CFPB The Feds are Coming! TILA / RESPA Integrated Disclosures (TRID)

Transcription

1 CFPB The Feds are Coming! TILA / RESPA Integrated Disclosures (TRID) Presented by Celia C. Flowers, Flowers-Davis, PLLC and East Texas Title Companies, Tyler Janet S. Minke, CTIA, Alliant National Title Insurance Company, Boyd Thomas F. Vetters II, Robertson Anschutz Vetters, Austin 2014 Texas Land Title Institute CFPB The Feds are Coming! P a g e 1

2 Celia C. Flowers Flowers Davis, P.L.L.C ESE Loop 323, Suite 200 ~ Tyler, Texas , Fax: , ccf@flowersdavis.com BIOGRAPHICAL INFORMATION EDUCATION: Tyler Junior College and graduated with an Associate in Arts (A.A.) in 1987, summa cum laude. University of Texas at Tyler, completing that phase of her education with highest honors. Attended law school at Baylor University and graduated in 1990 with a Juris Doctor (J.D.) degree. BOARD CERTIFICATION: Board Certified: Oil and Gas Law, Texas Board of Legal Specialization Board Certified: Residential Real Estate Law, Texas Board of Legal Specialization Board Certified: Civil Trial Law, Texas Board of Legal Specialization PROFESSIONAL ACTIVITIES: Ms. Flowers owns twelve title companies, which are licensed in thirteen counties in East Texas Oil and Gas Council of the Oil, Gas and Energy Resources Law Section of the State Bar of Texas Fellow of the College of the State Bar of Texas, and a member of the Texas Board of Legal Specialization, Smith County Bar Association, Rusk County Bar Association, Gregg County Bar Association, Van Zandt County Bar Association, International Right of Way Association, State Bar of Texas, East Texas Association of Petroleum Landmen, and American Association of Petroleum Landmen President of Independent Title Agents of Texas (ITAT) 2011-present - Texas Title Examination Standards Board In 2011, Ms. Flowers was honored by the East Texas Association of Petroleum Landmen with their President s Award and in 2012, with the Pioneer Award. In 2011, she was also recognized with the esteemed Title Person of the Year Award by the Texas Land Title Association for her significant and longtime contributions to the title industry and the association. American Land Title Association (ALTA) RESPA Implementation Task Force Board of Directors of the Texas Land Title Association and served as TLTA s President for PUBLICATIONS and HONORS: 60 th AAPL ANNUAL MEETING AND EDUCATION SESSIONS We Have to Drill This Well Somewhere-A Survey of Surface Issues Across the Nation, June 2014, Montreal, Canada, Celia C. Flowers and Melanie S. Reyes 2013 TEXAS LAND TITLE INSTITUTE - Minerals--Practice Tips for Leases and Surface Use Agreements, December 2013, San Antonio, Texas, Celia C. Flowers 2013 ADVANCED REAL ESTATE DRAFTING COURSE, Houston Texas, March 2013, Avoiding the Unintended Consequence When Drafting Mineral Reservations, Celia C. Flowers and Melanie S. Reyes 2012 TEXAS LAND TITLE INSTITUTE - CFPB - The New Disclosure Form and Its Requirements, December 2012, San Antonio, Texas, Celia C. Flowers 2012 SECTION REPORT OF THE 30 TH ANNUAL ADVANCED OIL, GAS, AND ENERGY RESOURCES LAW COURSE, October 2012 The Before and After - An Update of the Eminent Domain Changes, Celia C. Flowers 2011 SECTION REPORT OF THE OIL, GAS & ENERGY RESOURCES LAW SECTION OF THE STATE BAR OF TEXAS, June 2011, The Proof is in the Public Record or is it? Navigating Evidentiary Issues Related to Texas Railroad Commission Documents, Celia C. Flowers and Melanie Reyes. Ms. Flowers is certified by the Texas Real Estate Commission to teach their ethics and legal courses 2009 TEXAS LAND AND TITLE INSTITUTE, November 2009, Surface Use by Mineral Owners: The Title Insurance Solution, Celia Flowers, Melanie Reyes-Bruce, and Eric Schmalbach EAST TEXAS ASSOCIATION OF PETROLEUM LANDMEN SEMINAR, February 2009, Pitfalls in Title Examination: The Intricate Relationship Between Real Property Rights and Ownership, Celia C. Flowers and Melanie S. Reyes Bruce. 20 REVIEW OF OIL AND GAS LAW XXII, Energy Law Section Dallas Bar Association, August 17, 20, Exercising the Power of Eminent Domain, Celia C. Flowers and Melanie S. Reyes. 20 TEXAS LAND AND TITLE INSTITUTE, November 20, Minerals: Examination and Coverage Issues, Celia C. Flowers, Melanie S. Reyes, and Meredith N. Todd OIL, GAS & MINERAL LAW INSTITUTE, Protecting and Defending Your Mineral Title, Celia C. Flowers STATE BAR OF TEXAS CONTINUING EDUCATION SEMINAR: SUING AND DEFENDING GOVERNMENTAL ENTITIES, November 2004, Exercising the Power of Eminent Domain, Celia C. Flowers

