Bureau establish a single disclosure scheme for use by lenders or 
creditors in complying with the disclosure requirements of both the 
Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending 
Act (TILA). Section 1098(2) of the Dodd-Frank Act amended RESPA section 
4(a) to require that the Bureau publish a single, integrated disclosure 
for mortgage loan transactions, including ``the disclosure requirements 
of this section and section 5, in conjunction with the disclosure 
requirements of [TILA]. . . .'' \4\ Similarly, section 1100A(5) of the 
Dodd-Frank Act amended TILA section 105(b) to require that the Bureau 
publish a single, integrated disclosure for

[[Page 36728]]

mortgage loan transactions, including ``the disclosure requirements of 
this title in conjunction with the disclosure requirements of [RESPA].. 
. .'' \5\ The Bureau issued proposed integrated disclosure forms and 
rules for public comment on July 9, 2012, in the 2012 TILA-RESPA 
Proposal, and issued the TILA-RESPA Final Rule on November 20, 2013.\6\
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    \4\ 12 U.S.C. 2603(a).
    \5\ 15 U.S.C. 1604(b). The amendments to RESPA and TILA 
mandating a ``single, integrated disclosure'' are among numerous 
conforming amendments to existing Federal laws found in subtitle H 
of the Consumer Financial Protection Act of 2010 (the Consumer 
Financial Protection Act of 2010 is title X of the Dodd-Frank Act). 
Subtitle C of the Consumer Financial Protection Act, ``Specific 
Bureau Authorities,'' codified at 12 U.S.C. chapter 53, subchapter 
V, part C, contains a similar provision. Specifically, section 
1032(f) of the Dodd-Frank Act provides that, by July 21, 2012, the 
Bureau ``shall propose for public comment rules and model 
disclosures that combine the disclosures required under [TILA] and 
sections 4 and 5 of [RESPA] into a single, integrated disclosure for 
mortgage loan transactions covered by those laws, unless the Bureau 
determines that any proposal issued by the [Federal Reserve Board] 
and [U.S. Department of HUD] carries out the same purpose.'' 12 
U.S.C. 5532(f). The Bureau issued the 2012 TILA-RESPA Proposal 
pursuant to that mandate and the parallel mandates established by 
the conforming amendments to RESPA and TILA, discussed above.
    \6\ See Press Release, Consumer Financial Protection Bureau, 
CFPB proposes ``Know Before You Owe'' Mortgage Forms (July 9, 2012), 
available at http://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-proposes-know-before-you-owe-mortgage-forms/; CFPB Mortgage Disclosure Team, CFPB Blog, Know Before You 
Owe: Introducing our proposed mortgage disclosure forms (July 9, 
2012), available at http://www.consumerfinance.gov/blog/know-before-you-owe-introducing-our-proposed-mortgage-disclosure-forms/.
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    Upon issuing the TILA-RESPA Final Rule, the Bureau initiated robust 
efforts to support industry implementation.\7\ Information regarding 
the Bureau's TILA-RESPA implementation initiative and available 
resources can be found on the Bureau's regulatory implementation Web 
site at www.consumerfinance.gov/regulatory-implementation/tila-respa.
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    \7\ These on-going efforts include: (1) The publication of a 
plain-language compliance guide and a guide to forms to help 
industry understand the new rules, including updates to the guides, 
as needed; (2) the publication of a readiness guide for institutions 
to evaluate their readiness and facilitate compliance with the new 
rules; (3) the publication of a disclosure timeline that illustrates 
the process and timing requirements of the new disclosure rules; (4) 
an ongoing series of webinars to address common interpretive 
questions; (5) roundtable meetings with industry, including 
creditors, settlement service providers, and technology vendors, to 
discuss and support their implementation efforts; (6) participation 
in conferences and forums; and (7) close collaboration with State 
and Federal regulators on implementation of the TILA-RESPA Final 
Rule, including coordination on consistent examination procedures.
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B. Proposed Effective Date

