Community banks say RESPA top compliance concern

Regulatory compliance professionals at community banks will most likely spend a significant amount of their time meeting Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) requirements during the next 12 months, according to a recent Wolters Kluwer Financial Services survey.

Concerns tied to meeting TILA and RESPA requirements are likely to grow at community banks given a resurgence of mortgage lending at these institutions. Lower interest rates, less competition and an enhanced Federal Housing Administration (FHA) loan program have led to a spike in mortgage lending activity at community banks in the past year.

In fact, the Wolters Kluwer Financial Services survey found that 43 percent of respondents said mortgage lending was one of the three areas of their business they planned to grow the most in the next 12 months. The others were commercial lending at 49 percent and consumer lending at 37 percent.

“The survey results confirm that recent changes to TILA and RESPA will indeed place a significant compliance and operational risk management burden on community banks in the months to come,” said Ken Newton, executive vice president of Banking for Wolters Kluwer Financial Services. “As these banks increase their presence in the mortgage space, they’ll face a number of challenges in efficiently complying with these regulations. Those who will succeed will embrace their new obligations and be proactive in their compliance, making it a critical part of their overall lending workflow.”

Samples of the new GFE & HUD-1

Where can I find samples of the new GFE & HUD-1 that will become mandatory in January?

Samples can be requested through your sales representative. The final RESPA rule does allow financial institutions to use the new documents prior to January 1, 2010 however, for compliance reasons; the new version of the GFE, HUD-1 and Settlement Cost Disclosure should be used together. To date, the revised Settlement Cost Disclosure content is NOT available from HUD.

Welcome to our RESPA blog!

The RESPA Resource Center blog offers a forum to discuss the latest RESPA developments and related compliance concerns. We encourage you to participate in our blog and share your thoughts with your colleagues on this ever-changing area of compliance.

HUD Says New RESPA Rule a Go

In a press release, U.S. Housing and Urban Development Secretary Shaun Donovan announced his intention to implement the mortgage reforms under the Real Estate Settlement Procedures Act (RESPA) that are scheduled to take full effect on January 1, 2010.