3 JANET S. MINKE, CTIA Vice President, Underwriting Support Services Alliant National Title Insurance Company Toll-free: x440 Direct: EDUCATION BA in Social Science from University of North Texas, 1970 Texas Secondary Teaching Certificate TITLE INSURANCE EXPERIENCE Ms. Minke entered the title insurance industry as an escrow assistant and conveyancer in a fee attorney office in Fort Worth, Texas, in Shortly thereafter, the attorney retired, selling his closing offices to Guardian Title Company, where Ms. Minke remained until 1994, progressing to commercial escrow officer and eventually Executive Vice President. Since that time, she has held various regional and national roles with major national title insurance companies including technology project manager, business process manager and corporate trainer. In her current position with Alliant National Title she is available to respond to underwriting questions, as well as providing reference resources, training and education for the company s partner agents. TEXAS LAND TITLE ASSOCIATION ACTIVITIES AND HONORS Certification: Certified Title Insurance Associate (CTIA) Honors: Title Woman of the Year 2006 Professional Excellence Award Outstanding Underwriter Support, 2005 Peggy Hayes Teaching Excellence Award, 1995 President s Award for Outstanding & Exemplary Contribution, & Outstanding Young Title Person, Current Member: Regulatory Committee, Federal Issues Committee, Certification Council TEACHING AND TRAINING ACTIVITIES TLTA and NMLTA Land Title School; Texas Land Title Institute; Title Insurance and Doc Prep Basics: An Introduction to Closing the Deal State Bar of Texas: Advanced R E Law Course 2006; Agricultural Law Course 2009 TLTA, OLTA, NMLTA and NAPMW Conferences and Seminars Underwriter Agency Seminars and Training in Texas, New Mexico and Oklahoma PUBLICATIONS - Articles in TLTA News and other industry publications Money-Saving Ideas That Everyone Can Use, 1988 Proper Time Management Ensures Efficient Closings, 1989 Tips Help Clarify Procedural Rules, 1991 Training Today s Workforce: Educating for Excellence, 1997 The American Dream And the Importance of Title Insurance, 2006

4 Thomas F. Vetters II Board Certified, Residential Real Estate Texas Board of Legal Specialization Thomas Vetters graduated from Texas A&M University and South Texas College of Law. While in law school he clerked for the Honorable Judge Dwight Jefferson in the 215th Civil District Court in Harris County, Texas. After finishing his judicial clerkship Thomas joined the law firm of Robertson & Anschutz, PC in Houston. Thomas has been a past chair of Regulatory Compliance committee for the Texas Mortgage Bankers Association ( TMBA ) where he served as Editor for the TMBA Deskbook. He has served as part of the executive team for TMBA as well as two terms as a board member. Thomas co-authored the Texas Bankers Association ( TBA ) Home Equity Manual and is currently working with co-author John Fleming to update the manual for a Spring 2015 release. He is Board Certified in Residential Real Estate Law by the Texas Board of Legal Specialization and his primary practice areas include real estate law and regulatory compliance on both state and federal issues. He is a member of the College of the State Bar of Texas, the State Bar of Texas Real Estate, Probate and Trust Section and the Texas Land Title Association. He is a partner with the law firm of Robertson Anschutz Vetters and offices in Austin, Texas.

5 I. Introduction A. From CFPB The Consumer Financial Protection Bureau (Bureau) has issued a rule that will simplify and improve disclosure forms for mortgage transactions. The mortgage disclosures: the Loan Estimate given three business days after application, and the Closing Disclosure given three business days before closing, will be required to be given to consumers for mortgage applications received on or after August 1, For the complete rule and other materials about the final rule, please go to Background For almost 40 years, federal law has required lenders to provide different disclosure forms to consumers applying for a mortgage. The law has generally required two different disclosures at or shortly before closing of the loan. Two different federal agencies developed these forms separately, under two federal statutes. Specifically, the Federal Reserve enforced the Truth in Lending Act of 1968 (TILA) through its Regulation Z and the Department of Housing and Urban Development enforced the Real Estate Settlement Procedures Act of 1974 (RESPA) through its Regulation X. As a result, the information in these forms is overlapping and the language is inconsistent. Not surprisingly, consumers often find the forms confusing. It is also not surprising that lenders and settlement agents find the forms burdensome to provide and explain. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directed the Bureau to integrate the mortgage loan disclosures under TILA and RESPA sections 4 and 5. Section 1032(f) of the Dodd-Frank Act mandated that the Bureau propose for public comment rules and model disclosures that integrate the TILA and RESPA disclosures by July 21, The Bureau issued a proposed rule and forms on July 9, 2012 (Proposal). To accomplish this, the Bureau engaged in consumer and industry research, analysis of public feedback through qualitative usability testing and its Know Before You Owe public initiative, and public outreach for more than a year. After issuing the Proposal, the Bureau conducted additional qualitative usability testing and a large-scale quantitative validation study of its integrated disclosures with 858 consumers, which concluded that the Bureau s integrated disclosures had on average statistically significant better performance than the current disclosures under TILA and RESPA. The Bureau has now finalized a rule with new, integrated disclosures (Final Rule). The Final Rule which is now codified in Regulation Z includes the Regulation Z commentary which Lenders and Settlement Agents may rely upon as a Safe Harbor when interpreting the Rules intent. In addition to the Final Rule, the preamble to the Final Rule include detailed discussions of how the forms should be filled out and are intended to be used. The first new form (the Loan Estimate) combines the current Good Faith Estimate and Initial Truth-in-Lending disclosure and is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying to allow them to shop for the best mortgage. This form will be provided to consumers within three business days after they submit a mortgage loan application. The second form (the Closing Disclosure) combines the current HUD-1 and final Truth-in-Lending disclosure and is designed to help consumers understand the costs, terms and related mortgage obligations. This form must be provided to consumers at least three business days before they close on the mortgage loan. The forms use clear language and are designed to make it easier for consumers to locate key information, such as the interest rate, monthly payments, and costs to close the loan. The forms 2014 Texas Land Title Institute CFPB The Feds are Coming! P a g e 2

