The industry gave a collective sigh of relief when the CFPB announced a much-needed postponement of the new integrated mortgage disclosures deadline to Oct. 3. But before any of us get too comfortable in this postponement, it’s important financial institutions keep up their preparation for these new integrated disclosures. And one of those preparations should involve learning the new rules for record retention.
Because the adoption of the new integrated mortgage disclosures is such a huge adjustment, record retention is an area often overlooked that will be affected. But it definitely deserves some TLC as there are a few tweaks being made.
There are three questions I frequently receive about concepts altered by the integration.
What are the record retention requirements for the TILA-RESPA rule?
There are three significant record retention requirements.
1) The creditor must retain copies of the Closing Disclosure (and all documents related to the Closing Disclosure) for five years after consummation.
2) The creditor, or servicer if applicable, must retain the Escrow Closing Notice and the Post-Consummation Partial Payment Policy disclosure for two years. These requirements are derived from RESPA (Regulation X).
3) Creditors must maintain “evidence of compliance” with the Integrated Disclosure to meet provisions of Regulation Z. While not very specific, this should include the Loan Estimate forms and all documents related to the Closing Disclosure.
What are the record retention requirements if the creditor transfers or sells the loan?
If a creditor sells, transfers, or otherwise disposes of its interest in a mortgage and does not service the mortgage, the creditor shall provide a copy of the Closing Disclosure to the new owner or servicer of the mortgage as a part of the transfer of the loan file. In addition, both the creditor and the new owner/servicer shall retain the Closing Disclosure for the remainder of the five-year period.
Is there a requirement on how the records are retained?
Regulations X and Z permit, but do not require, electronic record-keeping. These records can be maintained by any method that reproduces disclosures and other records accurately, including computer programs.
Free AdvisX Record Retention Schedule
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As you know there are literally thousands of documents processed through your organization that have retention requirements and guidelines attached to them. Even the experts get perplexed. That’s why it is crucial for your organization to have a precise and extensive record retention plan in place to minimize risk.
Coppelia Padgett is senior analyst and resident SCRA Act expert for AffirmX. She began her career as a compliance examiner for the FDIC working primarily out of Los Angeles. She left the FDIC to found Triac in 1992. This consulting firm grew to serve the compliance needs of hundreds of financial institutions in the Los Angeles metropolitan area and around the United States. In 2011, Ms. Padgett joined AffirmX as a researcher, senior analyst, and writer. She graduated magna cum laude from the University of Tulsa with a degree in Economics.
