; Submitted via email July 13_ 2011 Professor Elizabeth Warren
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Submitted via email July 13_ 2011 Professor Elizabeth Warren


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									Submitted via email

July 13, 2011

Professor Elizabeth Warren
Special Advisor to the Secretary of the Treasury
For the Consumer Financial Protection Bureau
1801 L Street, N.W.
Washington, D.C. 20036

         Re:      Know Before You Owe Prototypes

Dear Professor Warren:

The Independent Community Bankers of America (ICBA)1 appreciates the
opportunity to submit comments to the Consumer Financial Protection Bureau
(CFPB) regarding its “Know Before You Owe” prototypes that will integrate the
Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA)
mortgage disclosures. In particular, these comments address the second round
of released prototypes that will be consumer tested, as ICBA was among the first
industry representatives to view and provide verbal comments on the first draft of
prototypes in a meeting conducted with the CFPB and community bankers.

First and foremost, ICBA is pleased with the CFPB’s collaborative approach
toward creating a combined TILA/RESPA disclosure, and we support efforts to

 The Independent Community Bankers of America represents nearly 5,000 community banks of all sizes and
charter types throughout the United States and is dedicated exclusively to representing the interests of the
community banking industry and the communities and customers we serve. ICBA aggregates the power of its
members to provide a voice for community banking interests in Washington, resources to enhance community
bank education and marketability, and profitability options to help community banks compete in an ever-changing

With nearly 5,000 members, representing more than 20,000 locations nationwide and employing nearly
300,000 Americans, ICBA members hold $1 trillion in assets, $800 billion in deposits, and $700 billion in
loans to consumers, small businesses and the agricultural community. For more information, visit ICBA’s
website at www.icba.org.

continue this approach before the draft forms are published for public comment.
Allowing financial institutions and the public to comment on the CFPB’s
prototypes during the consumer testing phase better enables the CFPB to
address comments and issues early in the regulatory process, and not merely
after the public comment period. This approach insures that any operational or
administrative issues can be considered as the prototypes go through the testing

ICBA also appreciates that community banks were the first financial institutions to
view and comment on the TILA/RESPA prototypes. Community banks are
common sense lenders whose sole objective is to provide solid and practical
financial solutions to the members of their communities. The CFPB’s efforts to
seek direct feedback from community banks throughout the country can help
insure that regulatory changes do not have unintended and overly burdensome
consequences on the very financial institutions Bureau officials have publicly
stated they wish to protect. ICBA strongly encourages the CFPB to continue to
actively communicate with community banks as it moves forward with this and
other rulemakings.

Specific Comments on the CFPB’s Round 2 Prototypes

ICBA generally believes that both prototypes are a vast improvement from the
current disclosure forms required by TILA and RESPA. Below is a list of some
specific comments on the format and various disclosures on both prototypes that
we hope are considered as you revise the current drafts:

Front Side of Prototypes:

   1. On both the Dogwood Credit Union and Redbud Credit Union prototypes,
      there should be a field at the top that is dedicated to listing the borrower’s
      mailing address. This additional field would properly format the form so it
      could be easily mailed to the consumer.

   2. At the top of the front side of both prototypes, the word “Caution?” appears
      to highlight the general loan terms. This word can be misleading, even
      with the “?”, because it automatically frames these loan terms as ones that
      the consumer should be cautious of, when the terms may be reasonable
      given the consumer’s credit history and other circumstances. We
      understand the purpose of using “Caution?” is to grab the consumer’s
      attention to these particular loan terms, but a less negative word or terms
      would be more appropriate to highlight this section of disclosures. A
      heading such as “Pay Attention” or “Loan Terms that Can Change” would
      be clear and would properly highlight the terms the consumer should pay

      special attention to without unnecessarily scaring them.

   3. On both prototypes, under the “Monthly Loan Payment” heading, there
      should be a third bullet that states “See details on page 2.” This third
      bullet is included under the “Interest Rate” heading, and it would be helpful
      and more transparent if it was included under “Monthly Loan Payment” as

   4. The section on both prototypes that highlights the cash needed at closing
      is helpful and should be clear to the consumer. ICBA strongly supports
      this disclosure.

Back Side of Prototypes:

   5. The format for the Dogwood prototype is good, but should provide more
      detail about the specific fees. A format, such as the Dogwood format in
      which the consumer can look down one column and add up all of the
      costs, would be more understandable and better for the lender to use in
      guiding the consumer through their expected costs.

   6. On the bottom left hand corner of both prototypes, there is a disclosure of
      “Important Dates,” which includes the date the estimated closing costs
      expire. This disclosure should also be highlighted on the front page of the
      prototypes, as was done on the first round of prototypes that were
      released for comment.

   7. On the Dogwood prototype, there is a disclosure for “Taxes and Recording
      Fees.” This disclosure should be further itemized to show the individual
      cost of each of the various taxes and fees, similar to how it is disclosed on
      the Redbud prototype.

   8. On the Dogwood prototype under the escrow heading, all of the different
      insurance fees should be itemized, so the consumer can see the individual
      cost of each type of insurance. On the escrow disclosure, we support a
      format similar to the back page of the Redbud prototype, because the
      consumer should be able to see the various costs for each type of
      insurance instead of just the total amount for all insurance.

   9. On the Dogwood prototype, under Section G under “Additional Funds,” the
      “Down Payment” field should state “Total Down Payment” and include the
      “minus any deposit made” disclosure on a separate line, so the consumer
      can clearly differentiate what they have already paid, such as an earnest
      money deposit. A cost field that shows a consumer’s contribution to the
      “Total Down Payment” would clearly indicate how any prior deposit has

      been applied to their total costs, and what they further owe.

   10. On both prototypes, there is a heading that states, “Cash Needed to
       Close.” This term is clear and should be used on the final form. On the
       Dogwood prototype, there is a parenthetical after “Cash needed to Close”
       that shows the consumer that this amount is “(E+F+G-H).” This
       parenthetical would be a helpful disclosure to the consumer and would
       assist the lender in explaining how the final closing amount is computed.

   11. On the Redbud prototype, costs such as the “Appraisal” should not be
       included under the “Costs and Taxes” heading, unless it is clearly notated
       that this amount could change and there is a way to allow for a 10%
       tolerance. Appraisal fees can always change, and the disclosure form
       should allow for this possibility.

   12. On the Dogwood prototype, there is a disclosure under the “Costs” section
       that the subtotal “Cannot exceed $5,184. If you choose your own
       provider, our price does not apply for that service.” This type of disclosure
       is useful, and should be included on the Redbud prototype if it is the form
       the CFPB decides to propose for comment.

Thank you for considering our comments. ICBA will continue to provide
feedback to the CFPB throughout the development of the TILA and RESPA
combined disclosure form. Please feel free to contact ICBA any time for
additional feedback, or to discuss our comments and thoughts in more detail.

If you have questions or need additional information about our thoughts in this
letter, please do not hesitate to contact me at 202-659-8111 or by email at



                                             Elizabeth A. Eurgubian
                                             Vice President & Regulatory Counsel

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