CFPB Releases TRID Resource for Construction Loans

Recently, the CFPB released a fact sheet that provides a basic outline for applying Know Before You Owe mortgage disclosures to constructions loans. Specifically, the fact sheet notes that (i) most construction loans are covered by the Know Before You Owe mortgage disclosures, with the exception of those that are open-end transactions or for commercial purposes; and (ii) Regulation Z’s existing provisions for disclosures for certain construction loans and construction-to-permanent loans continue to apply. In addition, the fact sheet provides guidance regarding a creditor’s choice to disclose a construction loan with permanent financing as one or two transactions. According to the fact sheet, the CFPB may release additional guidance to facilitate compliance with the Know Before You Owe mortgage disclosure rule, including a possible webinar regarding construction loan disclosures.

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FASB Issues New Guidance on the Recognition and Measurement of Financial Instruments

On January 5, the Financial Accounting Standards Board (FASB) issued a new accounting standard which “‘is intended to provide users of financial statements with more useful information on the recognition, measurement, presentation, and disclosure of financial instruments.’” The new Accounting Standards Update (ASU) impacts public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance is intended to make targeted improvements to existing GAAP by, among several other things, generally only requiring that changes in the fair value of equity investments be recorded in net income and requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The ASU will take effect for public companies for fiscal years beginning after December 15, 2017 (including interim periods within those fiscal years), and for private companies, not-for-profit organizations, and employee benefit plans for fiscal years beginning after December 15, 2018 (and for interim periods within fiscal years beginning after December 15, 2019). Early adoption of certain provisions is permitted.

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Maryland Law to Require Notice to Purchaser of Vehicle Prior to Dealer-Arranged Financing Approval

On May 12, Governor Larry Hogan (R-MD) signed HB 313, which will require auto dealers to provide notice to the purchaser/lessee before the dealer-arranged third-party financing is approved. The law requires the dealer to “notify a buyer in writing if the terms of a certain financing or lease agreement are not approved by a third-party finance source within a certain period of time.” Specifically, the dealer has four days from the delivery of the vehicle to notify the purchase/lessee of the third-party rejection. If the sale of the vehicle is canceled, the purchaser/lessee must return the vehicle to the dealer within two days of receiving the written notice. The new law is effective October 1, 2015.

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CFPB Grants Credit Card Issuers One-Year Suspension From Filing Card Agreements

On April 15, the CFPB issued a final rule temporarily suspending credit card issuers’ obligation to submit their card agreements to the CFPB, as required by the Credit Card Accontability, Responsibility, and Disclosure Act (CARD Act). The CARD Act, as implemented by TILA and Reg. Z (12 C.F.R. 1026.58), requires credit card issuers to submit credit card agreements to the Bureau on a quarterly basis. The first submission was set to be the first business day on or after April 30, 2015, but under the one-year reprieve, credit card issuers will not be required to begin submitting credit card agreements to the Bureau until April 30, 2016. According to the CFPB, during the temporary suspension, the regulator will “work to develop a more streamlined and automated electronic submission system.” The CFPB contends that the new system will allow for easier submission of credit card agreements than the manual submission system currently in place. Other requirements in Section 1026.58, including the requirement that credit card issuers post their credit card agreements on their own public website, remain unaffected by the temporary suspension.

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CFPB Releases New Mortgage Toolkit in Anticipation of New Mortgage Disclosure Rule

On March 31, the CFPB announced a new toolkit as part of its “Know Before You Owe” mortgage initiative. Designed to “help customers understand the nature and costs of real estate settlement services,” the step-by-step guide includes worksheets, checklists, and research tips for consumers. The new toolkit replaces an existing HUD booklet that creditors provide to mortgage applicants. The release of the toolkit precedes the August 1 effective date for the TILA/RESPA integrated disclosure rule, giving the industry “time to order and receive or print the new toolkit and integrate electronic versions into their mortgage origination systems.”

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