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1 Kristen J. Stogniew, Esq, Shareholder Saltmarsh, Cleaveland & Gund The information presented in this slide deck and provided at the workshop, whether by Saltmarsh or by others, is not to be considered legal advice nor a replacement for reading the applicable statute, regulation, official interpretation, commentary, or supplemental information (whether the initial final rule or later one(s) that amends, clarifies or makes technical amendments); the CFPBs or other regulatory authority s or consultant s compliance guide, examination manual or audit program, additional guidance, reference chart, Facebook page, web site blog or Twitter tweet; or viewing any webinar, YouTube video or Podcast, related to the subject matter contained herein. 1

2 3 General scope & some definitions Loan Estimate General Rules (e) Loan Estimate Completing the Form Closing Disclosure General Rules (f) Closing Disclosure Completing the Form Other requirements, liabilities Discussion, Q&A, implementation checklist 4 Effective Date: applications received on or after August 1, provisions of the new Rule are effective on August 1, Two Tier Operations: Cannot use new disclosures for pre 8/1/15 apps. Must use existing disclosures (GFE and HUD) for pre 8/1/15 apps that close anytime thereafter. Covered Loans: all closed end consumer credit transactions secured by real property except reverse mortgages So, HELOC and mobile home only loans are exempt Construction only, vacant land or > 25 acres NO LONGER EXEMPT Consumer purpose loans to trusts for tax & estate planning purposes are no longer exempt (is in substance a consumer purpose transaction) Old Forms Replaced: No Good Faith Estimate, no fed box TILA forms Replaced by LOAN ESTIMATE and CLOSING DISCLOSURE. 2

3 5 Deliver within 3 business days of receipt of Application Application = Submission of Name Income Social security number (to obtain credit report) Property address Property value estimate Mortgage loan amount sought * No longer includes catchall: any other information deemed necessary * Can be written or electronic record of an oral app * Some flexibility in collection sequencing/strategic collection of information to get additional information from borrower * Still cannot require verification of information 6 For most purposes, TRID rule uses the rescission or more precise definition = every day, except Sundays and these Federal holidays: New Years Jan 1 Independence Day July 4 Veterans Day November 11 Christmas Dec 25 Columbus Day Martin Luther King Jr s B day Washington s B day Memorial Day Labor Day Thanksgiving Day EXCEPT... For delivery, revisions of, and expiration of LOAN ESTIMATE... Use the days open or general definition = Day on which creditors offices are open to the public for carrying on substantially all business functions Example from commentary: do you make loan disbursements, open new accounts and handle credit transaction inquiries? For most institutions, can exclude Saturday as a business day 3

4 (e)(1)(iii) 2 tests must be met: Deliver or place in mail 3 business days after receipt of application ( days open definition); unless creditor denies or app is withdrawn AND Deliver or place in mail not later than 7 business days before consummation (AHA... rescission definition) FYI: Re disclosure (see later slides) does not trigger an additional waiting period Waiting periods can be waived by handwritten, dated written statement signed by all, if bona fide personal financial emergency SUN i.e. foreclosure MON sale Ex: App Rec d X Not BD TUES 1 st BD WED 2 nd BD THUR 3 rd BD LE mailed FRI 1 st BD 3 rd BD 4 th BD 5 th BD 6 th BD 7 th BD Can Close SAT 2 nd BD (e) Creditor responsible to deliver Person to whom the obligation is initially payable on its face (only 1 shall provide if there are >1) Mortgage broker may deliver BUT creditor responsible for any errors or defects Expects communication between creditor and mortgage broker FYI Broker MUST retain for 3 year retention period (d)(2) Must be provided (at least) to the applicant with primary liability; UNLESS rescindable, then must provide to all consumers (borrowers) with the right to rescind commentary makes clear that, although the closing disclosure will need to be provided with non borrowers who have the right to rescind, the LE does not 4