    As published, the TILA-RESPA Final Rule and the TILA-RESPA 
Amendments both had effective dates of August 1, 2015. Section 801 of 
the CRA precludes a rule from taking effect until the agency 
promulgating the rule submits a rule report, which includes a copy of 
the rule, to each House of Congress and to the Comptroller General of 
the Government Accountability Office (GAO). 5 U.S.C. 801(a)(1)(A). 
``Major rules,'' as defined under the CRA (which includes the TILA-
RESPA Final Rule), have several additional procedural requirements, 
including that they cannot take effect until 60 days after (1) 
publication in the Federal Register or (2) receipt by Congress, 
whichever is later. Although the TILA-RESPA Final Rule was published on 
December 31, 2013, and received widespread public and Congressional 
attention, the Bureau recently discovered that it inadvertently had not 
submitted the rule report to Congress as required. Immediately upon 
discovering its error, the Bureau submitted the rule report to both 
Houses of Congress and the GAO on June 16, 2015. Under the CRA, the 
TILA-RESPA Final Rule cannot take effect until, at the earliest, August 
15, 2015, two weeks after the currently-scheduled effective date.
    The Bureau continues to believe that implementation of the TILA-
RESPA Final Rule will provide significant benefits to consumers and 
that, therefore, its earliest practically feasible implementation 
remains essential to aid consumer understanding of mortgage loan 
transactions. The Bureau recognizes, as it always has, that the TILA-
RESPA Final Rule poses perhaps unique implementation challenges for 
industry, requiring major operational changes and close coordination 
among many different parties. At the same time, the Bureau further 
continues to believe that the nearly 21-month implementation period, 
coupled with the Bureau's significant regulatory implementation support 
efforts, afforded all participants a reasonable opportunity to come 
into compliance by the August 1 date. The Bureau understands that 
industry has dedicated significant resources to implementation 
readiness and appreciates that many organizations are well prepared to 
meet the original August 1 effective date.
    Nonetheless, as explained above, the TILA-RESPA Final Rule cannot 
take effect until the CRA Effective Date. Given that some delay in the 
effective date is now required, the Bureau believes that a brief 
additional delay may benefit both consumers and industry more than 
would allowing the new rules to take effect on the CRA Effective Date. 
The Bureau recognizes that a mid-month effective date may create 
additional challenges and also recognizes that adjusting operational 
systems from a target readiness date of August 1 to a target readiness 
date of August 15 is likely to pose implementation challenges for many 
organizations. Moreover, in recent weeks, the Bureau has learned that 
delays in the delivery of system updates have left creditors and others 
with limited time to fully test all of their systems and system 
components to ensure that each system works with the others in an 
effective manner. These delays pose risks to the smooth implementation 
of the new forms mandated under the TILA-RESPA Final Rule, the Loan 
Estimate and Closing Disclosure, particularly given the potential 
challenges for institutions of stopping and restarting their progress 
toward implementation readiness.
    Accordingly, for the reasons stated, the Bureau is proposing a 
brief delay to the CRA Effective Date and the effective date for the 
TILA-RESPA Amendments to October 3, 2015. The Bureau believes that 
scheduling the effective date on a Saturday may allow for smoother 
implementation by affording industry time over the weekend to launch 
new systems configurations and to test systems. A Saturday launch is 
also consistent with existing industry plans tied to the Saturday 
August 1 effective date. The Bureau believes that a longer delay in 
implementation would impose unnecessary costs on both those segments of 
industry that have worked hardest to implement on time and on consumers 
and would be inconsistent with the underlying intent to aid consumer 
understanding of mortgage loan transactions.
    The Bureau solicits comment on all aspects of this proposal. In 
particular, the Bureau asks commenters to provide specific detail and 
any available data regarding current and planned practices, as well as 
relevant knowledge and specific facts about any benefits, costs, or 
other impacts on both industry and consumers of this proposal. 
Specifically, the Bureau solicits comment regarding the proposed 
extension of the effective date to October 3, 2015, as well as 
alternative dates for extension, including the prospect of allowing the 
new rules to take effect on the CRA Effective Date.

III. Legal Authority

    The Bureau is proposing to exercise its rulemaking authority 
pursuant to its TILA section 105(a), RESPA section

[[Page 36729]]