6 also provide more information to help consumers decide whether they can afford the loan and to compare the cost of different loan offers, including the cost of the loan over time. In developing the new Loan Estimate and Closing Disclosure forms, the Bureau reconciled the differences between the existing forms and combined several other mandated disclosures, such as the appraisal notice under the Equal Credit Opportunity Act and the servicing application disclosure under RESPA. The Bureau also responded to industry complaints of uncertainty about how to fill out the existing forms by providing detailed instructions on how to complete the new forms and examples by publishing a Small Entity Compliance Guide, a Guide to the Loan Estimate and Closing Disclosure Forms as well as additional tools available on their website at the link provided above. This outreach by the Bureau is intended to reduce the burden on lenders and other settlement service providers as they prepare and incorporate the new forms and procedures into their origination/closing platforms. The rule amends 12 CFR PART 1024 REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X) PART 1026 TRUTH IN LENDING (REGULATION Z) B. Effective Dates 1. Most provisions apply to applications received by creditor or mortgage broker on and after August 1, New provisions concerning pre-disclosure activity of creditors and revisions to existing regulations concerning the rule s effect on State laws and State exemptions will be effective on August 1, 2015 without regard to whether an application has been received.. C. Stated Purpose of the Integrated Disclosures (12 CFR ) 1. To promote the informed use of consumer credit by requiring disclosures about its terms and cost, 2. To ensure that consumers are provided with greater and more timely information on the nature and costs of the residential real estate settlement process, and 3. To effect certain changes in the settlement process for residential real estate that will result in more effective advance disclosure to home buyers and sellers of settlement costs. 4. The regulation also includes substantive protections. D. Regulatory Change 1. It is important to note that the new Loan Estimate and Closing Disclosure regulations are now part of TILA, whereas the current GFE and HUD-1 regulations are part of RESPA. To affect this, the rule includes substantial changes to TILA regulations to incorporate combined disclosure forms. a) Section (e) and Section are added in regard to the Loan Estimate (early disclosures) 2014 Texas Land Title Institute CFPB The Feds are Coming! P a g e 3

7 b) Section (f) and Section are added in regard to the Closing Disclosure (final disclosures). 2. In addition, the rule contains substantial changes to Official Staff Commentary in TILA regulations to provide detailed guidance on how to use the forms. E. Coverage 1. Applies to most closed-end consumer mortgage loans 2. Does not apply to F. Terminology Home equity lines of credit (which are also not subject to RESPA) Reverse mortgages (which continue to be subject to RESPA) Mortgages secured by mobile homes or by dwellings not attached to property (if the mobile home is real property, the rule does apply). Creditor that makes five or fewer mortgage loans in one year Certain narrowly defined subordinate liens [see (h) of the Final Rule] Loans that are not consumer loans such as commercial or business purpose loans 1. Lender = creditor 2. Borrower = consumer 3. Tolerance = variation 4. Closing/Settlement = consummation but there is still discussion about this one G. The rule includes two primary new forms and instructions for how these forms are to be prepared and delivered to consumers. 1. Loan Estimate (LE) Model Form H-24 with variations (12 CFR ) Provided to consumer (by lender or broker) within 3 business days after submission of loan application Replaces early TIL statement and GFE Provides summary of key loan terms and estimates of loan and closing costs Includes Cash to close Idea is to promote comparison shopping 2014 Texas Land Title Institute CFPB The Feds are Coming! P a g e 4

8 2. Closing disclosure (CD) Model Form H-25 with variations (12 CFR ) Provided to consumer by lender or settlement agent Received by consumer 3 business days before consummation Replaces final TIL statement and HUD-1 settlement statement Provides detailed accounting of transaction. o Loan Terms o Final Costs o Comparison of LE with final terms and costs II. Top Takeaways in Final Rule A. Narrowed definition of Application Application is defined by 6 elements: o Borrower name, o income, o social security number, o property address, o estimated value of property, o mortgage loan amount sought Note: the CFPB has eliminated the seventh catch-all provision that included any other information deemed necessary by the lender. Once the lender has these six pieces of information the Loan Estimate must be provided to the consumer within 3 Business Days. B. Definition of Business Day Not one, but two definitions 1. When providing the Loan Estimate to consumer within three business days of application A business day is defined as a day on which the creditor s offices are open to the public to carry on substantially all functions 2. Waiting period between Loan Estimate and consumer receipt of Closing Disclosure and between Closing Disclosure and closing C. Timing of Disclosures A business day is defined as all calendar days except Sunday and certain specified federal holidays 1. Loan Estimate (LE) Application is the trigger Creditor must deliver or place in the mail no later than 3 business days after Application Creditor must deliver or place in the mail not later than the 7 th business day before closing. If not provided in person, consumer is considered to have received 3 business days after it is delivered or placed in the mail Texas Land Title Institute CFPB The Feds are Coming! P a g e 5

9 Waiting period can be waived for bona fide financial emergencies based on written statement by consumer no printed forms allowed Must re-disclose within three business days of learning of a change 2. Closing Disclosure (CD) Consumer must receive 3 business days before consummation unless Bona fide personal financial emergency written statement by consumer no printed forms If not provided in person, the consumer is considered to have received 3 business days after it is delivered or placed in the mail. Seller must receive no later than day of consummation 3. Subsequent Changes CD becomes inaccurate before closing: Some changes before closing require re-disclosure and a new 3- business-day waiting period The Annual Percentage rate changes above APR tolerance Change to loan product Addition of prepayment penalty Otherwise, corrected disclosure at or before consummation Consumer must be able to inspect one business day prior to consummation 4. Subsequent Changes CD becomes inaccurate after closing: Changes post-closing that require revised Closing Disclosure Discovery of an inaccuracy related to settlement during the 30 days after closing resulting in a change to an amount paid by consumer and/or seller = redisclose within 30 days after learning event occurred Non-numeric clerical errors = redisclose within 60 days after consummation Refunds related to the good faith analysis variation (tolerance) violation occurs = refund and redisclose within 60 days after consummation D. Who Provides Disclosure? 1. Loan Estimate to consumer either Creditor or Loan Broker may prepare and provide Creditor still liable/responsible 2. Closing Disclosure to consumer either Creditor or Settlement Agent may prepare and provide Creditor still liable/responsible 3. Closing Disclosure to Seller Settlement Agent must prepare and provide The disclosure must reflect the actual terms of the seller s transaction Texas Land Title Institute CFPB The Feds are Coming! P a g e 6

