1 PLEASE STAND BY Your webinar is about to begin. pncmortgage.com/agentalliance 1
2 2015 Home Lending Changes New Mortgage Rules Demystified: TILA RESPA Integrated Disclosures (TRID)
3 Welcome to the webinar!
4 Great webinars are interactive Ask questions! Use the WebEx Q&A window Right side of screen
5 Great webinars are interactive Ask questions! Use the WebEx Q&A window Interactive polls
6 Quick Poll #1 How did you find out about this webinar? A PNC Mortgage loan officer Online/Web Direct mail Social media 15 seconds to make your selection
7 Quick Poll Test Check out the results Review polling window for real-time results More polls throughout webinar
8 Meet today s moderator Paul Andreotti SVP, Midwest Division Manager PNC Mortgage
9 Why today s webinar? Keeping you informed of industry changes New laws go into effect August 1, 2015 Your clients may be impacted
10 Questions we ll answer Background TILA/RESPA What are the TILA/RESPA Integrated Disclosure Rules, and how will they affect my clients? What new disclosures/forms are required? What are the new timing restrictions? What are the fee restrictions? Where should I turn for help and more information?
11 Our Speaker Richard J. Andreano, Jr. Practice Leader Mortgage Banking Group
12 Today s agenda Background on TRID Rules and Timing Overview of Covered Transactions Review of New Forms and Timing Impact to Home Buyers Q&A
13 Quick Poll #1 True or False? HELOC Loans are excluded from the new TRID rules? True False I have no idea! 30 seconds to make your selection
14 Quick Poll #2 True or False? Rules apply to most closed-end consumer loan transactions? True False I have no idea! 30 seconds to make your selection
15 Background Information provided by Consumer Financial Protection Bureau (CFPB) The CFPB was established authority pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act TILA and RESPA rule making authority was transferred to the Consumer Financial Protection Bureau (CFPB) in July of 2011 Several new rules established in response to the housing market crisis CFPB designed the TILA Integrated Disclosure rules to help improve the customer home lending experience
16 TRID Background Information provided by Dodd-Frank Wall Street Reform and Consumer Protection Act Establishes a new Loan Estimate which replaces/combines intial TILA and Good Faith Estimate (GFE) New definition for Application (6 data points) Provides timing requirements for delivery of Loan Estimate Defines business days in two different ways Establishes timing standards for sending a revised Loan Estimate Provides a new Closing Disclosure: Requires borrower to receive 3 days prior to closing Lender has much greater responsibility Changes to loan product or APR changes exceeding tolerance require delivery of revised Closing Disclosure and re-starts the 3 day clock Fees paid to affiliates (National Link) will now be subject to zero tolerance Establishes more detailed/complex rules for tolerances
17 Background & Scope Information provided by Rules apply to: Rules do not apply to: Most closed-end consumer credit transactions secured by real estate. HELOCS Reverse mortgages (whether openend or closed-end) Mortgages secured by a mobile home or dwelling that is not attached to land Loans made by a creditor who makes five or fewer mortgages in a year Certain no-interest second mortgage loans Rules are effective for applications taken on or after August 1, Current rules will still apply to loans in pipeline as of August 1.