5 9 3 pages instead of 7 under current rules No more separate appraisal copy or mortgage servicing transfer disclosure 3/31/15 CFPB updated the Special Information Booklet. Is now Your home loan toolkit A step by step guide home loan toolkitweb.pdf Interactive, can be saved; CFPB encourages lenders to keep this level of accessibility when delivering the PDF to consumers Spanish language version is coming Broker must provide, and creditor does not have to Not required for non purchase loans, junior liens, reverse mortgages, refis. Still need to provide Consumer s Handbook on Adjustable Rate Mortgages; ARM Program disclosures; Homeownership Counseling notice, Initial Escrow Statement, and (if applicable) Affiliated Business Disclosure 10 See page 17 of forms doc handout Separate disclosure must accompany initial Loan Estimate revised LE does not require (but, recommend you provide if revision includes a new service that can shop for) Must identify settlement services for which consumer may shop ; at least one provider for each service; with contact info Not just toll free phone # or website, demonstrate it is sufficient for contact Cannot identify vendor management company Must provide services in the area where property is located An actual $ is not a required disclosure Hazard insurance is Not required here and the Statement May choose another provider May add The appearance on this list does not constitute an endorsement of the provider or similar IMPORTANT Shop = pick their OWN provider (vs. select a provider from the list i.e., cannot shop ) Must correspond to Settlement Services can shop for on Loan Estimate Affiliated Business Disclosure under RESPA is still required if affiliate is on the list 5

6 (e)(2)(ii) If written information is provided before a Loan Estimate: a clear notice (>= 12 point font) must appear at top of first page: Appendix H 26: Your actual rate, payment and costs could be higher. Get an official Loan Estimate before choosing a loan. May not have substantially similar headings, content and format as the LE (e)(2)(i) Effective ON 8/1/15 No fees allowed until consumer receives Loan Estimate and indicates intent to proceed Presumption of receipt 3 business days (rescission) after placing in the mail or sending by , unless earlier evidence of receipt is documented (mailbox rule) Can be provided in any manner, unless you require a particular manner Reg requires you document the intent to proceed, with 3 year record retention requirement Exception: Creditor or broker can impose bona fide and reasonable credit report fee before receipt of Loan Estimate Fee is NOT one of the 6 items for Loan Application Cannot take method for payment in advance No obtaining credit card number No holding of check 6

7 13 Standard = (e) and = Must be provided in good faith (see next slide); if any information is unknown, you must make the disclosure based on the best information reasonably available ( BIRA ) at the time the disclosure is provided. Reasonably available implies exercise of due diligence in obtaining information. ok to rely on 3 rd parties like realtors, insurance agents, etc (e)(3) General Rule: Disclosure was made in GF if charge imposed at closing does not exceed that disclosed in the Loan Estimate. Good Faith 10% Tolerance Allowed for Aggregate of: (1) Recording fees (paid to government agency), and (2) 3 rd party charges (not affiliate) from the list of providers allowed to be shopped (off list) by the consumer, and consumer either (a) does not pick anyone, or (b) picks a provider on the list. Variations Permitted If fees disclosed on LE were based on best info reas available: Prepaid interest Property insurance Amounts in escrow Charges for 3 rd party service providers shopped by the consumer (i.e., that were not on the list provided by the creditor) Charges for 3 rd party or affiliate services that are not required by creditor. Zero Tolerance: (General rule) Fees to creditor, broker, affiliate; lender credit Unaffiliated 3rd party not allowed to shop; Transfer taxes. (Lender credit see slide 33) 7

8 (e)(3)(iv) Revised Loan Estimate allowed for GF determination, within 3 business days ( days open ) of: 1. REQUIRED when Floating rate is locked new LE with revised rate, points lender credits and other interest rate dependent charges 2. ALLOWED for Revisions requested by consumer 3. ALLOWED if Original LE Expired intent to proceed not received after 10 business days ( days open ) 4. ALLOWED for Construction loans If settlement will occur more than 60 days after LE and if LE reserves the right to send revision (place in Other Considerations section of the LE) 5. ALLOWED IF CHANGE(s) EXCEEDS TOLERANCES for Changed Circumstances affecting eligibility change impacts creditworthiness or value of security which increases fee (one becomes unemployed) 6. ALLOWED IF CHANGE(s) EXCEEDS TOLERANCES Changed Circumstances re: settlement charges extraordinary event beyond control, information inaccurate or changed, or new information not relied on For Good Faith comparison, can only use an LE provided due to tolerance increase 16 Timing of Revised Loan Estimate, when CC (e)(4) Not allowed after delivery of Closing Disclosure Must be received no later than 4 business days ( rescission ) prior to consummation Because of mailbox rule, if not provided in person, must deliver 7 business days before consummation If Changed Circumstances later than 4 business days before closing: if between 4 th & 3 rd business day before, show revised charges on Closing Disclosure if after first Closing Disclosure (within waiting period), put revised charges on Closing Disclosure given at consummation, and compare to prior Closing Disclosure 8