19(a), and Dodd-Frank Act section 1022(b)(1) to delay the effective 
date of the TILA-RESPA Final Rule and the TILA-RESPA Amendments.
    The legal authority for the TILA-RESPA Final Rule and the TILA-
RESPA Amendments are described in detail in the Legal Authority parts 
of the TILA-RESPA Final-Rule and Amendments, respectively. As amended 
by the Dodd-Frank Act, TILA section 105(a), 15 U.S.C. 1604(a), directs 
the Bureau to prescribe regulations to carry out the purposes of TILA 
and provides that such regulations may contain additional requirements, 
classifications, differentiations, or other provisions, and may provide 
for such adjustments and exceptions for all or any class of 
transactions, that the Bureau judges are necessary or proper to 
effectuate the purposes of TILA, to prevent circumvention or evasion 
thereof, or to facilitate compliance. Section 19(a) of RESPA, 12 U.S.C. 
2617(a), authorizes the Bureau to prescribe such rules and regulations 
and to make such interpretations and grant such reasonable exemptions 
for classes of transactions as may be necessary to achieve the purposes 
of RESPA. Additionally, under Dodd-Frank Act section 1022(b)(1), the 
Bureau has general authority to prescribe rules ``as may be necessary 
or appropriate to enable the Bureau to administer and carry out the 
purposes and objectives of the Federal consumer financial laws, and to 
prevent evasions thereof.'' 15 U.S.C. 5512(b)(1). TILA and RESPA are 
Federal consumer financial laws. Accordingly, in proposing this rule, 
the Bureau is exercising its authority under Dodd-Frank Act section 
1022(b) to prescribe rules under TILA, RESPA, and title X of the Dodd-
Frank Act that carry out the purposes and objectives and prevent 
evasion of those laws. Section 1022(b)(2) of the Dodd-Frank Act 
prescribes certain standards for rulemaking that the Bureau must follow 
in exercising its authority under section 1022(b)(1). 12 U.S.C. 
5512(b)(2).

IV. Section-by-Section Analysis

Section 1026.1 Authority, Purpose, Coverage, Organization, Enforcement, 
and Liability

1(d) Organization
1(d)(5)
    Comment 1(d)(5)-1 provides clarity regarding the application of the 
effective date to transactions covered by the TILA-RESPA Final Rule and 
the TILA-RESPA Amendments. The Bureau is proposing conforming 
amendments to comment 1(d)(5)-1 to reflect the proposed change in 
effective date to October 3, 2015.

Section 1026.19 Certain Mortgage and Variable-Rate Transactions

19(g) Special Information Booklet at Time of Application
19(g)(2) Permissible Changes
    Comment 19(g)(2)-3 refers to the general restriction on changing 
the settlement cost booklet's title under Sec.  1026.19(g)(2)(iv) and 
comment 19(g)(1)-1 and explains that, until the Bureau issues a version 
of the special information booklet relating to the Loan Estimate and 
Closing Disclosure under Sec. Sec.  1026.37 and 1026.38, for 
applications that are received on or after August 1, 2015, a creditor 
may change the title appearing on the cover of the version of the 
special information booklet in use before August 1, 2015, provided the 
words ``settlement costs'' are used in the title. The Bureau is 
proposing conforming amendments to comment 19(g)(2)-3 to reflect the 
proposed change in effective date to October 3, 2015.

Section 1026.43 Minimum Standards for Transactions Secured by a 
Dwelling

    In addition to the amendments to the Official Interpretations 
discussed above, the Bureau is proposing one amendment to an amendatory 
instruction that relates to FR Doc. 2014-25503, published on November 
3, 2014. Specifically, the Bureau proposes to amend the instruction, 
which is drafted so the interpretation would take effect on August 1, 
2015, to coordinate with the original effective date of the TILA-RESPA 
Final Rule. The subject of the amendatory instruction, Paragraph 
43(e)(3)(iv)-2, Relationship to RESPA tolerance cure, will replace an 
existing clarification of the relationship between tolerance cures and 
Regulation Z points and fees cures. The proposed amendment would 
preserve this coordination by having the interpretation take effect on 
October 3, 2015, instead of August 1, 2015.

