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NAFCU recommends ways to strengthen trial disclosure application
NAFCU Senior Regulatory Affairs Counsel Aminah Moore Wednesday responded to the CFPB’s request for information (RFI) regarding a trial disclosure application from the Independent Community Bankers of America (ICBA) related to consumer construction and construction-to-permanent loans.
The CFPB in 2019 launched three new policies aimed at promoting innovation and facilitating compliance at financial institutions, including the Trial Disclosure Program (TDP). In a letter to the bureau, Moore noted ICBA submitted an application for a TDP waiver template “that aims to increase the availability of affordable single-close construction-to-permanent loans by proposing an alternative Loan Estimate Disclosure (LE) and Closing Disclosure (CD) that the ICBA believes will more fully disclose all the various components of these types of loans.”
While NAFCU is generally supportive of ICBA’s efforts to reduce closing costs and ensure consumers are adequately informed, Moore offered recommendations to strengthen the waiver application, such as:
- including bullet points to explain why an amount can increase after closing as “this will be helpful for consumers to estimate costs and avoid a surprise increase in payment;”
- having the “Loan Information” section of the CD state the loan term for the construction phase “to” the loan term for the permanent phase – Moore noted “this is a change that was proposed for the LE, and the two documents should state the information as succinctly as possible to provide greater clarity;”
- naming documents that clearly reflect their purpose and are consistent across all documents; and
- providing more detail in the projected payment section of the CD to include the payment calculation for years there is an estimated change in payment.
NAFCU will continue to advocate for ways to provide credit unions with regulatory relief and better serve their 135 million members.