9 Must Reflect Legal Obligation using BIRA MUST USE FORM H 24 if federally related ; model if not Estimates may label if exact info is unknown/not reasonably available; IF H 24 USES ESTIMATE MUST USE Do not use N/A if a disclosure is inapplicable, leave blank Rounding rules: If loan amount does not have cents, truncate (e.g. $125,000 or $125,345.67) Percentages are truncated to 2 or 3 decimal points (unless no decimals, then none e.g., 7.125%; 7%) Special rule for APR only, truncate to 3 decimal points; add a 0 if necessary (e.g., 7.25% = 7.250%) Monthly payments are rounded to nearest whole dollar if disclosed in a range All Loan & Other Costs on LE are rounded to nearest whole dollar Spanish language Form H See Model Forms from CFPB s Guide to Forms (reference to GTF numbers in slide headings) Also see related forms docs from today s session (reference to slide #s) 9

10 19 Creditor name and address if not known based on BIRA, leave blank; logo allowed if it fits Date Issued is date mailed or delivered, not date prepared Applicants list all names and US postal addresses; may use additional paper if needed Property must include zip code Sale Price for transactions with no seller, use appraised value or estimated property value ( Est. Prop. Value ) Can use information from the applicant or own estimate If creditor has an appraisal, value to be used in underwriting is disclosed Loan Term if years and months, use 15 yr., 5 mo. If less than 24 months, just use months; 16 mo. for example If unknown, state possible range, including the maximum Purpose Purchase, Refinance, Construction, or Home Equity (catch all) Loan ID From creditor, if available (BIRA), not broker s 20 Product =any feature that can change the payment and how interest rate applied to balance is determined Payment Change Features: (in priority order) Negative Amortization Interest Only Step Payment Balloon Payment Seasonal Payment Payment change feature precedes disclosure of product Precede feature with its duration: i.e. 5 Year Interest Only For balloon payment, state year due, i.e. Year 7 Balloon Payment If more than one apply, only the first applicable feature is disclosed Products: Fixed Rate Adjustable Rate Step Rate For ARM and Step Rate, precede Product name with introductory rate duration and frequency of first adjustment period Example: 5/3 Adjustable Rate, 0/Daily Adjustable Rate, Year 7 Balloon, Fixed Rate: If no introductory rate: 0/3 Adjustable Rate ; if unknown, the shortest potential Uneven Periods: If >24 months, use decimals (# months 12), (i.e., 2.5/1 Adjustable Rate If <24 months, use months, i.e., 18 mo. 10

11 21 Loan Type Conventional FHA VA Other for state guaranteed loans and other federal programs; Need short description: i.e. USDA Rural Housing Service = RHS Loan Identification Number Determined by creditor; must be unique to the specific loan Rate Lock If locked, disclose the time that lock expires with time zone (i.e. 10:00 a.m. EST ) Expiration of Loan Estimate disclose, whether or not rate has been locked Note that italicized sentences are re: lock AND expiration of all closing costs 22 Loan Amount If may increase: Disclose maximum principal balance, and due date of last payment that causes loan amount to increase, and whether potential or scheduled (will or may occur): [Can] go as high as $ Can increase until year Interest Rate at consummation For ARM s, if interest rate at consummation not known at time of Loan Estimate, use fully indexed rate in effect at time of disclosures. If may increase, disclose: Frequency and first adjust date: Adjusts every starting in Maximum rate and date reached: Can go as high as in year If loan term increase because of rate: Can increase loan term to Reference to AP table 11

12 23 Principal & Interest Frequency inserted before i.e. Monthly Bi Weekly If initial rate unknown, current fully indexed rate determines payment If may increase; disclose: Frequency and first adjust date: Adjusts every starting in Maximum payment and date reached: Can go as high as in year If interest only period: Includes interest only and no principal until Reference to AP table 24 Prepayment Penalty if yes, disclose maximum amount and date no longer imposed: As high as $ if you pay off the loan during the first 2 years. Includes: monthly interest accrual amortization calculation method if full month of interest is assessed upon prepayment fee that is waived on condition that consumer does not prepay (but see below) minimum finance charge in simple interest deal refund of unearned interest by method less favorable than actuarial method portion of unearned pre computed FC will not be rebated Does not include: pay off fees uniformly charged Loan guarantee fees Imposing waived bona fide third party fees if loan prepaid sooner than 36 mo 12