V. Effective Date

    The Bureau is proposing to move the effective date of the TILA-
RESPA Final Rule and the TILA-RESPA Amendments to October 3, 2015. 
Additionally, the Bureau is proposing to make a conforming amendment to 
an amendatory instruction that relates to FR Doc. 2014-25503. After 
considering comments received on the proposal, the Bureau will publish 
a final rule finalizing an effective date for the TILA-RESPA Final Rule 
and TILA-RESPA Amendments on an expedited schedule. The Bureau proposes 
that any final rule delaying the effective date and amending the 
amendatory instruction take effect immediately upon publication in the 
Federal Register. Section 553(d) of the APA generally requires that the 
effective date of a final rule be at least 30 days after publication of 
a final rule, except for (1) a substantive rule which grants or 
recognizes an exemption or relives a restriction; (2) interpretive 
rules or statements of policy; or (3) as otherwise provided by the 
agency for good cause found and published with the rule. 5 U.S.C. 
553(d). The Bureau proposes that good cause exists for the final rule 
for the delay of the effective date to become effective immediately 
upon publication in the Federal Register to reduce industry and 
consumer confusion and market disruption.
    The Bureau also is proposing to make conforming amendments to two 
provisions of the Regulation Z Official Interpretations (commentary) 
that were adopted by the TILA-RESPA Final Rule, as discussed in the 
Section-by-Section Analysis above. The Bureau proposes that any final 
rule amending the affected commentary provisions take effect on the 
same effective date as the TILA-RESPA Final Rule and TILA-RESPA 
Amendments.

VI. Section 1022(b)(2) of the Dodd-Frank Act

A. Overview

    In developing the proposed rule, the Bureau has considered 
potential benefits, costs, and impacts.\8\ The Bureau requests comment 
on the preliminary analysis presented below as well as submissions of 
additional data that could inform the Bureau's analysis of the 
benefits, costs, and impacts of the proposed rule. The Bureau has 
consulted, or offered to consult with, the prudential regulators; the 
Securities and Exchange Commission; the U.S. Department of Housing and 
Urban Development; the U.S. Department of Housing and Urban 
Development, Office of the Inspector General; the Federal Housing 
Finance Agency; the Federal Trade Commission; the U.S. Department of 
Veterans Affairs; the U.S. Department of Agriculture; and the 
Department of the Treasury, including regarding

[[Page 36730]]

consistency with any prudential, market, or systemic objectives 
administered by such agencies.
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    \8\ Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act 
calls for the Bureau to consider the potential benefits and costs of 
a regulation to consumers and covered persons, including the 
potential reduction of access by consumers to consumer financial 
products or services; the impact on depository institutions and 
credit unions with $10 billion or less in total assets as described 
in section 1026 of the Dodd-Frank Act; and the impact on consumers 
in rural areas.
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    Because of the Bureau's error, the TILA-RESPA Final Rule cannot go 
into effect until the CRA Effective Date. As a result, affected covered 
persons will incur costs associated with delaying the implementation 
date.\9\ These costs include communication with and training of the 
staff, software programming, vendor and outside supplier coordination, 
advertising and product development costs, and broker and settlement 
agent coordination. The Bureau believes that these costs are likely 
higher for larger creditors and creditors that rely primarily on 
proprietary systems rather than on third-party software vendors.\10\ 
While many of these costs are largely incurred with the initial delay 
to the CRA Effective Date, affected entities may incur additional costs 
for subsequent delay beyond August 15, including ongoing training, 
testing, and opportunity costs. Similarly, consumers will incur costs 
associated with delaying the effective date. These costs will consist 
mostly of delayed benefits described in the 1022(b) analysis of the 
TILA-RESPA Final Rule, primarily improved consumer understanding of 
mortgage loan transactions and an increased ability to shop for a 
mortgage loan. The longer the delay in the implementation of the TILA-
RESPA Final Rule is, the greater the cost to consumers.
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    \9\ As in the 1022(b) analysis of the TILA-RESPA Final Rule, 
some service providers, such as software vendors, will incur costs, 
as well, but these are not covered persons for the purposes of this 
analysis.
    \10\ As in the 1022(b) analysis of the TILA-RESPA Final Rule, 
the Bureau believes that approximately 5 percent of creditors do not 
rely on third-party vendors.
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    Because the TILA-RESPA Final Rule cannot become effective before 
the CRA Effective Date, the Bureau has evaluated the benefits, costs, 
and impacts of the proposed rule, assuming that the TILA-RESPA Final 
Rule would become effective on August 15 absent this proposal. The 
Bureau has relied on a variety of data sources to consider the 
potential benefits, costs, and impacts of the proposed rule. In some 
instances, the requisite data are not available or are quite limited. 
Data with which to quantify the benefits of the rule are particularly 
limited. As a result, portions of this analysis rely in part on general 
economic principles to provide a qualitative discussion of the 
benefits, costs, and impacts of the proposed rule.
    This proposed rule proposes to amend the effective date of the 
TILA-RESPA Final Rule and the TILA-RESPA Amendments. In the 1022(b)(2) 
analyses of the TILA-RESPA Final Rule and TILA-RESPA Amendments, the 
Bureau previously considered the costs, benefits, and impact of the 
rules.

