(Truth in Lending Act – Real Estate Settlement Procedures Act)
For more than 30 years, TILA and RESPA have each required lenders to provide a specific form to consumers applying for a mortgage loan, and each had different forms of disclosure for consumers at or before closing. The TILA and RESPA forms have long been acknowledged as inconsistent in language and overlapping in content. The Dodd-Frank Act required integration of those forms.
The new forms have gone through the rule making process and have now been approved. The Loan Estimate, disclosing estimated costs, features and risks of the loan, is required no later than the third business day after submission of a loan application. The Closing Disclosure, disclosing final costs of the loan, is required at least three business days before closing.
The required use of these forms applies to consumer loans made by creditors who issue more than five loans per year. It does not apply to home equity lines of credit, reverse mortgages, or mobile homes.
The new forms are ready and their use is required as of August 1, 2015. However, the use of the old forms is required until then and the new forms will not be accepted before then.