13 25 Balloon Payment : more than 2 times regular payment; Loans with only 1 or 2 payments are balloons If yes, disclose maximum amount and due date: You will have to pay $ at the end of year. 26 Column for each separate periodic payment or range First column initial payment, and additional columns for: P&I changes (including end of only interest period disclosed as such) Scheduled balloon payment (balloon should be range if ARM) Automatic termination of MI or functional equivalent If multiple P&I changes in a single year, use anniversary date for column Max number columns = 4 Final Balloon Payment is always last column, and that may compress other columns (Heading is Final Payment ) MI termination only disclosed as separate column if column available Range of P&I use for ARMs; multiple events in single column 13

14 27 ROW 1 Principal & interest only interest language for interest only initial payment period ARM s use range of payment from maximum possible increases and minimum increase ROW 2 Mortgage Insurance Whether or not escrowed If not required 0 ; if terminated ROW 3 Estimated Escrow If not required, 0 Year Subheadings mid year event assumed next year For fixed rate 10 years 4 months use Years Estimated Taxes, Insurance & Assessments* Scope: Property taxes, property insurance, credit life, debt cancellation, condo/homeowners assessments, flood insurance (flood and liability insurance are included in homeowners insurance ) Sum of monthly cost Listing of Other costs if more than one in other, identify one and add and additional costs Paid from escrow if more than one in other and only some will be paid be creditor from escrow, for In escrow can disclose some. * Do not follow RESPA Escrow limitations; use the figures from the ATR calculations (replacement cost, value of property plus improvements). Will be different for Closing Disclosure. 14

15 29 Estimated Closing Costs derived from page 2 subtotals for Loan Costs, Other Costs minus Lender Credits Estimated Cash to Close derived from page 2 schedule For transactions without a seller, can add checkbox indicating from or to borrower (page 5 & 6 of forms doc handout) 30 Origination Charges Dollar amounts rounded to nearest dollar; % to 2 or 3 decimals. Indirect compensation of loan originator by creditor NOT shown Origination: includes, for example, application fee, origination fee, underwriting fee, processing fee, rate lock fee, verification fee, mortgage broker fee, charge for LLPA that is not part of the rate Must include % of Loan Amount (Points) ; leave blank if 0 Points are ONLY those that reduce the interest rate; otherwise, call it some other type of origination charge Cannot exceed 13 itemized charges; Additional Charges aggregated and totaled on line 13. Points must be listed first, all others listed in alphabetical order Clear and conspicuous standard applies 15

16 31 CANNOT SHOP: Fees creditor requires for services by specified third parties. Examples: appraisal, flood determination, lender s attorney fee, subordination fee, title closing protection, title lender s policy, up front MI Cannot exceed 13 itemized items CAN SHOP: Consumer can select their OWN, not on the list. Examples: Pest inspection, survey, title. Cannot exceed 14 itemized items Optional to have an addendum with the additional services itemized; line 14 would refer to the addendum 32 Recording fees any other government fees not transfer taxes are aggregated with recording fees. Transfer taxes only portion imposed on consumer; portion imposed on seller not for Loan Estimate (both are on Closing Disclosure) Taxes and Other Governmental Fees cannot delete categories; cannot add more subheadings. 16

17 33 Prepaids Use precise language of model form; if no charge for a category, leave blank. Prepaid interest: rate disclosed same as interest rate page 1 Cannot delete subcategories; if not charged leave blank Maximum 3 additional subcategories can be added with time period and total. Examples: Real estate property taxes due within 60 days after consummation of the transaction; Past due real estate property taxes; Mortgage insurance premiums; Flood insurance premiums; and Homeowner's insurance premiums. 34 Use precise language of model form; if no charge for a category, leave blank. Need monthly amount and number of months collected. Aggregate account adjustment not included in Loan Estimate If different time frames for 2 property taxes, i.e. general and school, can add another category. Maximum of 5 additional items permitted. 17