B. Potential Benefits and Costs to Consumers and Covered Persons

    The only consumers who would be affected by the proposed rule are 
consumers that would engage in mortgage shopping between the CRA 
Effective Date and the proposed effective date of October 3. Those 
consumers will be harmed by not receiving the benefits of the TILA-
RESPA Final Rule. Consumers shopping for a mortgage during the proposed 
period of delay in the effective date would not receive the benefits of 
the TILA-RESPA Final Rule, even if they closed on their loan after the 
proposed delayed effective date. The benefits of the TILA-RESPA Final 
Rule include easier-to-understand disclosures and the requirement that 
the creditor deliver the closing disclosure containing the settlement 
information as well as the Truth in Lending disclosures at least three 
days before closing.\11\ Some consumers may benefit if the proposed 
delay results in the industry using the time for more system testing or 
other preparation leading to a smoother transition to the new 
disclosure regime. As in the TILA-RESPA Final Rule, the Bureau cannot 
quantify either the benefit or the cost of the proposed rule to 
consumers.
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    \11\ These and other benefits are described in detail in the 
1022(b) analysis of the TILA-RESPA Final Rule.
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    Due to industry's implementation difficulties, the Bureau believes 
that the proposed delay of the CRA Effective Date could benefit many 
creditors, mortgage brokers, and settlement agents, by allowing them 
more time to transition to the new disclosure regime required by the 
TILA-RESPA Final Rule and diminishing the magnitude of any potential 
disruptions associated with the transition. The proposed delay in the 
effective date could also benefit them to the extent that it allows 
them to delay incurring any of the costs described in the TILA-RESPA 
Final Rule 1022(b) analysis. Creditors and other affected persons might 
also incur costs due to the proposed delay of the effective date of the 
TILA-RESPA Final Rule. The Bureau believes that three categories would 
benefit or incur adjustment costs: Creditors that engage in mortgage 
lending, mortgage brokers, and settlement agents. The Bureau estimates 
that there were about 11,150 creditors engaged in mortgage lending in 
2014 and that there were about 7,000 mortgage brokers and about 7,700 
settlement agent firms.\12\
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    \12\ The primary source of data used in this analysis is 2013 
data collected under the Home Mortgage Disclosure Act (HMDA). The 
empirical analysis also uses data from the 4th quarter 2013 bank and 
thrift Call Reports, and the 4th quarter 2013 credit union Call 
Reports from the NCUA, to identify financial institutions and their 
characteristics. Unless otherwise specified, the numbers provided 
include appropriate projections made to account for any missing 
information, for example, any institutions that do not report under 
HMDA. The Bureau also utilizes data from the Bureau of Labor 
Statistics.
    The Bureau analyzes data from all creditors, both the ones that 
report under HMDA and the ones that do not, with the exception of 
non-depository institutions that do not report under HMDA. For HMDA 
reporters, the Bureau uses the data reported. For HMDA non-
reporters, the Bureau uses projections based on the match of the 
Call Report data with HMDA.
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    The Bureau estimated in its 1022(b) analysis of the TILA-RESPA 
Final Rule that 95 percent of creditors (about 10,600) rely on third-
party vendors for their software, and the Bureau estimates that these 
creditors would not incur significant software programming costs. 
However, for the 5 percent of the creditors (approximately 560) that do 
not rely on third-party vendors, the proposed change of the effective 
date would require some programming expense. While a portion of this 
cost is already imposed by the delay in the effective date to the CRA 
Effective Date and therefore would not be costs imposed by this 
proposed rule, the Bureau believes that some of this cost might be 
higher if the effective date is delayed further to October 3. The 
Bureau is uncertain as to the extent of programming expense and 
requests comment on such expense.
    Moreover, the proposed change might also require rearranging an 
already established operational schedule and business processes. This 
potential disruption might be costly and require additional effort from 
the employees and additional expenses due to, for example, overtime 
pay. This potential disruption might especially affect creditors not 
relying primarily on third-party vendors.
    The Bureau believes that mortgage brokers and settlement agents 
would incur similar coordination and implementation costs. The Bureau 
is uncertain of the extent of such costs and requests comment on such 
costs.
    Finally, affected persons would incur costs in internal 
communications, training, and software re-programming, among other 
costs. The Bureau believes that the proposed change in the effective 
date might require communicating with any external suppliers of forms 
and booklets and potentially ordering