10 Disclosure must be provided to seller no later than the day of consummation. Seller s Disclosure may be on a separate form from the Borrower s Disclosure If an amount changes, settlement agent must redisclose not later than 30 days after receiving information to establish the change occurred. Must also provide copy of seller Closing Disclosure to creditor E. Written List of Providers (Model Forms H-27B and H-27C) If the consumer is permitted to shop for a settlement service, the creditor must provide consumer with a Settlement Service Providers List (SSPL) At least one provider for each service for which the consumer may shop Multiple providers permitted SSPL must be provided on separate sheet of paper May expressly state that list is not an endorsement of providers Same timing as provision of Loan Estimate Lender affiliates may be listed on SSPL List may be limited to affiliates An affiliate on the list is considered a referral Providers on list must have the ability to provide services in the geographic location of the property and must still be in business. F. Itemization of Fees and Charges The amount imposed upon the consumer (or seller) for any settlement service shall not exceed the amount actually received by the settlement service provider for that service unless it is an Average Charge. All fees and charges must be separately itemized. Fees and charges must be listed alphabetically. All title insurance charges (including settlement agent fee) must be preceded by Title followed by a description of the fee. Fee for owner s title insurance must be followed by the word optional. Note: Texas does not permit average charges all charges must be actual. G. Variations the new word for Tolerances The creditor must give the consumer the best information reasonably available; however, variations between amounts on the Loan Estimate and on the Closing Disclosure are permitted, as follows: 1. No Variations (current Zero Tolerance Bucket) expanded to include: Lender s own charges Charges by SSP (Settlement Service Provider) affiliated with lender 2014 Texas Land Title Institute CFPB The Feds are Coming! P a g e 7

11 Fees paid to unaffiliated SSP if consumer is not permitted to shop 2. Limited Increases (current 10% Tolerance Bucket) Charge paid to unaffiliated SSP selected from creditor s SSPL (Settlement Service Provider List) 3. Variations permitted (current No Tolerance Bucket) SSP selected by consumer and not on the SSPL Charges for services not required by the creditor Prepaid interest Property insurance premiums Escrow amounts, impound reserves H. Changed Circumstances still exist 1. Good faith for purposes of fee variation rules can be determined based on a revised Loan Estimate if: Changed circumstances cause the charge or aggregate charges to increase or a borrower s eligibility to change 2. Must provide revised estimate within 3 business days of receiving information establishing that a reason for revision applies. 3. Cannot deliver a revised Loan Estimate on same day as delivery of Closing Disclosure III. The Forms Overview A. Generally 1. Fees and charges will move around from section to section depending on whether the service is required by the lender, and whether the borrower did or did not shop for the service. 2. The forms contain full itemization at the line-by-line level with a rollup of the totals to a line above the items. 3. There are a limited number of lines in each section, so full itemization may sometimes be difficult. Software vendors verified with CFPB that the number of lines in each section may expand or contract depending on actual charges to be disclosed. However, all charges in the category of Loan Costs must appear on one page. If it is necessary to itemize more charges than there are lines in any section on page 2, page 2 may be broken into two pages numbered page 2a (for Loan Costs) and 2b (for Other Costs). See attached sample H-25(H) Texas Land Title Institute CFPB The Feds are Coming! P a g e 8

12 4. There are multiple variations for each form depending on the type of loan and other factors, such as whether the transaction involves a sale. The forms are dynamic so only items that apply to the particular loan are to be included on the form. For example, if you are dealing with a fixed rate loan, any language that doesn t apply to a fixed rate loan should not appear on the form. In other words the words can t be on the form with a notation n/a or not applicable. 5. The fact that fees/charges are not uniformly named and disclosed will make auditing the escrow transaction by using the Closing Disclosure more difficult. 6. There is a separate Closing Disclosure for a seller. 7. A disbursing agent/escrow agent is not likely to rely on the borrowers confirm receipt signature as an authorization to disburse the disclosed fees/charges. B. Discussion of some specific fees/charges 1. Title Fee Estimates 12 CFR (f) a) Lender s title insurance policy Estimate premium based on the type of policy required by lender s underwriting standards for that loan. Disclose the amount of the premium without any adjustment for a possible simultaneous purchase of an owner s policy. b) Owner s title insurance policy Estimate premium based on the owner s policy rate; Lender may disclose the premium for an enhanced policy when required by the real estate sales contract, if such requirement is known by the creditor when issuing the Loan Estimate. To disclose the premium for an owner s policy when there is a discounted rate for simultaneous owner s and loan policies disclose the full owner s premium, plus any simultaneous rate for a loan policy, minus the full rate for the loan policy. 2. Title Fees Final Disclosure Simultaneous owner s title insurance in purchase transactions 12 CFR (g) a) Continue to disclose for the loan policy the amount of the premium without any adjustment for a possible simultaneous purchase of an owner s policy (In Texas the loan policy is the policy that carries the simultaneous rate, but the Federal law does not address this inconsistency.) 2014 Texas Land Title Institute CFPB The Feds are Coming! P a g e 9

