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Th e M Rep o RT | 11 T he reactions from the financial reform community were fierce and surefooted in December last year when it became clear that Congress would likely succeed in throwing out a part of the Dodd-Frank Act. Republicans had slipped a policy rider into a spending bill that would strike through a rule that barred banks from placing risky, taxpayer-backed derivatives bets. It was legislation at gun- point—the only way lawmakers get anything done in a town that knows voters back home don't like compromise and see governing as a form of war. If the House or Senate didn't agree to it, or the president didn't sign it, the government would yet again shutter, furloughing federal employees, zapping the economy, and risking the country's credit score right before the holidays. So it passed: Merry Christmas from Uncle Sam. Democrats and reform advocates were apoplec- tic. Sen. Elizabeth Warren (D-Massachusetts), the woman who made her name in politics standing up for the Consumer Financial Protection Bureau, took to the Senate floor to decry Citigroup's sketchy involvement in reportedly writing the repeal lan- guage. The left-leaning Huffington Post and Mother Jones sided with Warren, predictably. Republicans and conservative think tanks like the American Enterprise Institute said nay, predictably. What's garnered a lot less at- tention since then—maybe also predictably—is a federal regula- tion that promises to do nothing less than overhaul how mort- gage lenders disclose terms and conditions and report the income, assets, and other private data of interested homebuyers. In line with Dodd-Frank, that rule will require banks and credit unions to merge disclosure documents they've previously furnished in separate forms to homebuyers under the Real Estate Settlement Procedures Act and Truth in Lending Act. It will impact almost every mortgage lender in the country, and every applicable bank or credit union needs to comply by August. The agency said in a blog post that it received more than 27,000 comments about the prototypes for the unified disclosure form and some 3,000 about the final proposed rule. And they prob- ably should have, with a nearly 2,000-page regulation that trade associations have said are causing anxiety among their members. "There's a lot of concern be- cause it [the RESPA-TILA merger] is very complicated," Bob Davis, executive vice president for the American Bankers Association, the industry's heavyweight lobby- ing group, said. But not every one in the industry is getting the jitters. In fact, four of the sources for this story—two of them executives, another a law partner—said they felt comfortable with the change, with the idea that it would be helping them improve their bottom lines after the financial crisis. Their message: get right with technology and the ethics behind this new deal, and you'll get right with the disclosure form merger. "It's incredibly difficult to keep up without the technology invest- ment," said Teri Williams, president and COO of Boston, Massachusetts- based OneUnited Bank. Less clear is what new compli- ance measures may come after August—and after the next election. Less overlap, more anxiety B ecause it gets its mandate from Dodd-Frank, the merger's detractors sometimes succumb to the temptation to couch their criticisms of the big disclosure merger in campaign rhetoric. Big government versus the business owner. Reaganom- ics versus Obamanomics. The reality is that RESPA-TILA reform is an atypically biparti- san one with a history that goes back nearly half a century. If it works as intended in August, the CFPB rule will fulfill a desire shared by political appointees under Democratic and Republican administrations alike for an end to an overlap between the two laws that created confusion and no small share of government waste. More granularly, the scope of the rule only includes closed-end mortgage products—not reverse mortgages or any loans for domi- ciles not attached to actual land. Regulators replaced HUD's Good Faith Estimate and the Fed's TILA disclosure document with a single Loan Estimate that also includes new terms from Dodd-Frank. Gone, too, are the HUD-1 under RESPA and its sister TILA disclo- sure form, replaced by one closing disclosure. Regulators also ditched experimental designs for the APR after receiving some pushback from the industry. And there are deadlines for the brokers and institutions dealing with consumers. If the rule works as it should, homebuyers who submit their applications should receive their loan estimates within three business days. The same goes for closing disclosures, three days before a homebuyer closes the loan. Of course, that's if it works, free of requirements that go too far for mortgage brokers on the frontlines, or don't go far enough. Mark Calabria, director of financial regulation studies at the libertarian-leaning Cato Institute, had two words when asked about the rule: "Good luck." Calabria knows how difficult it is to reform RESPA—he tried it himself, according to his own ac- count. The former Senate Banking Committee staffer, a Republican, spent the better part of the Bush administration trying to eliminate duplication with TILA at the top echelons of the Department of Housing and Urban Development. "This is one of the few instanc- es where I agree with the CFPB," he admitted. "I hope it gets done, but I'll withhold my applause." "This is one of the few instances where I agree with the CFpB. I hope it gets done, but I'll withhold my applause." — Mark Calabria, Cato Institute 2015 tila/respa update

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