[[Page 36731]]

additional forms in the current format. Any pre-ordered Loan Estimates 
or Closing Disclosures mandated by the TILA-RESPA Final Rule would 
still be usable after October 3, and the Bureau does not believe that 
the current forms are significantly more expensive than the ones that 
are required by the TILA-RESPA Final Rule; thus, there should be no net 
increase in expense of procuring forms and booklets. While many of 
these costs are already imposed as a result of the delay in the 
effective date to the CRA Effective Date (and therefore would not be 
costs imposed by this proposed rule), the Bureau believes that some of 
the costs might be higher if the Bureau adopts the rule as proposed and 
further delays the effective date until October 3. The Bureau is 
uncertain at this time as to the extent of such costs and requests 
comment on any such costs.

C. Impact on Depository Institutions With No More Than $10 Billion in 
Assets

    The vast majority of the creditors described above have no more 
than $10 billion in assets. The Bureau believes that depository 
institutions with no more than $10 billion in assets would not be 
differentially affected by the proposed extension of the effective 
date.

D. Impact on Access to Credit

    The Bureau does not believe that there would be an adverse impact 
on credit availability resulting from the proposed extension of the 
effective date.

E. Impact on Rural Areas

    The Bureau does not believe that the proposed rule would have a 
unique impact on consumers in rural areas.

VII. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, requires each 
agency to consider the potential impact of its regulations on small 
entities, including small businesses, small governmental units, and 
small nonprofit organizations. The RFA defines a ``small business'' as 
a business that meets the size standard developed by the Small Business 
Administration pursuant to the Small Business Act.
    The RFA generally requires an agency to conduct an initial 
regulatory flexibility analysis (IRFA) and a final regulatory 
flexibility analysis (FRFA) of any rule subject to notice-and-comment 
rulemaking requirements, unless the agency certifies that the rule will 
not have a significant economic impact on a substantial number of small 
entities. The Bureau also is subject to certain additional procedures 
under the RFA involving the convening of a panel to consult with small 
business representatives prior to proposing a rule for which an IRFA is 
required.
    The Bureau concludes that an IRFA is not required for this proposed 
rule because the proposed rule, if adopted, would not have a 
significant impact on a substantial number of small entities. As 
discussed above, the proposal would extend the CRA Effective Date of 
the TILA-RESPA Final Rule and the August 1, 2015 effective date of the 
TILA-RESPA Amendments to October 3, 2015.

Number and Classes of Affected Entities

    The following table provides the Bureau's estimate of the number 
and types of entities to which the proposed rule would apply. The table 
summarizes the number of entities that would be affected if this 
proposal were finalized.\13\
---------------------------------------------------------------------------

    \13\ The details of cost quantification are described in the 
1022(b) analysis above. The average cost per mortgage creditor 
includes the weighted programming cost for the 5 percent of 
creditors that do not utilize third-party software vendors. The 
Bureau assumes that all mortgage creditor non-depository 
institutions are below the Small Business Administration's threshold 
for small entities (revenue of $38.5 million).

----------------------------------------------------------------------------------------------------------------
                                                                                                 Small affected
                  Category                            NAICS codes           Affected entities       entities
----------------------------------------------------------------------------------------------------------------
Mortgage Creditors.........................  522110, 522120, 522130,                   11,150             10,403
                                              522292.
Mortgage Brokers...........................  522310.......................              7,007              6,895
Settlement Agents..........................  541191.......................              7,719              7,580
----------------------------------------------------------------------------------------------------------------

    The Bureau believes that, as in the 1022(b) analysis of the TILA-
RESPA Final Rule, 5 percent of creditors do not utilize software 
vendors. Some of these creditors could incur significant costs; 
however, the fraction of small creditors incurring these costs (5 
percent) is not substantial.

Certification

    Accordingly, the undersigned hereby certifies that this proposed 
rule, if adopted, would not have a significant economic impact on a 
substantial number of small entities.