13 b) Calculate the owner s premium by taking the full owner s premium adding the simultaneous issuance premium for the loan policy and then deducting the full premium for the loan policy. Note: TLTA is currently working with TDI toward a promulgated Texas Disclosures form to provide correct premiums to the consumer and seller, as well as to make other required Texas disclosures. IV. Impact of rule on AFBAs A. Fees charged by affiliates of the creditor are in the zero tolerance no variation bucket 12 CFR If you, the title agent, are affiliated with a lender or owned by a lender your fees are now considered part of the fees a lender charges that have zero tolerance or no variation. In other words at the time of the loan estimate the lender has to get your fees and charges exactly correct. In order to keep the lender in compliance and the closing on as scheduled, this change in the rules requires you and the lender to have a much more complete understanding of your charges. If the charges are more than that shown on the loan estimate, the Lender will be deemed in violation of Section 5 of RESPA and will have to refund the difference to the borrower to cure the violation. If they estimate too high and your charges are lower, then there is no violation Good faith = actual charge imposed by affiliate B. Affiliates permitted on SSPL If you are an affiliate of a lender, you may be included on the lender s Settlement Service Provider List. Note that your inclusion on the list is equal to a referral of business to you as that affiliate. V. Impact of rule on title industry A. Continued Uncertainty about Who Will Do What CFPB holds the creditor responsible for the Closing Disclosure Lenders will decide what role settlement agents will play Not all lenders will make the same decision resulting in a mix of disclosure scenarios so settlement agents will need to be nimble Notes: Wells Fargo has publicly announced that it will prepare and distribute the Closing Disclosure. It is rumored that CitiMortgage will soon make a similar announcement Texas Land Title Institute CFPB The Feds are Coming! P a g e 10

14 B. Implementation Concerns New combined disclosure will require substantial technology changes No distinct line for a distinct service No uniform terminology so no two disclosures will be the same Employee training will be more intensive than in 2009 Costs of implementation will be substantial both hardware and software Uncertainty surrounds electronic exchange of data without re-keying C. Information Flow The lender will need about the same information about fees/charges before delivering the Loan Estimate as they now need before delivering a GFE If the lender prepares the Closing Disclosure, it will need from the settlement agent Complete and accurate detail of all fees and charges, not just those related to the loan or included in the LE If the settlement agent prepares the Closing Disclosure, it will need from the lender A complete copy of the LE and SSPL Detailed final loan and lender fee information. Exchange of information may be hampered by the lack of uniform names for various fees and charges. Exchange of information may benefit from loan and settlement technology platforms that integrate or talk with one another to eliminate redundant keying of information. D. Scheduling Closings Possible Closing Disclosure Process with Lender preparing Closing Disclosure Loan is approved lender contacts settlement agent to schedule closing giving a no sooner than date. Not less than 7 days after delivery of the initial LE Not less than 3 days (or 6 days depending on lender) after anticipated receipt by borrower of the CD Settlement agent contacts parties; a date is selected and confirmed with all parties. Settlement agent contacts lender to give scheduled closing date and details of all fees, charges and credits for settlement of the real estate transaction. Although seller disclosure is not delivered until closing, a best practice would be to wait to schedule closing until all fees/charges are known, including repair invoices, curative matters and payoff calculations, etc. Lender prepares CD and delivers to borrower with a copy to settlement agent Texas Land Title Institute CFPB The Feds are Coming! P a g e 11

15 Lender may also deliver lender instructions and documents to be recorded or may elect to deliver full loan package to settlement agent Settlement agent reviews CD and verifies accuracy of fees/charges/credits related to settlement of real estate transaction. If there are inaccuracies settlement agent immediately notifies lender. If changes are needed before closing settlement agent or lender prepares new CD and notifies borrower that it is available for review no later than the day before closing. Settlement agent finalizes Seller s Disclosure. Settlement agent may deliver Seller s Disclosure to seller and listing agent in advance of closing. At closing, settlement agent: Obtains signature from borrower on some type of settlement authorization (since the closing disclosure does not provide for signature or authority to proceed) Delivers Seller Disclosure to seller and obtains signature from seller on some type of settlement authorization (same reason as for borrower). VI. What can we all do now to prepare? A. Lenders and settlement agents need to talk Who will prepare and deliver the Closing Disclosure form? All lenders will not be the same so settlement agents need to be prepared for this. If a lender wants the settlement agent to deliver the form what method of delivery will be required? Talk about new time lines and when final information must be received in order to prepare and distribute the Closing Disclosure 3 to 6 days before closing. Learn how data or forms may be shared by software integration. Talk about security and procedures to protect non-public personal information. B. Lenders and settlement agents need to talk with real estate agents Communicate with real estate agents about new time lines and when information must be finalized in order to prepare and distribute the Closing Disclosure 3 to 6 days before closing. Talk about new requirements for scheduling closings in advance and sticking to the scheduled closing day and time. C. Talk with your settlement software providers! 2014 Texas Land Title Institute CFPB The Feds are Coming! P a g e 12

16 D. Begin to think about implementation Develop a budget and begin to accrue funds, if needed. Make lists of customized documents and reports If you have workflow software or a workflow diagram of your processes begin to think about where changes must occur. Develop a reasonable timeline for implementation. Take into consideration time for testing and training Start giving employees and managers general education about the rule. VII. Want to know more? A. For sample forms and training aids go to B. From CFPB You can find the 2013 Integrated Disclosures Rule on the Bureau s website at In addition to a complete copy of the January 2013 final rule, that web page also contains: The preamble, which explains why the Bureau issued the rule; the legal authority and reasoning behind the rule; responses to comments; and analysis of the benefits, costs, and impacts of the rule Official Interpretations of the rule Other implementation support materials, including annotated copies of the Loan Estimate and Closing Disclosure forms. You may also subscribe to updates about Bureau regulations and when additional implementation resources become available by signing up on the Bureau s website. Additional resources to help you understand and comply with the Dodd-Frank Act mortgage reforms and the CFPB s regulations, including downloadable compliance guides, are available through the CFPB s website at If after reviewing these materials you still have a question about how to interpret or apply specific CFPB regulations, you may submit your inquiry and request that a staff attorney contact you to provide an informal oral response. To speak to a CFPB attorney about a specific question: CFPB_RegInquiries@cfpb.gov. Include in your message the following (1) your phone number, (2) your office hours and time zone, and (3) clear details about your specific inquiry, including reference to the applicable regulation section(s). Please note the specific title, section or subject matter of the particular regulation that you are inquiring about so that we can route your inquiry to the appropriate subject matter expert. If you do not have access to the internet, you may leave this information in a voic at Texas Land Title Institute CFPB The Feds are Coming! P a g e 13

