In the TILA-RESPA Integrated Disclosure, the CFPB has defined six key pieces of information to trigger a Loan Estimate disclosure — the disclosure to the consumer on costs of obtaining the loan. As a quick refresher, here are some highlights on the Loan Estimate disclosure (straight from the rule’s summary, section 5.1):
- Loan Estimate must contain a good faith estimate of credit costs and transaction terms
- Loan Estimate must be in writing and contain the information prescribed in § 1026.37
- Delivery must satisfy the timing and method of delivery requirements
- Creditors may only use revised or corrected Loan Estimates when specific requirements are met
- In certain situations, mortgage brokers may provide a Loan Estimate
However, an issue arises when the Loan Estimate is triggered upon the receipt of the six key pieces of information from the consumer. The bank is now on the hook for the Loan Estimate (unless specific requirements allow revised or corrected Loan Estimates), and there is no way for the consumer to know if he is getting a good deal.
To remedy this, the consumer may send their six pieces of personal information to multiple banks, triggering binding commitments from each bank. Would this increase the liability on each bank’s part through having to commit to so many loans to consumers who would potentially only be comparison shopping?
So let’s throw this out there for conversation: What if we solved this problem with “blind shopping” of some sort? If the consumer had a way to provide less than the six pieces of information that trigger the Loan Estimate (for instance, not including the social security number) to many different lenders, then we could provide a ‘blind shopping’ experience for both the consumer and the lender. The consumer could submit non-identifiable information to many lenders to comparison shop and the lender could provide non-binding estimates back.
This small adjustment could provide value to both consumers and lenders while still fitting within the framework of the TILA/RESPA ruling. Would it work? What would some of the draw-backs be? Are there positives to be gained by such a method of comparison shopping for consumers?
For more information on the impact to the industry and technology solutions that can help your business be compliant on August 1, 2015, visit the TILA-RESPA Knowledge Center.
All information and views expressed or implied are provided without warranty and are only the opinion of Pavaso, Inc. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation. The final rule can be found here.
