Overview The Regulation The Loan Estimate (LE) The Closing Disclosure (CD) Loan Estimate (LE) Application Date LE Responsibility

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1 To support your preparation efforts when implementing the TILA-RESPA Integrated Disclosure (TRID) rule effective for applications dated on or after October 3, 2015, we have created this Helpful Tips for implementing the TILA-RESPA Integrated Disclosure rule. This document includes key points about the Loan Estimate (LE) and Closing Disclosure (CD), highlights how you can evidence compliance for Mortgage Loans brokered to Allied Mortgage Group. The information provided in this document, should not be used as a substitute for the TILA- RESPA Integrated Disclosure rule. Only the rule and its Official Interpretations (also known as commentary) can provide complete and definitive information regarding its requirements. The intent of this document is to highlight issues that lenders may find helpful to consider when implementing the rule and is not considered all-inclusive. Overview The Regulation The Consumer Financial Protection Bureau (CFPB) issued a final rule amending Regulation Z (Truth in Lending Act) and Regulation X (Real Estate Settlement Procedures Act) to integrate Mortgage Loan disclosures. When the TRID rule becomes effective with applications taken on or after October 3, 2015, four familiar disclosures will be replaced with two new disclosures: The Good Faith Estimate (GFE) and initial Truth-in-Lending (TIL) will be replaced with the LE. The Final TIL and HUD-1 Settlement Statement will be replaced with the CD. The rule applies to most closed-end consumer credit transaction secured by real estate. Just as we do today, Allied considers all residential mortgage Loans, including investment properties and cooperatives, to be consumer credit transactions and applies the consumer lending laws to all loans that we fund. The Loan Estimate (LE) The Closing Disclosure (CD) Loan Estimate (LE) Application Date LE Responsibility The LE integrates and replaces the existing GFE and the initial TIL disclosure It must be delivered (provided or placed in the mail) within 3 business days of the receipt of the consumer s Loan application and at least 7 business days prior to The CD integrates and replaces the existing HUD-1 Settlement Statement and the final TIL disclosure and helps the consumer understand all of the costs associated with Loan. It must be received no later than three business days before consummation of the Loan. Application Date is determined when the Broker receives all 6 fields of data on the customer. Allied will disclose the LE on all files. Any loan submitted with a Broker LE will not be accepted.

2 LE Timing Requirements The initial LE must be provided within three business days of the application date (as described in the Application Date section above). The initial LE must be provided no less than seven business days prior to A revised LE must be provided within three business days of Lock Date. A revised LE must be provided within three business days of knowledge when there is a valid changed circumstance that results in charges to increase more than is permitted under the rule. The last revised LE must be received no later than four business days prior to LE must not be provided after the CD has been provided to the consumer(s). Note: The Broker or Allied may not impose any fee on a consumer in connection with the consumer s application for a mortgage transaction until the consumer has received the Loan Estimate and has indicated intent to proceed with the transaction. The only exception to this exclusion is for a bona fide and reasonable fee for obtaining a consumer s credit report. Application Received at Allied Allied requires 24 hours to disclose loans. We will require loan submission within 48 hours of Application Date so disclosures can be sent within the required 3 business days Verification / Documentation The Broker is prohibited from requiring the consumer to submit documents verifying information relating to the consumer s application until the LE has been provided. Intent to Proceed Electronic Delivery LE Signature Requirements Service Providers List Allied is responsible for documenting borrower's Intent to Proceed. It will be sent with the initial application package sent by Allied. Allied prefers to electronically disclose all loan documents. We will obtain consumer consent before the LE is delivered. If ESIGN is not consented, Allied will paper disclose all loan files Allied will not require the consumer(s) to sign the LE unless the signature is being utilized as alternative documentation to evidence consumer receipt prior to the three business day presumption (See Receipt of LE and CD). At time of initial disclosures, Allied will provide a list of services for which the consumer may shop and identify at least one provider for each service.

