Understanding the CFPB s TILA-RESPA Integrated Disclosures. Marvin Stone SVP, Business Integration CFPB Program Manager Stewart Title Guaranty Corp.

Transcription

1 Understanding the CFPB s TILA-RESPA Integrated Disclosures Marvin Stone SVP, Business Integration CFPB Program Manager Stewart Title Guaranty Corp.

2 A Brief History. Truth-in-Lending Act (TILA) of 1968 Reg Z Real Estate Settlement and Procedures Act (RESPA) of 1974 Reg X HUD-1 and GFE Update introducing tolerances 2010 Dodd Frank Act of 2010 Consumer Financial Protection Bureau (CFPB) formed in 2011

3 About the CFPB Created in 2011 as a result of Dodd-Frank Act Supervision over banks and non-banks Enforcement authority over RESPA and TILA Actively informing and protecting the consumer Enforcement actions against banks, mortgage bankers, mortgage brokers, title and settlement providers, brokerage, builders, developers, etc.

4 About the CFPB

5 Goals in redesigning disclosures Help consumers by making all forms look similar Help consumers shop for best loan Help consumers guard against hikes in charges at closing Help consumers understand future obligations Good Faith Estimate Truth in Lending HUD-1

6 Introducing TRID TILA-RESPA Integrated Disclosures Detailed Summary 7 pages Scope Loan Estimate Closing Disclosure Limits on Cost Increases Proposals Not Adopted Effective Date *Final Rule 1,888 pages

7 About the new rule(s) 1 Scope 2 Loan Estimate 3 Closing Disclosure 4 Limits on Increases a) Applications on or after 8/1/2015 fall under new rules b) Closed-end loans only - No home equity lines c) No reverse mortgages d) No mobile home loans a) Replaces Good Faith Est. / Early Truth-in-Lending b) Mortgage Broker may provide / Lender is still responsible c) Delivery must be within 3 Business Days of application d) Limitation on up-front fees with exception for credit reports e) Disclaimer on early estimates used before Loan Estimate a) Replaces HUD-1 and Final Truth-in-Lending b) Consumer must receive at least 3 business days before signing c) APR changes over limit require re-disclosure/ 3 Bus. Day wait d) Escrow may prepare and/or deliver* a) Items that generally cannot increase: a) Creditor s or broker s charges for its own services b) Charges for services provided by an affiliate c) Charges where consumer is not permitted to shop b) Other services can generally increase by 10% or less 4a Exceptions a) Consumer requests the change b) Consumer chooses their own service provider c) Information at application is/becomes inaccurate d) Loan Estimate expires 5 Not Adopted a) Re-defined All In APR b) Storage in standard, electronic machine-readable format c) Disclosure of Approximate Cost of Funds

8 So, what s different this time? 2010 HUD Change Updated form New fee roll up New tolerances CFPB Integrated Disclosures New Loan Estimate New Closing Disclosures New options to produce CD New options to deliver CD New variance in process by lender New liability under TILA New process collaboration New fee itemization New variances New delivery timeline New closing timeline New evidence of compliance demands New integration demands New education requirements

9 Loan Estimate Page 1 Transaction Information Loan Terms Projected Payments Costs at Closing

10 Loan Estimate Page 2 Loan Costs Other Costs Calculating Cash-to-Close

11 Loan Estimate Page 3 Loan Calculations Other Disclosures Contact Information Confirmation of Receipt

12 Closing Disclosure Page 1 Closing Information Transaction Information Loan Information Loan Terms Projected Payments Costs at Closing

13 Closing Disclosure Page 2 Loan Costs Other Costs Total Costs

14 Closing Disclosure Page 3 Cash-to-Close Calculations Transaction Summaries

15 Closing Disclosure Page 4 Loan Disclosures Escrow Account

16 Closing Disclosure Page 5 Loan Calculations Other Disclosures Questions Contact Information Confirmation of Receipt

17 New ALTA Settlement Statement(s)

18 New ALTA Settlement Statement(s)

19 New ALTA Settlement Statement(s)

20 New ALTA Settlement Statement(s)

21 The High Points Lenders will largely be the ones to prepare the CD Escrow/settlement will likely prepare a Settlement Statement Realtors will need to be able to explain new forms to buyers Realtors may have to get permission from buyers to release CD Builders may not allow upgrades that trigger a new 3-day wait Simultaneous Issue problem may require additional disclosures Owners Title Policy (optional) may cause buyer confusion Same day closings may be risky per some lenders Lenders are no longer allowing settlement to fix lender errors Lenders may place more focus on approved provider lists