18 Key Changes Information provided by The definition of an application will change 6 customer data fields constitutes an application Name, Social Security, Property Address, Property Value Estimate and Mortgage Loan Amount. Income is requested last. Effective 8/1, we cannot require documentation to accept an application, but we can ask for it For example, we can request, but not require, a customer to identify a loan product and provide a purchase agreement Loan Estimate Replaces the RESPA Good Faith Estimate & the TILA Early Disclosure Must be delivered or placed in the mail to the consumer within 3 business days after receipt of an application and not less than 7 business days before consummation of the transaction Effective 8/1, PNC will provide the new LE to customers in accordance with rule Closing Disclosure Replaces the HUD-1 under RESPA and final TIL Disclosure Closing Disclosure provides a summary of the actual loan terms, the loan costs, other settlement costs, and additional closing disclosures Closing Disclosure must be received by customers 3 business days prior to closing date Effective 8/1, PNC will provide the Closing Disclosure via the Black Knight Closing Insight tool to Settlement Agents in accordance with rule -
19 Definition of Business Days Information provided by Business Day Definition Applies to: The definition of an application will change 6 customer data fields constitutes an application Name, Income, Social Security, Property Address, Property Value Estimate and Mortgage Loan Amount Sought Effective 8/1, we cannot require documentation in order to accept an application, but we can ask For example, we can request, but note require, a customer to identify a loan product and purchase agreement Timeframe to deliver or place in mail Any day a lender s offices are open to the public for conducting Loan Estimate substantially all of its business functions (all calendar Replaces days except the RESPA Sunday Good Faith and Estimate Federal & the legal TILA holidays) Early Disclosure Must be delivered or placed in the mail to the consumer within 3 business days after receipt of an application and not less than 7 business days before consummation of the transaction Effective 8/1, we will issue the new LE to customers in accordance with rule Anything other than delivery in person mailing rule applies Deemed Closing Disclosure receipt 3 business days after mailing or delivery by any other method (specific Replaces the HUD-1 under RESPA and final Truth in Lending Disclosure under TILA Closing Disclosure provides a summary of the actual loan terms, the loan costs, other definition settlement costs, of business and additional closing day disclosures applies) CD must be received by customers 3 business days prior to closing date Effective 8/1, PNC will issue the CD via the Black Knight Closing Insight tool to Settlement Or may Agents in rely accordance on with evidence rule of earlier actual receipt -
20 What about Pre-Application Estimates? Information provided by
21 Written cost estimates can be provided before a Loan Estimate, however Information provided by Estimates Must: Estimates May Not: Look different than the Loan Estimate Clearly and conspicuously state at top of first page, in no less than 12 point type: Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan. Use headings, content and format similar to Loan Estimate Apply to generic cost lists or advertisements
22 Fee Restrictions & Intent to Proceed Information provided by Initial Fees No fee other than a bona fide and reasonable fee to obtain a credit report may be imposed before the consumer has received the Loan Estimate and indicated an intent to proceed. Intent to Proceed Imposition of Fee Consumer may indicate intent to proceed in any manner, unless lender requests a particular communication method Silence may not be assumed as an intent to proceed documentation requirement. Lenders may not require a customer to provide a method of payment in advance, even if payment is not made immediately, before a fee is charged No checks in advance Cannot charge credit card in advance or obtain a credit card number
23 Quick Poll #3 The loan estimate needs to be provided? One business day after application Three business days after application Five business days after application Seven days prior to settlement 30 seconds to make your selection
24 What exceptions permit a revised Loan Estimate? Information provided by Unforeseeable Changes (only if they would breach tolerances) For example, Changed circumstance affecting settlement charge Changed circumstance affecting eligibility Customer requests changes to credit terms or settlement A foreseeable change with unforeseeable impact on costs Rate lock occurring after Loan Disclosure Too much time has passed Loan estimate expires Delayed new construction loan
25 Tolerances: What s in each category? Information provided by Zero Tolerance for increases Fees paid to the lender Third party service charges paid to an affiliate of the lender Fees paid to a third party service provider selected by the lender Transfer Taxes 10% aggregate tolerance for increases Fees paid to a third party service provider selected by the lender from a written list provided by the lender unless the affiliate is a provider of the lender or mortgage broker Recording Fees Allowed to increase (if information was based on best estimate) Prepaid interest Property insurance premium Amounts placed into an escrow impound, reserve or similar account Fees for services provided by a third party not selected from PNC s provider list
26 Loan Estimate Fee Guidelines Information provided by Itemized Fees Lender s Title Insurance Owner s Title Insurance Key Changes First few lines in each section are dedicated for specified items Otherwise, list fees in applicable section alphabetically With fees as a component of title insurance or are for conducting the closing, place Title- at beginning of each fee
27 Loan Estimate Fee Guidelines Information provided by Itemized Fees Lender s Title Insurance Owner s Title Insurance When creditor does not require purchase of owner s title insurance: Disclose title insurance premium based on lender s requirements for lender s title insurance Do not take into account any adjustment that might be made for simultaneous issuance of owner s title insurance.