18 35 Amounts consumer likely to pay not required by creditor Example: Title Owner s Title Policy (optional) More examples: credit life, appliance warranties, real estate agent/broker commissions, inspection fee not required by creditor. Indicate (optional) for separate insurance or warranty products. 36 Special rule for disclosing simultaneously issued Lender s and Owner s title insurance Lender s premium is disclosed as full premium Owner s is the incremental difference Lender s Full Prem $ (How Reg describes) Less, L s Simult Prem Full Owners $ Difference $ Plus, L s Simult Prem Owner s Policy $ Total $ Less, Difference Less, L s Full Prem Title Owners Title Policy (optional) $ Title Owners Title Policy (optional) $

19 37 List as a negative number or leave blank Defined: Sum of payments from creditor to consumer for both non specific overall credit and for specific fees If creditor represents that all or part of fees will not be paid, the lender credit must be sufficient to cover that sum. No cost loans: cost of all fees shown as a lender credit Good Faith : if Closing Disclosure Lender Credit is less than that disclosed in the Loan Estimate, that is increased charge: An increased lender credit to cover an increased cost complies A decreased lender credit to cover decreased cost violates good faith 38 Funds for Borrower only for loans not for purchase Formula: Satisfied debt minus principal loan amount: if answer is positive, disclose in Funds from Borrower if answer is negative, disclose in Funds For Borrower Adjustments and Other Credits disclosed as a negative number Gifts from family members; Home builder or developer providing a credit Proceeds of subordinate funding Estimated Cash to Close all lines show negative number except first and Down Payment 19

20 39 Refi/Home Equity Alternative (see pages 5/6 of handout) Optional, simpler format. If use, also use optional format at bottom of page 1 Estimated Cash to Close. Estimated Total Payoffs and Payments payoffs of existing liens, judgments, outstanding debts required to be paid. 40 Only appears if payment can change not based on rate, such as an interest only feature; seasonal payment, optional payment (biweekly) or step payment. Principal and Interest Payments: First change date and amount/range; subsequent change dates; and maximum payment amount and date. 20

21 41 Use only when rate may increase either based on an index or scheduled changes. Index and margin, initial interest rate, min/max, first change date and subsequent, limits on rate changes Can abbreviate index: LIBOR 1 Year CMT If no contractual maximum, state usury rate. 42 Lender/Broker contact info and NMLS numbers if known Comparisons 5 year total (or loan term, if less than 5 years) Loan costs are from Page 2 of LE/CD APR no change to calculation Total Interest Percentage (TIP) The amount of interest paid over loan term as a percent of the loan amount. How will consumers respond to this? 21

22 43 Appraisal takes the place of Reg B appraisal disclosure Reg B right to prompt copy only covers 1 st lien loans Homeowner s Insurance optional disclosure, but satisfies requirement for excluding premiums from finance charge Late Payment Include both dollar/percentage and number of days (grace period) Construction Loan Re disclosure Notice new construction, expectation loan will close after 60 days: You may receive a revised Loan Estimate at any time prior to 60 days before consummation. Liability after Foreclosure Only for refinance transactions; not permitted for other transactions And, on the LE, disclose this only if it applies (it does not in FL, GA and AL): Warning that state law may remove protection against deficiency 44 Loan Acceptance Include acknowledgment of receipt/signature with you do not have to accept this... OR No signature: Loan Acceptance disclosure added to Other Considerations Servicing what is creditor s intent on servicing the loan, at the time of disclosure? 22

23 45 Accuracy is ensured by Creditor. TIMING Must be received (by primary borrower and all with rescission rights) no later than 3 business days before consummation : HUGE CHANGE If delivered other than in person, presumed received 3 business days after sent. Evidence of earlier receipt can change that. If sent by e mail, need E SIGN Act compliance and evidence of delivery. Can be waived if bona fide financial emergency (e.g. foreclosure imminent) Rescission definition for all purposes here. Example: SUN MON TUES WED THUR FRI CD mailed overnight deliv 1 st BD 2 nd BD 3 rd BD Can close SAT Consumer signs 46 BEFORE CONSUMMATION (f)(2)(i) and (ii): Required re disclosure and 3 business day waiting period (clock starts over) if: APR becomes inaccurate (so, includes overdisclosed APRs unless the overdisclosure was due to an overdisclosed finance charge that would otherwise be considered accurate) Loan product changes, or A prepayment penalty is added For other changes, re disclose at or before consummation (no new waiting period) allow inspection 1 business day prior if requested Only changed circumstances will allow GF analysis for 0% or 10% variations 23