17 FEBRUARY 7, 2014 TILA RESPA Integrated Disclosure H-24(B) Mortgage Loan Transaction Loan Estimate Fixed Rate Loan Sample This is a sample of a completed Loan Estimate for a fixed rate loan. This loan is for the purchase of property at a sale price of $180,000 and has a loan amount of $162,000, a 30-year loan term, a fixed interest rate of percent, and a prepayment penalty equal to 2.00 percent of the outstanding principal balance of the loan for the first two years after consummation of the transaction. The consumer has elected to lock the interest rate. The creditor requires an escrow account and that the consumer pay for private mortgage insurance.

18 FICUS BANK 4321 Random Boulevard Somecity, ST Loan Estimate DATE ISSUED 2/15/2013 APPLICANTS Michael Jones and Mary Stone 123 Anywhere Street Anytown, ST PROPERTY 456 Somewhere Avenue Anytown, ST SALE PRICE $180,000 Save this Loan Estimate to compare with your Closing Disclosure. LOAN TERM 30 years PURPOSE Purchase ce PRODUCT Fixed Rate LOAN TYPE x Conventional FHA VA LOAN ID # RATE LOCK NO x YES, until 4/16/2013 at 5:00 p.m. EDT Before closing, your interest rate, points, and lender credits can change unless you lock the interest rate. All other estimated closing costs expire on 3/4/2013 at 5:00 p.m. EDT Loan Terms Can this amount increase after closing? Loan Amount $162,000 NO Interest Rate 3.875% NO Monthly Principal & Interest See Projected Payments below for your Estimated Total Monthly Payment $ NO Does the loan have these features? Prepayment Penalty YES As high as $3,240 if you pay off the loan during the first 2 years Balloon Payment NO Projected Payments Payment Calculation Years 1-7 Years 8-30 Principal & Interest $ $ Mortgage Insurance Estimated Escrow Amount can increase over time Estimated Total Monthly Payment $1,050 $968 Estimated Taxes, Insurance & Assessments Amount can increase over time $206 a month This estimate includes In escrow? x Property Taxes YES x Homeowner s Insurance YES Other: See Section G on page 2 for escrowed property costs. You must pay for other property costs separately. Costs at Closing Estimated Closing Costs $8,054 Includes $5,672 in Loan Costs + $2,382 in Other Costs $0 in Lender Credits. See page 2 for details. Estimated Cash to Close $16,054 Includes Closing Costs. See Calculating Cash to Close on page 2 for details. LOAN ESTIMATE Visit for general information and tools. PAGE 1 OF 3 LOAN ID #

19 Closing Cost Details Loan Costs A. Origination Charges $1, % of Loan Amount (Points) $405 Application Fee $300 Underwriting Fee $1,097 Other Costs E. Taxes and Other Government Fees $85 Recording Fees and Other Taxes $85 Transfer Taxes F. Prepaids $867 Homeowner s Insurance Premium ( 6 months) $605 Mortgage Insurance Premium ( months) Prepaid Interest ( $17.44 per day for %) $262 Property Taxes ( months) B. Services You Cannot Shop For $672 Appraisal Fee $405 Credit Report Fee $30 Flood Determination Fee $20 Flood Monitoring Fee $32 Tax Monitoring Fee $75 Tax Status Research Fee $110 G. Initial Escrow Payment at Closing $413 Homeowner s Insurance $ per month for 23mo. $202 Mortgage Insurance per month for 0 mo. Property Taxes $ per month for 2 mo. $211 H. Other $1,017 Title Owner s Title Policy (optional) $1,017 I. TOTAL OTHER COSTS (E + F + G + H) $2,382 C. Services You Can Shop For $3,198 Pest Inspection Fee $135 Survey Fee $65 Title Insurance Binder $700 Title Lender s Title Policy $535 Title Settlement Agent Fee $502 Title Title Search $1,261 D. TOTAL LOAN COSTS (A + B + C) $5,672 J. TOTAL CLOSING COSTS $8,054 D + I $8,054 Lender Credits Calculating Cash to Close Total Closing Costs (J) $8,054 Closing Costs Financed (Paid from your Loan Amount) $0 Down Payment/Funds from Borrower $18,000 Deposit $10,000 Funds for Borrower $0 Seller Credits $0 Adjustments and Other Credits $0 Estimated Cash to Close $16,054 LOAN ESTIMATE PAGE 2 OF 3 LOAN ID #

20 Additional Information About This Loan LENDER Ficus Bank NMLS/ LICENSE ID LOAN OFFICER Joe Smith NMLS/ LICENSE ID PHONE MORTGAGE BROKER NMLS/ LICENSE ID LOAN OFFICER NMLS/ LICENSE ID PHONE Comparisons In 5 Years Annual Percentage Rate (APR) Total Interest Percentage (TIP) Use these measures to compare this loan with other loans. $56,582 Total you will have paid in principal, interest, mortgage insurance, and loan costs. $15,773 Principal you will have paid off % Your costs over the loan term expressed as a rate. This is not your interest rate % The total amount of interest that you will pay over the loan term as a percentage of your loan amount. Other Considerations Appraisal Assumption Homeowner s Insurance Late Payment Refinance Servicing We may order an appraisal to determine the property s value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost. If you sell or transfer this property to another person, we will allow, under certain conditions, this person to assume this loan on the original terms. x will not allow assumption of this loan on the original terms. This loan requires homeowner s insurance on the property, which you may obtain from a company of your choice that we find acceptable. If your payment is more than 15 days late, we will charge a late fee of 5% of the monthly principal and interest payment. Refinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan. We intend to service your loan. If so, you will make your payments to us. x to transfer servicing of your loan. Confirm Receipt By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form. Applicant Signature Date Co-Applicant Signature Date LOAN ESTIMATE PAGE 3 OF 3 LOAN ID #

