ICBA Supports CFPB Approval of Project to Improve Mortgage Disclosures

Washington, D.C. (Nov. 21, 2023)—The Independent Community Bankers of America (ICBA) today expressed support for the Consumer Financial Protection Bureau’s approval of ICBA’s proposed template to 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. ICBA and 42 affiliated state banking associations earlier this year 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 support today’s CFPB announcement that it will allow community banks to test updated mortgage disclosures to 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 approved today 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.

With the CFPB’s publication of the template, ICBA will work with community bankers interested in testing the new forms. Community bankers who wish to be included in the testing process should contact ICBA Senior Vice President of Housing Finance Policy Ron Haynie at ron.haynie@icba.org for more details.

About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.

As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.

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