Home Equity Loans Excluded from Integrated Disclosure Rule

The Consumer Financial Protection Bureau’s final rule for integrated mortgage disclosures applies to most closed-end consumer mortgages secured by real property.

However, the rule does not apply to home equity lines of credit (HELOCs), reverse mortgages or chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property.

Conversely, certain types of loans that are currently subject to the Truth-in-Lending Act but not the Real Estate Settlement Procedures Act are subject to the rule’s requirements. Such loans include construction-only loans, loans secured by vacant land or by 25 or more acres and credit extended to certain trusts for tax or estate planning purposes.

Meanwhile, various disclosures may be used for cash transactions. TILA and RESPA only apply to mortgage or credit transactions. Federal law does not require the use of the HUD-1 or the new Closing Disclosure in all cash transactions. While some states have laws requiring the use of a state promulgated form in cash transactions, in general the HUD-1, the Closing Disclosure or any other settlement statement can be used for these deals.