3 Discount Points Change in Circumstance Transferred Loan Points paid to the Allied to reduce the interest rate must be disclosed as a separate line item on page two Origination Charges. In addition, they must be listed as both a dollar amount and as a percentage of the amount of credit extended, labeled: % of Loan Amount (Points). Only fees paid to reduce the interest rate may be called Points Allied will disclose all subsequent Loan Estimates as a result of a CIC If the Loan Estimate was issued by the broker or by another investor/lender AND the LE has expired, Allied will accept the loan and issue a new Loan Estimate even though the loan has exceeded Allied s policy that an LE request must be generated within 2 General Business Days of the application date. Denied or Withdrawn Loans: If a Loan Estimate was issued by the broker or by another investor/lender AND the borrower expresses a written desire to transfer their application to Allied OR the other investor denies the loan, Allied will accept the loan as new and issue a new Loan Estimate. Closing Disclosure (CD) CD Preparation Allied will prepare the CD when all 3 conditions are met: 1. Appraisal Received, 2. Loan is locked, 3. Loan is conditionally approved. However in no case will the CD be prepared earlier than 7 business days before settlement. Broker must request the CD to be prepared. We will allow the CD to be used to reflect a CIC only if within 4 days of settlement CD Timing Requirements The CD must be received no later than three business days prior to Closing Date. The CD reflecting the actual terms/costs of the transaction must be provided to the consumer. If the CD becomes inaccurate before closing a corrected CD at or before closing must be provided. (Exception: APR tolerance violation and Loan product change as described in Changes to the CD (prior to closing)/impacts to wait period section and Fee Tolerance) Under the rule, the consumer has the right to inspect the CD one business day prior to closing. If the CD becomes inaccurate due to an APR tolerance violation or a change to the Loan product, a corrected CD containing all changed terms must be received by the consumer no later than three business days before (See APR Tolerances (prior to or at closing section.) Title & Closing Center To better faciliate interaction between Allied and the Broker's title partners, Allied is requiring that all Settlement companies use the Encompass Title & Closing Center to provide fees. Settlement Companies can create an account at titlecenter.elliemae.com

4 CD Signature Requirements Seller CD APR Tolerances (prior to or at consummation) Changes to the CD (prior to consummation) and Impacts to wait period At Closing: Allied will continue to require final disclosures, including the CD, be signed in ink and dated at closing by all applicable parties. Note: For rescindable transactions, the CD must be given to and signed by each consumer who has the right to rescind. Allied will not prepare the seller's CD, but we will require a signed copy from settlement As we do today, Allied requires re-disclosure when there is an APR increase outside of tolerance and a new three day waiting period applies. The requirements governing changes made to the terms/costs on the CD vary, dependent on the change and timing of the change. With the exception of APR tolerance violations, product type changes, and the addition of a prepayment penalty, the lender is not required to provide the consumer with the revised Closing Disclosure until the day of However, the consumer has the right to inspect the CD one business day prior to Changes that require re-disclosure and a new three business day wait period prior to consummation: Change in the APR outside of the tolerance Change in the Loan product Addition of a prepayment penalty Lender and/or Seller Credits* Loan Estimate AND Closing Disclosure GFE/HUD/TIL vs. LE/CD Receipt of LE and CD Hand Delivery or Fax: Overnight delivery: Lump sum credit amounts will not be applied to our points and fees calculations. For a Loan with an application date prior to October 3, 2015, the LE/CD cannot be used to comply with RESPA and Reg Z requirements. For a Loan with an application date on or after October 3, 2015, a GFE/HUD/TIL forms cannot be used to comply with TRID requirements. Allied will presume receipt of the disclosures by the consumer three business days after the Date Issued on the disclosure, if not otherwise indicated by evidence of alternative documentation supporting earlier receipt. Disclosures hand-delivered or faxed to the consumer(s) will be considered received by the consumer(s) on the date they sign and date the disclosure. Disclosures shipped overnight, will be considered received on the date the consumer(s) sign for receipt of the overnight delivery.

5 / E-Sign: Waiver of Wait Periods Fee Tolerances Allied may use electronic delivery methods subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign). Allied will not accept or fund loans where the consumer has waived any of the required wait periods as defined by the rule (e.g. initial seven day LE, three day CD prior to consummation). Similar to today s rules under RESPA, there are three tolerance buckets that apply to the new disclosures under the TRID rule. The rules have changed slightly however, particularly with the treatment of fees when the consumer is allowed to shop for a service provider, when they are not allowed to shop for a service provider, and at Closing, whether they did or did not shop for a service provider. As a result, fees may move between different sections on the LE and/or CD, and may be subject to a different tolerance throughout the application process. Purpose field In general, the following definitions can be applied to the disclosure of the Loan Purpose: Purchase - Loan for the acquisition of property Refinance - Loan to pay off an existing lien (if no existing lien payoff, see Home Equity) Construction - Loan is for financing either initial phase or permanent phase with the same lender as initial phase or new build on prior owned land. Home Equity - If none of the above applies.