Pub. 4 2014-2015 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S July • August 2014 9 The purpose of the rule is to improve the way consumers get loan information when they apply for and close on a mort- gage loan. The majority of the requirements are about the two required disclosure documents, which are the Loan Estimate (replaces the current GFE, Appraisal Notice, Servicing Disclo- sure, ECOA notice and the Early Truth-in-Lending) and the Closing Disclosure (replaces the current HUD and the Final Truth-in-Lending). The rule also contains some key provisions about the timing of these disclosures. The purpose of reducing the number of the disclosures to only two is not only to reduce the burden on the lenders and other loan personnel who prepare these forms, but to also simply the forms to be easily understood by the consumer. Before we go into the requirements of the new forms we would be remiss if we did not also note that the proposed integrated mortgage disclosure rule added some language to the official interpretation of Regulation Z which is seemingly unrelated to integrated disclosures. The CFPB slipped in a fairly big change that may broaden the scope of Regulation Z to expressly include loans to trusts. Section 1026.3(a)(2) of Reg Z specifically exempts extensions of credit “to other than a natural person.” Many compliance specialists often argued that because trusts, are not defined as “natural persons,” a loan to such an entity would be exempt from the regulation. While there has been debate to the contrary, and even some case law suggesting that revocable trusts are still subject to the rule, there was no definitive guidance —until now. The integrated disclosure rule now amends the commen- tary to section 1026.3(a)(2) and provides, in part that, “Credit extended for consumer purposes to certain trusts is considered to be credit extended to a natural person rather than credit ex- tended to an organization.” (Commentary to 12 CFR 1026.3(a)). The commentary further explains: “Regardless of the capacity or capacities in which the loan documents are executed, assuming the transaction is primarily for personal, family or household purposes, the transaction is subject to the regulation because in substance (if not form) consumer credit is being extended.” If a loan to a trust is for a consumer purpose, then Regulation Z, and all its glory, will apply. Now for the agencies’ stated purpose of the rule, let’s break the requirements of the final rule into five sections: First, either the lender or the broker may deliver the Loan Estimate to the consumer; however, ultimate responsibility falls on the lender. A legal partner you can trust. Our advantage is simple—we understand the business. Stinson Morrison Hecker’s banking attorneys have broad experience in matters related to financial services, including commercial lending, mergers and acquisitions, regulations and compliance, litigation and payment systems. Bank on our reputation and knowledge. Stinson.com. Ernie Panasci Kristin Godfrey The choice of a lawyer is important and should not be based solely on advertisements. 5613 DTC Parkway, Ste. 970 | Greenwood Village, CO 80111 | 303.376.8400 Denver | Kansas City | St. Louis | Phoenix | Washington, D.C. Omaha | Wichita | Overland Park | Jefferson City | Decatur Perry Glantz Deborah Bayles 20539 CO Banker Ad_Half pg 9/30/13 11:58 AM Page 1  RESPA / TILA Reform  continued on page 10