21 FEBRUARY 7, 2014 TILA RESPA Integrated Disclosure H-24(D) Mortgage Loan Transaction Loan Estimate Refinance Sample This is a sample of a completed Loan Estimate for a transaction that is a refinance of an existing mortgage loan that secures the property, for which the consumer is estimated to receive funds from the transaction. The estimated property value is $180,000, the loan amount is $150,000, the estimated outstanding balance of the existing mortgage loan is $120,000, and the interest rate is 4.25 percent. The consumer has elected to lock the interest rate. The creditor requires an escrow account and that the consumer pay for private mortgage insurance.

22 FICUS BANK 4321 Random Boulevard Somecity, ST Loan Estimate DATE ISSUED 2/15/2013 APPLICANTS Michael Jones and Mary Stone 123 Anywhere Street Anytown, ST PROPERTY 123 Anywhere Street Anytown, ST EST. PROP. VALUE $180,000 Save this Loan Estimate to compare with your Closing Disclosure. LOAN TERM 30 years PURPOSE Refinance ce PRODUCT Fixed Rate LOAN TYPE x Conventional FHA VA LOAN ID # RATE LOCK NO x YES, until 4/16/2013 at 5:00 p.m. EDT Before closing, your interest rate, points, and lender credits can change unless you lock the interest rate. All other estimated closing costs expire on 3/4/2013 at 5:00 p.m. EDT Loan Terms Can this amount increase after closing? Loan Amount $150,000 NO Interest Rate 4.25% NO Monthly Principal & Interest See Projected Payments below for your Estimated Total Monthly Payment Prepayment Penalty Balloon Payment $ NO Does the loan have these features? NO NO Projected Payments Payment Calculation Years 1-4 Years 5-30 Principal & Interest $ $ Mortgage Insurance Estimated Escrow Amount can increase over time Estimated Total Monthly Payment $1,026 $944 Estimated Taxes, Insurance & Assessments Amount can increase over time $206 a month This estimate includes In escrow? x Property Taxes YES x Homeowner s Insurance YES Other: See Section G on page 2 for escrowed property costs. You must pay for other property costs separately. Costs at Closing Estimated Closing Costs $5,099 Includes $3,521 in Loan Costs + $2,8 in Other Costs $500 in Lender Credits. See page 2 for details. Estimated Cash to Close $24,901 Includes Closing Costs. See Calculating Cash to Close on page 2 for details. LOAN ESTIMATE From x To Borrower Visit for general information and tools. PAGE 1 OF 3 LOAN ID #

23 Closing Cost Details Loan Costs A. Origination Charges $1,950.5 % of Loan Amount (Points) $750 Application Fee $250 Origination Fee $450 Underwriting Fee $500 Other Costs E. Taxes and Other Government Fees $80 Recording Fees and Other Taxes $80 Transfer Taxes F. Prepaids $1,585 Homeowner s Insurance Premium ( 6 months) $605 Mortgage Insurance Premium ( 1 months) $82 Prepaid Interest ( $17.71 per day for %) $266 Property Taxes ( 6 months) $632 B. Services You Cannot Shop For $635 Appraisal Fee $425 Credit Report Fee $30 Flood Determination Fee $25 Flood Monitoring Fee $45 Tax Monitoring Fee $65 Tax Status Research Fee $45 G. Initial Escrow Payment at Closing $413 Homeowner s Insurance $ per month for 23mo. $202 Mortgage Insurance per month for 23mo. Property Taxes $ per month for 2 mo. $211 H. Other $0 I. TOTAL OTHER COSTS (E + F + G + H) $2,8 C. Services You Can Shop For $936 Pest Inspection Fee $85 Title Insurance Binder $50 Title Lender s Title Policy $251 Title Settlement Agent Fee $350 Title Title Search $200 J. TOTAL CLOSING COSTS $5,099 D + I $5,599 Lender Credits $500 Calculating Cash to Close Loan Amount $150,000 Total Closing Costs (J) $5,099 Estimated Total Payoffs and Payments $120,000 Estimated Cash to Close From x To Borrower $24,901 Estimated Closing Costs Financed (Paid from your Loan Amount) $5,099 D. TOTAL LOAN COSTS (A + B + C) $3,521 LOAN ESTIMATE PAGE 2 OF 3 LOAN ID #

