Part of the proposed changes that are required to integrate the old early disclosures (GFE and early TIL) and closing disclosures are embodied in this proposal to amend Regulation Z. This is huge -- and I'm sure you have some thoughts about what they're proposing.

The comment deadline on this one is November 6 -- including the proposed changes to the definition of finance charge.

Speak up by posting comments in this thread.

Here's the link to the proposal:
https://www.federalregister.gov/articles...ation-x-and-the

The effective date for this massive proposal should be determined by adding 3 months to the date by which Loan Originator Software providers can delivered a software update that accurately produces the new disclosures.

Please use your interpretative powers to eliminate the TIP rate (total interest percentage). This disclosure offers no value to the consumer. There is no way consumers will understand it. Most lenders don't understand it.

Please use your interpretative powers to eliminate the Approximate Cost of Funds. It is meaningless to the consumer. Using the yield on a Treasury security as the cost of funds is simplistic and inaccurate. Disclosing the actual cost of funds will only work if everyone uses the same formula for the calculation. And you will never get universal agreement on how the number should be calculated.

I agree with Jack. The TIP percentage is worthless. At best/worst, it puts the customer on edge and make them wonder if the bank is taking advantage of them. Totally unconstructive.

I'm also very concerned that my forms company will NOT be prepared in time.

At a conference last week put on by our trade association, they focused a lot on these disclosures (the better part of 6 hours) going through them and pointing out troublesome areas that they recommended commenting on. These include:
1.) Closing disclosures 1026.19(f) timing of delivery. "Ensure consumer receives final disclosures not later than 3 business days before consummation" It was noted that if disclosures are mailed/emailed, you're still expected to assume a 3 day delivery time resulting in a 6-business day lead time. How often are your final disclosures ready over a week prior to your closing date? I can tell you this never happens here.

2.) 1026.25 Record retention. "Evidence of compliance must be retained in electronic, machine readable format". Many/most of us have electronic imaging systems, but it's estimated that very few (particularly mid-sized and smaller) FI's have a system that's sophisticated enough that it would qualify as machine readable (meaning you need to be able to search for terms throughout the document, not just what the image might be indexed under). Estimated cost of system upgrades were stated at $100,000 or more.

3.) The TIP calculation, for reasons already stated in above posts

4.) The ACF box, for reasons stated above

5.) The requirement of having the large grey question mark on the 5th page of the closing disclosure. An additional issue for forms vendors when there's plenty of other, real issues to sort out.

I also agree with Jack on both counts and sent in my comment letter to that effect. I wasn't aware of the other issues Matt raised, but they sound equally cumbersome.

Matt_B hit the nail on the head. I would add my concern about the changes in the APR calculation and how they will affect the HMPL/HOEPA status of loans. While I do like the simplification of the APR calculation, the additional requirements that HMPL and HOEPA loans add could drive smaller lenders out of the market.

ETA: One more thing I don't like - On the Loan Estimate, numbers are rounded to the nearest dollar, but on the Closing Disclosure, we have to use the exact amount. That is going to cause confusion for both consumers and loan officers. Compliance has drilled into loan officer's heads that certain fees cannot increase, even one cent. Now we are going to have to add the caveat that they have to check the rounding??? And consumers could be confused because the same fee, even if it hasn't changed, can look different. i.e. origination charge could be $1,527 on the Loan Estimate, but on the Closing Disclosure, it shows $1,527.43. You have gone from 4 digits to 6. That could cause more confusion that it saves. I don't think we are giving the consumer enough credit in this case.

TMatt...the workaround for High priced is the new suggested TCR or TRC, whatever (it's been too long since I read it!). However, the thresholds for HOEPA are proposed to be lowered, so it could still impact those numbers for that reason.

Please use your interpretative powers to eliminate the TIP rate (total interest percentage). This disclosure offers no value to the consumer. There is no way consumers will understand it. Most lenders don't understand it.

Agreed

Agree with all three of Jack/Pegasus' recommendations

I also don't believe that the TIP rate will be beneficial to consumers.

I Agree with everyones comments and am very concerned about vendors not being able to deliver accurate solutions if there is not adequate time for testing.

Now there is a real concern for everyone ^^^.

I am all for the change in the APR calculation. If it is a fee it should be in...period. (IMHO).

I do see HUGE problems with vendors as stated above and agree the TIP is not beneficial to anyone.

The new forms are no better or easier to understand than the old forms. Changes in the fees that are finance charges should require appropriate changes in all the regulations which have finance charge triggers thereby maintaining the status quo as to what is a high cost mortgage, HOEPA loan etc.

1. The machine readable format will be very costly for commumity banks.
2. The TIP will not be understood.
3. Please be very clear about who is ultimately responsible for accuracy of the HUD-1 so that closing attorneys will understand our need to ensure accuracy.
4. The concern that more loans will be high cost mortgages is a valid concern. Consumers will, unfortunately, bear the consequences.
5. Consumers don't understand the APR. Including more charges will not make it any better. They want simple disclosures such as the rate and a list of charges. That is all they really want.

Did anyone see the FTC comments? So they took 15 pages to say the FTC is the founding father of consumer protection, the FTC is great, and these forms need quantative testing? Hooray Bureaucracy!!!!!

Yep. That's what I read. Imagine one bureacracy advising the other on just how to do this right! Just imagine...

I too agree that the Total Interest Percentage is of no help to the customer. By the time they get to page 5, if they do, they are already overloaded with information.

The Approximate cost of funds (ACF) should also be removed from the closing disclosure.

I thought the intent of the CFPB was to make it more understandable, they look good and better than the current ones but I still think they hold way too much information.
I, as a compliance officer, would probably not read the whole docuement if I was to buy a house. Sad but true.

Consumers (myself included) are interested in 3 pieces of information:
1. Interest rate
2. Fees
3. Payment amount

That's it. Everything else is either ignored completely or (for those few who try to read it) causes confusion.

^^^^^^Agree wholeheartedly. I'm still trying to figure out why the people that make $300/hr. don't have the expertise to complete the HUD-1, yet still make $300/hr. to do so. Sorry...rant over.

I agree with other comments that the effective date should be extended (Adding 3 months) to allow for a testing and training period.

TIP and Cost of Funds are meaningless to consumer.

Effective date MUST allow for testing, training and development.

Just to echo some of the concerns of others:
1)The TIP and cost of funds fields are not helpful to the consumer and will only lead to more confussion
2)The effective date of the disclosures should allow sufficent time for the vendors to develop and test the new forms and for the banks to test, train and implement the changes
3)The machine readable format will be a hugh cost for community banks and I don't see where this is helpful to the consumer or the community banks either
4)Adding another rate calculation with the TCR just for seeing if loans are Higher Priced or Higher Cost just is another opportunity for banks to error. Why not just increase the thresholds for HPMLs and Higher costs loans to go with the new APR calculation.