VIII. Paperwork Reduction Act Analysis

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), Federal agencies are generally required to seek the Office of 
Management and Budget (OMB) approval for information collection 
requirements prior to implementation. The collections of information 
related to the TILA-RESPA Final Rule has been previously reviewed and 
approved by OMB in accordance with the PRA and assigned OMB Control 
Number 3170-0015 (Regulation Z) and 3170-0016 (Regulation X). Under the 
PRA, the Bureau may not conduct or sponsor and, notwithstanding any 
other provision of law, a person is not required to respond to an 
information collection unless the information collection displays a 
valid control number assigned by OMB.
    The Bureau has determined that this proposed rule would not have 
any new or revised information collection requirements (recordkeeping, 
reporting, or disclosure requirements) on covered entities or members 
of the public that would constitute collections of information 
requiring OMB approval under the PRA. The Bureau welcomes comments on 
this determination or any other aspects of this proposal for purposes 
of the PRA. Comments should be submitted to the Bureau as instructed in 
the ADDRESSES part of this notice and to the attention of the Paperwork 
Reduction Act Officer. All comments will become a matter of public 
record.

List of Subjects in 12 CFR Part 1026

    Advertising, Consumer protection, Credit, Credit unions, Mortgages, 
National banks, Recordkeeping and recordkeeping requirements, 
Reporting, Savings associations, Truth in lending.

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau proposes to 
amend Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 1026 continues to read as follows:


[[Page 36732]]


    Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 5511, 
5512, 5532, 5581; 15 U.S.C. 1601 et seq.

0
2. In amendatory instruction 5, appearing on page 65300 in the Federal 
Register on November 3, 2014, revise ``Effective August 1, 2015'' to 
read ``Effective October 3, 2015.''
0
3. In Supplement I to Part 1026-Official Interpretations, as amended by 
78 FR 79730 (Dec. 31, 2013):
0
A. Under Section 1026.1--Authority, Purpose, Coverage, Organization, 
Enforcement and Liability, under subheading 1(d) Organization, 
Paragraph 1(d)(5), paragraph 1 is revised.
0
B. Under Section 1026.19--Certain Mortgage and Variable-Rate 
Transactions, under subheading 19(g) Special information booklet at 
time of application, 19(g)(2) Permissible changes, paragraph 1 is 
revised.
    The revisions read as follows:

Supplement I to Part 1026--Official Interpretations

* * * * *

Subpart A--General


Sec.  1026.1  Authority, purpose, coverage, organization, enforcement 
and liability.

