ICBA, State Affiliates Urge CFPB to Improve Mortgage Disclosures

Washington, D.C. (March 29, 2023) — The Independent Community Bankers of America (ICBA) and 42 affiliated state banking associations today called on the Consumer Financial Protection Bureau to approve a proposed template that would improve mortgage disclosures required under TILA-RESPA Integrated Disclosure (TRID) rules.

Under ICBA’s Trial Mortgage Disclosure Sandbox Template proposal, the bureau would permit community banks to test modified disclosures for consumer construction and construction-to-permanent loans, which are a core offering of community banks in many local communities. In formal comments and a joint letter to the CFPB, ICBA and state associations urged the bureau to test and ultimately adopt the proposal given the potential benefits to consumers and lenders.

“ICBA and our affiliated state community banking associations urge the CFPB to allow community banks to test updated mortgage disclosures that would improve the process for lenders and borrowers alike,” ICBA President and CEO Rebeca Romero Rainey said. “The proposed template will provide consumers greater clarity, streamline the process through improved disclosure requirements, and expand access to more affordable homes in rural areas with limited housing supply.”

The current TRID disclosure regime focuses on transactions for purchasing a home or refinancing a mortgage loan, so it does not adequately disclose the components of construction loans. While construction loans are often needed in small towns and rural communities, using existing TRID disclosures is confusing, leading some creditors to avoid making these loans due to compliance concerns.

Developed alongside a group of community bankers, technology vendors Land Gorilla and Wolters Kluwer, and the Community Bankers Association of Illinois, ICBA’s proposal would modify the current Loan Estimate and Closing Disclosure to include improved construction phase details, a construction cost breakdown, and enhanced disclosures regarding the consumer’s permanent loan financing. Streamlining the TRID mortgage disclosure process for single-close construction-to-permanent loans would support the use of these loans, save time for lenders, and create cost savings for consumers.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5.8 trillion in assets, over $4.8 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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