24 47 CHANGES AFTER CONSUMMATION (f)(2)(iii): If during 30 day period post consummation: (i) an event connected to settlement causes a Closing Disclosure inaccuracy, and (ii) inaccuracy causes amount actually paid by consumer to change; then mail corrected disclosure within 30 days of receiving information about change. Recording fee change = Yes re disclose; Property tax increase after consummation = no, because not in connection with the settlement Change that impacts what seller pays does not trigger disclosure to borrower; settlement agent must send revised disclosure to seller (e.g., nuisance abatement) Changes due to non numerical clerical errors 60 days to re disclose (e.g. third party payee name). Narrow set of errors Coincides with cure provisions, including ones that become out of tolerance due to post closing events (i.e. transfer taxes different) (f)(2)(v) GOOD FAITH ANALYSIS REFUNDS w/in 60 DAYS If amount paid exceeds either the 10% threshold; or amount paid exceeds applicable prohibition on any change, safe harbor from liability arises if excess is refunded (received) within 60 days after consummation accompanied by corrected Closing Disclosure (f)(3) ACTUAL CHARGE/AVERAGE CHARGE Rule: Amount imposed on consumer not to exceed amount actually received by settlement service provider, except: Average Charge: May impose for a defined class of transactions uniformly to all, but not for insurance or any charge based on loan amount or property value. 24

25 (f)(4) Settlement agent to provide disclosures that relate to the seller s transaction no later than consummation. May provide copy of Closing Disclosure or separate short form: Appendix H 25(I) Amount imposed on seller not to exceed amount actually received by settlement service provider except for the average cost option. Settlement agent to provide creditor a copy of seller disclosure if separate from consumer s. If event occurs in 30 days post consummation that changes the amount actually paid by the seller, settlement agent must provide corrected copy within 30 days after receiving that information. 50 Cannot use N/A or not applicable, just leave blank Adjustable payment and rate tables excluded if inapplicable Clear and conspicuous, segregated, form can keep Federally related mortgages use H 25; others, H 25 is a model Can print or fill out manually See Appendix H 28 for Spanish language 25

26 51 See Model Forms from CFPB s Guide to Forms See forms docs from today s presentation starting at page 7 52 Date Issued is date delivered to consumer Settlement agent employer, not person conducting closing File # Settlement agent s; no rules govern Sale Price becomes Appraised Prop. Value w/o seller or Estimated Prop. Value if no appraisal & no seller Borrower and Seller All must be listed; additional pages allowed. Loan ID # must identify same transaction as Loan Estimate MIC # mortgage insurance case number Loan Terms same as Loan Estimate, except ESCROW will be following RESPA requirements. Projected Payments same as Loan Estimate except that Estimated Taxes, Insurance & Assessments, if in escrow and subject to RESPA, must follow RESPA prohibitions. Amount of estimated escrow payments accurate if any difference from Loan Estimate arises from RESPA escrow account analysis Costs at Closing alternative for transactions without a seller required if alternative used on Loan Estimate 26

27 53 Paid by others Can insert L in front of number for lender Example compensation payments by creditor to a loan originator; fee specific lender credits. Services Borrower Did NOT Shop For itemization of required settlement services. If provider on written list, list here. Services Borrower DID Shop For If consumer selected a provider but NOT from written list of providers, list here. The above are NOT limited to the # of lines on standard form, can have addendum page; Page 2a (loan costs) and 2b (other costs) see model forms. Loan Costs only borrower paid costs are sub totaled Initial Escrow Payment at Closing aggregate adjustment required by RESPA disclosed on last line Other reminder that owner s title shown as (optional) ; only borrower paid costs subtotaled. 54 Lender Credit generalized credit appears here; credits particular to a cost list in paid by others Lender Credit show excess charges above fee limits: (includes $200 credit for increase in Closing Costs above legal limit) (see pages 12 and 15 in handout from today s session) 27