* * * * *
    1(d) Organization.
    Paragraph 1(d)(5).
    1. Effective date. The Bureau's revisions to Regulation X and 
Regulation Z published on December 31, 2013 (the TILA-RESPA Final 
Rule), apply to covered loans (closed-end credit transactions secured 
by real property) for which the creditor or mortgage broker receives an 
application on or after October 3, 2015 (the ``effective date''), 
except that new Sec.  1026.19(e)(2), the amendments to Sec.  
1026.28(a)(1), and the amendments to the commentary to Sec.  1026.29, 
become effective on October 3, 2015, without respect to whether an 
application has been received. The provisions of Sec.  1026.19(e)(2) 
apply prior to a consumer's receipt of the disclosures required by 
Sec.  1026.19(e)(1)(i), and therefore, restrict activity that may occur 
prior to receipt of an application by a creditor or mortgage broker 
under Sec.  1026.19(e). These provisions include Sec.  
1026.19(e)(2)(i), which restricts the fees that may be imposed on a 
consumer, Sec.  1026.19(e)(2)(ii), which requires a statement to be 
included on written estimates of terms or costs specific to a consumer, 
and Sec.  1026.19(e)(2)(iii), which prohibits creditors from requiring 
the submission of documents verifying information related to the 
consumer's application. Accordingly, the provisions under Sec.  
1026.19(e)(2) are effective on October 3, 2015, without respect to 
whether an application has been received on that date. In addition, the 
amendments to Sec.  1026.28 and the commentary to Sec.  1026.29 govern 
the preemption of State laws and thus, the amendments to those 
provisions and associated commentary made by the TILA-RESPA Final Rule 
are effective on October 3, 2015, without respect to whether an 
application has been received on that date. The following examples 
illustrate the application of the effective date for the TILA-RESPA 
Final Rule.
    i. General. Assume a creditor receives an application, as defined 
under Sec.  1026.2(a)(3) of the TILA-RESPA Final Rule, for a 
transaction subject to Sec.  1026.19(e) and (f) on October 3, 2015, and 
that consummation of the transaction occurs on October 31, 2015. The 
amendments of the TILA-RESPA Final Rule, including the requirements to 
provide the Loan Estimate and Closing Disclosure under Sec.  1026.19(e) 
and (f), apply to the transaction. The creditor would also be required 
to provide the special information booklet under Sec.  1026.19(g) of 
the TILA-RESPA Final Rule, as applicable. Assume a creditor receives an 
application, as defined under Sec.  1026.2(a)(3) of the TILA-RESPA 
Final Rule, for a transaction subject to Sec.  1026.19(e) and (f) on 
September 30, 2015, and that consummation of the transaction occurs on 
October 30, 2015. The amendments of the TILA-RESPA Final Rule, 
including the requirements to provide the Loan Estimate and Closing 
Disclosure under Sec.  1026.19(e) and (f), do not apply to the 
transaction, except that the provisions of Sec.  1026.19(e)(2), 
specifically Sec.  1026.19(e)(2)(i), (e)(2)(ii), and (e)(2)(iii), do 
apply to the transaction beginning on October 3, 2015 because they 
become effective on October 3, 2015, without respect to whether an 
application, as defined under Sec.  1026.2(a)(3) of the TILA-RESPA 
Final Rule, has been received by the creditor or mortgage broker on 
that date. The creditor does not provide the Closing Disclosure so that 
it is received by the consumer at least three business days before 
consummation; instead, the creditor and the settlement agent provide 
the disclosures under Sec.  1026.19(a)(2)(ii) and Sec.  1024.8, as 
applicable, under the Truth in Lending Act and the Real Estate 
Settlement Procedures Act, respectively. The requirement to provide the 
special information booklet under Sec.  1026.19(g) of the TILA-RESPA 
Final Rule would also not apply to the transaction. But the creditor 
would provide the special information booklet under Sec.  1024.6, as 
applicable.
    ii. Predisclosure written estimates. Assume a creditor receives a 
request from a consumer for a written estimate of terms or costs 
specific to the consumer on October 3, 2015, before the consumer 
submits an application to the creditor, and thus before the consumer 
has received the disclosures required under Sec.  1026.19(e)(1)(i). The 
creditor, if it provides such written estimate to the consumer, must 
comply with the requirements of Sec.  1026.19(e)(2)(ii) and provide the 
required statement on the written estimate, even though the creditor 
has not received an application for a transaction subject to Sec.  
1026.19(e) and (f) on that date.
    iii. Request for preemption determination. Assume a creditor 
submits a request to the Bureau under Sec.  1026.28(a)(1) for a 
determination of whether a State law is inconsistent with the 
disclosure requirements of the TILA-RESPA Final Rule on October 3, 
2015. Because the amendments to Sec.  1026.28(a)(1) are effective on 
that date and do not depend on whether the creditor has received an 
application as defined under Sec.  1026.2(a)(3) of the TILA-RESPA Final 
Rule, Sec.  1026.28(a)(1), as amended by the TILA-RESPA Final Rule, is 
applicable to the request on that date and the Bureau would make a 
determination based on the amendments of the TILA-RESPA Final Rule, 
including, for example, the requirements of Sec.  1026.37.

Subpart C--Closed End Credit

* * * * *


Sec.  1026.19  Certain mortgage and variable-rate transactions.

* * * * *
    19(g)(2) Permissible changes.
* * * * *
    3. Permissible changes to title of booklets in use before October 
3, 2015. Section 1026.19(g)(2)(iv) provides that the title appearing on 
the cover of the booklet shall not be changed. Comment 19(g)(1)-1 
states that the Bureau may, from time to time, issue revised or 
alternative versions of the special information booklet that address 
transactions subject to Sec.  1026.19(g) by publishing a notice in the 
Federal Register. Until the Bureau issues a version of the special 
information booklet relating to the Loan Estimate and Closing 
Disclosure under Sec. Sec.  1026.37 and 1026.38, for applications that 
are received on or after October 3, 2015, a creditor may change the 
title appearing on the cover of the version of

[[Page 36733]]

the special information booklet in use before October 3, 2015, provided 
the words ``settlement costs'' are used in the title. See comment 
1(d)(5)-1 for guidance regarding compliance with Sec.  1026.19(g) for 
applications received on or after October 3, 2015.
* * * * *

    Dated: June 23, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2015-15836 Filed 6-24-15; 4:15 pm]
BILLING CODE 4810-AM-P