Legislation that calls for the federal consumer financial protection agency to rewrite its rules for disclosures about mortgage loans at zero percent interest made by charities such as Habitat for Humanity and others will be considered by the House Tuesday, according to the floor schedule released by the House leader.
The Building Up Independent Lives and Dreams (BUILD) Act (H.R. 5953), authored by Reps. Barry Loudermilk (R-Ga.) and Brad Sherman (D-Calif.), would require the Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) to allow “bona fide nonprofits” eligible for tax-exempt charitable donations that are making zero-interest mortgage loans to choose whether to use the truth in lending (TIL), good faith estimate (GFE), and HUD-1 forms instead of the more complicated TRID forms.
The proposal would require the BCFP to rewrite, within 180 days of enactment of the legislation, its rules for disclosures of the zero percent interest mortgage loans made by the charitable organizations, which are now covered by the bureau’s TILA-RESPA integrated disclosure (TRID) forms.
According to the bill’s authors, the TRID forms were designed to be more consumer friendly, “but they include sections on balloon loans and adjustable rate mortgages that may be applicable to traditional mortgage lenders, but are not relevant to charitable organizations like Habitat for Humanity. These disclosures were also designed to require software to be completed properly.”
The authors said small and mid-sized Habitat organizations “have experienced challenges when complying with the new TRID forms because of the cost of the necessary software to complete these forms and training required to use the software.”
The authors noted that now, all organizations making five or fewer mortgage loans in a year are not required to use the TRID forms and instead use the TIL, GFE, HUD-1 forms to ensure the material terms and costs of the loans are communicated to the borrower. “This bill simply extends this option to all local Habitat organizations regardless of how many mortgage loans they are making per year,” a fact sheet on the legislation states.