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SBREFA, Small Providers, and Mortgage Disclosure

The CFPB is mindful that new statutory requirements we are implementing can burden as well as benefit small financial services providers. We use many methods to reach out to small providers to find out if any of these burdens are unnecessary and, if so, how we may be able to reduce them (within the limits of our statutory authority, of course). One method we will sometimes use is the Small Business Review Panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA). In certain cases, this Act requires us to form and chair a panel alongside representatives of the Small Business Administration (SBA) and the Office of Management and Budget. That panel will meet with a group of representatives of the small providers directly affected by the new requirements.

We expect the number of representatives will generally be around 15-20. They will provide feedback on the options we’re considering and on alternatives to minimize negative impacts. Within 60 days of convening, the panel will complete a report on the issues, including input they receive, their findings on the economic impacts of the proposal, and any alternatives that achieve the proposal’s objectives while minimizing unnecessary burdens. The Bureau will then consider the panel’s input in preparing the proposed rule.

Know Before You Owe and SBREFA

This week, we are doing the final round of Know Before You Owe testing in Austin, Texas. As we shift to writing the rules that implement the required disclosures on the forms, we want to gather additional input from small providers that these new rules will affect directly. We have received a lot of questions about these rules. We are going to share the regulatory proposals that we are considering and hear your feedback.

In the upcoming weeks, the Review Panel will meet with a group of small lenders, brokers, and settlement agents that we have selected in consultation with the SBA. The representatives are being asked to provide the Panel feedback on the potential economic impacts of complying with the proposals we are considering. The panel will invite the representatives to suggest alternatives. The Panel will issue a report summarizing this feedback and making findings.

Here are the materials that the CFPB is sharing with the small financial services providers:

  • A “fact sheet” summarizing the Small Business Review Panel process;
  • An overview of the proposals we are considering and their potential implications for small providers; and
  • A list of questions and issues on which we will seek small providers’ input at the Panel outreach meeting.

Feedback From Consumers and Other Providers

While the Review Panel takes feedback from small providers, we want to hear from all of you! Please review the proposals we are considering and send us your thoughts. Simply post a comment to this blog or shoot us an email at Here are some examples of what we are considering:

  • Many lenders and mortgage brokers provide consumers with preliminary estimates of loan terms and settlement costs that are not mandated by TILA or RESPA. We are considering whether to require that these preliminary estimates carry a disclaimer that tells the consumer that the document is not the integrated Loan Estimate required by TILA and RESPA.
  • Under the current rules, when a lender provides a consumer with an estimate of the cost of its own services under RESPA, the actual cost cannot be higher than the estimate unless there is a valid change of circumstances. We are considering a proposal to apply the same limitation to estimates of services provided by the lender’s affiliates or by companies the lender requires the consumer to use.
  • Under the current rules, consumers typically receive a disclosure with some of their final loan terms and costs three business days before closing on the loan. Other costs are finalized on the day of closing. We are considering a proposal that would generally require delivery of the integrated Settlement Disclosure stating the consumer’s final loan terms and costs at least three business days before closing, although some flexibility may be provided.

While you review our materials, we will continue refining the proposals under consideration before we formally propose a rule for comment in July. At that time, you will have another opportunity to weigh in and let us know what you think.

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