28 55 Total Closing Cost tell if changed and see details Bold face required for YES NO and other words in sample form Loan Estimate dollar amount is rounded, Final is shown to 2 decimals; but no increase solely due to rounding See details bold words; cross reference other sections Total Closing Costs if change, only cross reference Total Loan Costs or Total Other Costs or both as applicable Exceeding limits on increases in closing costs Must calculate aggregate among various categories Sample: Increase exceeds legal limits by $200. See Lender Credits on page 2 for credit of excess amount. (page 15 of forms docs handout). 56 Closing Costs Financed if changes, show as a negative number, and state consumer included closing costs in the loan amount which increased the loan amount Down Payment If purchase price increases, down payment might increase. You increased this payment. See details in Section K. 28

29 57 Alternative Closing Estimate table required if used Loan Estimate optional alternative table. Completely different Closing Statement with Payoffs and Payments See pages 12 & 13 of forms docs 58 Due From Borrower: Adjustments amounts owed such as rent collected after closing for periods before; tenant security deposit. Due From Borrower: Additional items paid by seller (due from borrower): Flood/hazard premiums PUD or condo assessments paid in advance Fuel or other supplies purchased by seller that consumer will use 29

30 59 Paid By Borrower: Seller credit (L 05) (builder) is general credit Particular credits are disclosed in seller paid column Issues identified at walk through prior to closing listed here Paid by Borrower: Other Credits real estate agent rebate Paid By Borrower: (L 04) Subordinate financing proceeds Second Loan (Principal Balance $100,00) $96,500 Paid By Borrower: Pay off of subordinate liens by consumer (L 04) Satisfaction of Junior Lien $5,000 P.O.C. Borrower POC not included in calculations Paid By Borrower: Gift funds show as credit (L 07?) 60 Other Seller Obligations: list tax liens, judgments, other seller obligations to be paid from closing Funds to be held by closing agent for post closing invoices for repairs, utilities, or other costs that cannot be prorated because amounts unknown 30

31 61 Partial Payments per Will creditor accept and/or put in suspense, or not accept Security interest property address; zip code required; can add personal property description Escrow must disclose annual cost of nonescrowed taxes, insurance and assessments. Adjustable Payment Table/Adjustable Interest Rate Table disclosed here ONLY if applicable; same as Loan Estimate (page 14 of loan docs handout) 62 CONTACT INFO: Column left blank if no such party to the transaction; unless multiple other parties and room is needed SIGNATURE: Optional; same guidance as Loan Estimate 31

32 63 Post Consummation Escrow Cancellation Notice Model form (e) If 1 st lien on real property or dwelling, must ensure consumer receives 3 business days ( rescission ) before escrow account is cancelled at their request, or 30 business days if creditor cancels it (so, mailbox rule means must mail 3 business days prior to that) Warns them they have to pay; and allows them to change their mind. NA for repayment, refinancing, rescission or foreclosure. Post Consummation Partial Payment Policy Creditors who purchase all or part of a mortgage or dwelling secured loan through assignment or other transfer including affiliates. Integrated in existing notice that is already required (FYI is also required for primary home LOCs) By the 30 th calendar day following day of transfer 64 5 years Creditor must retain each completed Closing Disclosure (including seller disclosure from Closing agent) Transfer of servicing creditor provides to new owner or servicer a copy of the Closing Disclosures, and both the selling creditor and the new owner or servicer retain for balance of the 5 years. 2 years Creditor, or servicer, must retain Post Consummation Escrow Cancellation Notice (Escrow Closing Notice) and Post Consummation Partial Payment Policy disclosure and other TILA disclosures not specifically stated. 3 years For all other evidence of compliance with the Loan Estimate and Closing Disclosure process Runs from the later of consummation, date disclosure is required, or date action is required to be taken. Mortgage broker must retain the LE as well 32

33 TILA Private Right of Action & Rescission Issues for entire rule?? RESPA currently does not provide a private right of action These changes are codified in TILA (Regulation Z, which, at (e), specifically acknowledges liability for failure to comply with TILA, Reg Z and RESPA). Admin Enforcement CFPB and others CFPB expects perfection AG s and States Buyback Risk Creditor is responsible for compliance Imposing fees before LE and intent to proceed (.19(e)(2)(i)) Must include written statement if you provide marketing disclosures of terms or costs (.19(e)(2)(ii)) May not require verification documents before LE (.19(e)(2)(iii)) 33

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