24 Additional Information About This Loan LENDER Ficus Bank NMLS/ LICENSE ID LOAN OFFICER Joe Smith NMLS/ LICENSE ID PHONE MORTGAGE BROKER NMLS/ LICENSE ID LOAN OFFICER NMLS/ LICENSE ID PHONE Comparisons In 5 Years Annual Percentage Rate (APR) Total Interest Percentage (TIP) Use these measures to compare this loan with other loans. $51,932 Total you will have paid in principal, interest, mortgage insurance, and loan costs. $13,788 Principal you will have paid off % Your costs over the loan term expressed as a rate. This is not your interest rate % The total amount of interest that you will pay over the loan term as a percentage of your loan amount. Other Considerations Appraisal Assumption Homeowner s Insurance Late Payment Loan Acceptance Liability after Foreclosure Refinance Servicing We may order an appraisal to determine the property s value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost. If you sell or transfer this property to another person, we will allow, under certain conditions, this person to assume this loan on the original terms. x will not allow assumption of this loan on the original terms. This loan requires homeowner s insurance on the property, which you may obtain from a company of your choice that we find acceptable. If your payment is more than 15 days late, we will charge a late fee of 5% of the monthly principal and interest payment. You do not have to accept this loan because you have received this form or signed a loan application. Taking this loan could end any state law protection you may currently have against liability for unpaid debt if your lender forecloses on your home. If you lose this protection, you may have to pay any debt remaining even after foreclosure. You may want to consult a lawyer for more information. Refinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan. We intend to service your loan. If so, you will make your payments to us. x to transfer servicing of your loan. LOAN ESTIMATE PAGE 3 OF 3 LOAN ID #

25 FEBRUARY 7, 2014 TILA RESPA Integrated Disclosure H-25(B) Mortgage Loan Transaction Closing Disclosure Fixed Rate Loan Sample This is a sample of a completed Closing Disclosure for the fixed rate loan illustrated by form H-24(B). The purpose, product, sale price, loan amount, loan term, and interest rate have not changed from the estimates provided on the Loan Estimate. The creditor requires an escrow account and that the consumer pay for private mortgage insurance for the transaction.

26 Closing Disclosure This form is a statement of final loan terms and closing costs. Compare this document with your Loan Estimate. Closing Information Date Issued 4/15/2013 Closing Date 4/15/2013 Disbursement Date 4/15/2013 Settlement Agent Epsilon Title Co. File # Property 456 Somewhere Ave Anytown, ST Sale Price $180,000 Transaction Information Borrower Seller Lender Michael Jones and Mary Stone 123 Anywhere Street Anytown, ST Steve Cole and Amy Doe 321 Somewhere Drive Anytown, ST Ficus Bank Loan Information Loan Term Purpose Product 30 years Purchase Fixed Rate Loan Type x Conventional FHA VA Loan ID # MIC # Loan Terms Can this amount increase after closing? Loan Amount $162,000 NO Interest Rate 3.875% NO Monthly Principal & Interest See Projected Payments below for your Estimated Total Monthly Payment $ NO Does the loan have these features? Prepayment Penalty YES As high as $3,240 if you pay off the loan during the first 2 years Balloon Payment NO Projected Payments Payment Calculation Years 1-7 Years 8-30 Principal & Interest $ $ Mortgage Insurance Estimated Escrow Amount can increase over time Estimated Total Monthly Payment $1, $ Estimated Taxes, Insurance & Assessments Amount can increase over time See page 4 for details $ a month This estimate includes In escrow? x Property Taxes YES x Homeowner s Insurance YES x Other: Homeowner s Association Dues NO See Escrow Account on page 4 for details. You must pay for other property costs separately. Costs at Closing Closing Costs $9, Includes $4, in Loan Costs + $5, in Other Costs $0 in Lender Credits. See page 2 for details. Cash to Close $14, Includes Closing Costs. See Calculating Cash to Close on page 3 for details. CLOSING DISCLOSURE PAGE 1 OF 5 LOAN ID #

27 Closing Cost Details Loan Costs Borrower-Paid Seller-Paid Paid by Others At Closing Before Closing At Closing Before Closing A. Origination Charges $1, % of Loan Amount (Points) $ Application Fee $ Underwriting Fee $1, B. Services Borrower Did Not Shop For $ Appraisal Fee to John Smith Appraisers Inc. $ Credit Report Fee to Information Inc. $ Flood Determination Fee to Info Co. $ Flood Monitoring Fee to Info Co. $ Tax Monitoring Fee to Info Co. $ Tax Status Research Fee to Info Co. $ C. Services Borrower Did Shop For $2, Pest Inspection Fee to Pests Co. $ Survey Fee to Surveys Co. $ Title Insurance Binder to Epsilon Title Co. $ Title Lender s Title Insurance to Epsilon Title Co. $ Title Settlement Agent Fee to Epsilon Title Co. $ Title Title Search to Epsilon Title Co. $ D. TOTAL LOAN COSTS (Borrower-Paid) $4, Loan Costs Subtotals (A + B + C) $4, $29.80 Other Costs E. Taxes and Other Government Fees $ Recording Fees Deed: $40.00 Mortgage: $45.00 $ Transfer Tax to Any State $ F. Prepaids $2, Homeowner s Insurance Premium ( 12 mo.) to Insurance Co. $1, Mortgage Insurance Premium ( mo.) 03 Prepaid Interest ( $17.44 per day from 4/15/13 to 5/1/13 ) $ Property Taxes ( 6 mo.) to Any County USA $ G. Initial Escrow Payment at Closing $ Homeowner s Insurance $ per month for 2 mo. $ Mortgage Insurance per month for mo. 03 Property Taxes $ per month for 2 mo. $ Aggregate Adjustment 0.01 H. Other $2, HOA Capital Contribution to HOA Acre Inc. $ HOA Processing Fee to HOA Acre Inc. $ Home Inspection Fee to Engineers Inc. $ $ Home Warranty Fee to XYZ Warranty Inc. $ Real Estate Commission to Alpha Real Estate Broker $5, Real Estate Commission to Omega Real Estate Broker $5, Title Owner s Title Insurance (optional) to Epsilon Title Co. $1, I. TOTAL OTHER COSTS (Borrower-Paid) $5, Other Costs Subtotals (E + F + G + H) $5, J. TOTAL CLOSING COSTS (Borrower-Paid) $9, Closing Costs Subtotals (D + I) $9, $29.80 $12, $ $ Lender Credits CLOSING DISCLOSURE PAGE 2 OF 5 LOAN ID #