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ABA Testifies on Importance of Mortgage Disclosure Reform


June 20 - The American Bankers Association has testified in support of reforming mortgage disclosures, emphasizing the need for stakeholders to work together to ensure a solution that works for banks and is clear for consumers. 

Brenda K. Hughes, senior vice president and retail lending administrator at First Federal Savings Bank in Twin Falls, Idaho, testified on behalf of ABA before the House Subcommittee on Insurance, Housing and Community Opportunity. Hughes also serves as co-vice chairman of the Mortgage Markets Committee at ABA.

Hughes testified that ABA has long supported reforming Real Estate Settlement Procedures Act and Truth in Lending Act disclosures. 

“We believe the RESPA and TILA forms are convoluted and complex — and must be fixed,” Hughes said.  “It is common knowledge that consumers either ignore these disclosures or don’t fully grasp the information contained in them. Simple, clearer forms have long been a priority for all stakeholders.”

While Hughes expressed support for these changes, she also testified that the industry has critical concerns about the coordination and timing of disclosure reform.

“In reforming the RESPA and TILA disclosure requirements, the Consumer Financial Protection Bureau is effectively rewriting rules that control the timing of the loan origination process, disclosures to consumers and the legal liabilities that result,” Hughes said. “This is a massive and important undertaking. The goal must be to achieve a workable and lasting framework of clear and comprehensible mortgage disclosures, and rigid time frames should not trump quality.” 

Hughes also testified that the Dodd-Frank Act imposes many regulatory changes on mortgage loan origination that should be implemented in coordination with RESPA-TILA.

“It would be cumbersome, expensive, inefficient and confusing to finalize a merger rule without considering these other rules that must be implemented,” Hughes said. “It would result in erratic and never-ending amendments to our compliance systems. Such a result is unwarranted and avoidable.”

Hughes closed her testimony by encouraging disciplined and efficient rule-writing, offering four important principles to help guide the process: new rules should in fact simplify a convoluted process, new rules should recognize the interactions and reconcile the conflicts inherent in the mortgage regulatory structure, the integration process should not be abused by adding rules that go beyond RESPA and TILA’s congressional intent and implementation time frames should be ample and adequate to accommodate industry need.