28 Loan Estimate Fee Guidelines Information provided by Itemized Fees Lender s Title Insurance Owner s Title Insurance When simultaneous issuance insurance rates are allowed Disclose premium based on full amount of owner s title insurance premium, add simultaneous issuance premium for lender s coverage, and subtract full premium for lender s coverage.
29 Closing Disclosure Information provided by The definition of an application will change Who s responsible for providing the Closing Disclosure? 6 customer data fields constitutes an application Name, Income, Social Security, Property Address, Property Value Estimate and Mortgage Loan Amount Sought Effective 8/1, we cannot require documentation in order to accept an application, but we can ask For example, we can request, but note require, a customer to identify a loan product and purchase agreement Lender is responsible and may Lender Loan Estimate may permit settlement agent to provide Replaces the RESPA Good Faith Estimate & the TILA Early Disclosure Must be delivered or placed in the mail to the consumer within 3 business days after receipt of an application and not less than 7 business days before consummation of the transaction Effective 8/1, we will issue the new LE to customers in accordance with rule If lender permits settlement agent to provide Closing Disclosure, lender remains responsible to ensure Closing Disclosure is provided in accordance with the rule Based on timing requirements, industry facing challenges Closing Disclosure Settlement agent responsible for providing Closing Disclosure to seller Replaces the HUD-1 under RESPA and final Truth in Lending Disclosure under TILA Closing Disclosure provides a summary of the actual loan terms, the loan costs, other settlement costs, and additional closing disclosures CD must be received by customers 3 business days prior to closing date Effective 8/1, PNC will issue the CD via the Black Knight Closing Insight tool to Settlement Agents in accordance with rule Settlement agent must provide copy to lender - How will PNC provide the Closing Disclosure? - Effective 8/1, PNC will provide closing disclosures, via Black Knight s Closing Insight Tool, to settlement agents
30 What is Closing Insight? The Closing Insight online tool will help open the lines of communication between the lender and settlement agents to create a collaborative environment Closing Insight was designed to address regulatory environment challenges with the closing process PNC is partnering with Black Knight & RealEC on awareness and training of the tool
31 Quick Poll #4 Client must receive the closing disclosure Anytime prior to closing Three business days prior to closing Five business days prior to closing At closing Never 30 seconds to make your selection
32 Loan Transaction Timeline & Impact Plan for loan transaction timelines to increase Limited ability to move closing dates Don t assume issues can be dealt with at closing overnight delivery Source: MBA s Quarterly Mortgage Banker s Performance Report
33 Preparing Your Clients Maintain Strong Communications Plan Ahead Avoid Issues Strong communications with your client and settlement agents is critical Plan for transaction timelines to lengthen add 15 days to be safe* No moving up of closing dates Resolving issues at the closing table will be challenging Let sellers know they should have everything ready for walkthroughs and to abide by agreements/deadlines to avoid substantial impact to closings *National Association of Realtors is suggesting Realtors add 15 days to transactions to be safe
34 What You Can Expect The road ahead New rules implemented August 1, 2015 Loan Estimate replaces initial TILA disclosure and GFE Closing Disclosure replaces final TILA disclosure and HUD-1 Upfront fee restrictions imposed Greater need for coordination between lenders, clients and settlement agent providers Products, pricing and underwriting requirements Preparing clients with the necessary information
35 For more information consumerfinance.gov PNC will provide today s attendees with a complimentary TILA RESPA white paper on May 1, 2015, or you may contact a PNC Mortgage Loan Officer (MLO). Locate a loan officer near you at PNC s exclusive online destination for Real Estate Agents pncmortgage.com/agentalliance
36 Q&A Session Instructions: Use the WebEx Q&A window Right side of screen
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40 The opinions, beliefs, guidelines, and advice shared in the following presentation are the creation of Ballard Spahr, LLP and do not necessarily reflect the views or opinions of PNC. PNC is a registered service mark of The PNC Financial Services Group, Inc. ("PNC"). PNC Mortgage is a division of PNC Bank, National Association, a subsidiary of PNC. All loans are provided by PNC Bank, National Association. This information is provided for business and professional uses only and is not to be provided to a consumer or the public. This information is provided to assist real estate professionals and is not an advertisement to extend consumer credit as defined by Section of Regulation Z. Programs, interest rates, and fees are subject to change without notice The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC.