More than a fifth of bankers recently surveyed indicated that they will back away from certain mortgage products if their vendors’ systems aren’t prepared for the integrated disclosure deadline.
Originators and lenders on home loans will be required to provide new integrated disclosures as required by the Truth in Lending Act and the Real Estate Settlement Procedures Act as of Aug. 1.
The new forms include a Loan Estimate and a Closing Disclosure designed and implemented by the Consumer Financial Protection Bureau.
The American Bankers Association conducted a survey of around 800 of its members in April. Roughly two-thirds of the respondents worked at financial institutions with assets of less than $1 billion.
About a quarter of the respondents originated more than $1 billion in home loans a year.
Three-quarters of the group indicated that they are using vendors to comply with the integrated disclosures.
But 36 percent of their vendors had still not provided a solid delivery date, according to the trade group’s survey.
For those that are still unprepared, a three-month installation period is needed — leaving some banks short.
“We expect actual deliveries of systems to lag what bankers are being promised,” ABA Executive Vice President Robert Davis said in the statement. “If this holds true, and bankers are uncertain about the level of potential supervisory tolerance, we expect a measurable reduction in credit availability during a transition period.”
Nearly a fourth of the group said that the final loan officer compliance software system will not cover all loan types they offer.
The ABA said that 21 percent of survey respondents will not offer the product if it compliance won’t be met with the vendor’s system.
Still, 59 percent said they would just use multiple vendors to fill the hole, while a quarter would produce a specialty product in house.
The survey was conducted in support of a May 13 letter to CFPB Director Richard Cordray
asking for a hold-harmless period.
