TILA-RESPA INTEGRATED DISCLOSURE (TRID) AT A GLANCE COPYRIGHT 2015 AMERICAN FINANCIAL RESOURCES, INC. ALL RIGHTS RESERVED

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1 TILA-RESPA INTEGRATED DISCLOSURE (TRID) AT A GLANCE Last Revised: 8/28/2015

2 TABLE OF CONTENTS What is TRID?...3 Forms Loan Estimate - Closing Disclosure - Change of Circumstance Delivery Methods for Disclosures What is Consummation?...6 Application & Business Days...8 Imposing a Fee...9 Fees & Tolerances Record Retention...12 Resources...13 Connect With Us...14 About Us...15

3 WHAT IS TRID? The Consumer Financial Protection Bureau (CFPB) issued TILA RESPA Integrated Disclosure Rule or TRID will go into effect on 10/3/15. The purpose of TRID is to help customers understand mortgage transactions through the use of clear language in disclosures and simplifying the technical nature of the disclosure documents. TRID also ensures that consumers will have adequate time to make an informed and responsible decision regarding their home loan. While these changes provide a great benefit to consumers, creditors must be ready to adhere to new disclosures and timing requirements. WHAT DOES THAT MEAN FOR YOU? WHY TRID? TRID will change the landscape of the mortgage process from Application to Closing/Post-Closing procedures. These changes will affect the forms used, disclosure tolerances including fees and timing requirements, and general origination and operations workflow. In order to prepare for the coming changes, we have provided this TRID Roadmap to outline the key elements, how they will affect your loan process and what AFR is doing to streamline this change for you. Dodd-Frank Act: Enacted in 2010 to promote the financial stability of the United States by improving accountability and transparency in the financial system CFPB: The Consumer Financial Protection Bureau (CFPB) or The Bureau, is the agency in charge of creating and enforcing this rule as well as other Dodd-Frank Act mandates TRID: the TILA-RESPA Integrated Disclosure (TRID) is being implemented to help consumers understand the loan they are applying for 3

4 FORMS Early usage of all forms is not permitted & all applications taken on or after 10/3/15 must utilize the new disclosures (there is no grace period); for online applications, the application date is as of the date the borrower hits submit. Applications received prior to 10/3/15 are to be issued with the current GFE and TIL. These loans will also close using the existing HUD-1. Covered Transactions The TRID rule covers all closed-end transactions secured by real property. Transactions not covered by TRID include HELOC s, reverse mortgages or mortgages secured by a mobile home or by a dwelling that is not attached to real property Changes to Forms The Loan Estimate (LE) is the standard form that combines and replaces: the GFE and initial TIL It must be provided within three business days from the application and seven business days before consummation The Closing Disclosure (CD) is the new disclosure that combines and replaces the final TIL and HUD 1. The format is similar to the Loan Estimate so that consumer can easily compare them Some of the Loan Estimate requirements: No other disclosure can have the same name Must be in writing; made in good faith and based on the best information reasonably available at the time the disclosure is provided to the consumer Use due diligence in obtaining the information No fees can be charged except for a reasonable credit report fee The collection of a check or credit card info to charge after disclosing is also prohibited In a wholesale transaction, the broker can provide the consumer with the Loan Estimate but the creditor is legally responsible Some of the Closing Disclosure requirements: Must be received by the consumer at least three business days before consummation No other disclosure can have the same name A Loan Estimate cannot be provided after the Closing Disclosure has been provided 4

5 FORMS (CONT.) Additional Changes: The Loan Estimate (LE) must be in writing; made in good faith and based on the best information reasonably available at the time the disclosure is provided to the consumer. Mortgage professionals must use due diligence in obtaining the information required. No other disclosure can have the same name, no fees can be charged (except for a reasonable credit report fee in order to provide the LE), and the collection of a check or credit card info to charge after disclosing is also prohibited (Intent to Proceed). LE GENERAL REMINDERS N/A is not permitted Cross-outs are not permitted If an item is not applicable, it must be left BLANK Yes answers require an explanation Amounts rounded Alphabetical order Title fees are displayed: Title FORM DELIVERY The LE must be provided within three business days from application and seven business days prior to consummation The LE must also be RECEIVED four business days prior to consummation 5

6 FORMS (CONT.) Intent to Proceed and Changed Circumstance: A revised LE must be provided to the consumer within three business days from the changed circumstance and RECEIVED four business days before consummation. Consummation is not the same as closing or settlement; it is defined as the time that a consumer becomes contractually obligated on a credit transaction (executes the Promissory Note), and determined by the applicable state law. Remember, a revised Loan Estimate cannot be issued after the Closing Disclosure. INTENT TO PROCEED The consumer must express the Intent to Proceed within ten business days from the LE: Signed and dated disclosure Silence is not an indication Fees cannot be charged If the consumer does not express the Intent to Proceed within the ten standard business days: Changed Circumstance Revised LE CHANGED CIRCUMSTANCE Changed Circumstance Affecting Settlement Charges Natural Disaster, provider goes out of business, or new info Changed Circumstance Affecting Eligibility Revisions Requested by the Consumer Interest Rate Dependent Charges Rate Lock Expiration Intent to Proceed Delayed Settlement Date on a New Construction Loan Meet certain requirements 6

7 FORMS (CONT.) Closing Disclosure: At a glance, the Closing Disclosure (CD) is in similar format to the Loan Estimate. The CD must be RECEIVED at least three business days prior to consummation (mailbox rule applies) and does not allow certain aesthetic modifications such as N/A or cross outs; these fields must be left BLANK. THE CLOSING DISCLOSURE Is prepared and provided by AFR Closing agent provides to seller A revised CD will be provided at or prior to consummation After the CD has been provided, the three business day waiting period resets if: The APR becomes inaccurate There is a change in loan product A prepayment penalty is added FORM DELIVERY If in person Must be received within three business days If mailed Must be received within three business days Consummation: Must be mailed a week before (express mail: receipt must be documented) If delivered electronically Received within three business days Consummation: must have proof of earlier delivery 7

8 APPLICATION The definition of an Application has been revised. As of 10/3/15, the Loan Estimate (LE) must be provided to the consumer or placed in the mail within three business days of receiving SIX PIECES of INFORMATION from the consumer. 6 PIECES OF INFORMATION WHAT IS A BUSINESS DAY? A - Address L - Loan Amount I - Income (use the acronym ALIENS) E - Estimated Value of the Property N - Name S - Social Security Number NOTE: All six pieces can be collected at once or piece by piece. Other information can be requested to the consumer, but are NOT required in order to provide the Loan Estimate For purposes of issuing the Loan Estimate: The Loan Estimate must be provided within three standard business days. Standard Business Days are Monday through Saturday except AFR s holidays: New Year s Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Thanksgiving Day, and Christmas Day For purposes of Consummation and Rescission: The final Loan Estimate must be received by the consumer four alternate business days prior to Consummation and the Closing Disclosure must be received by the consumer three alternate business days prior to Consummation. Alternate Business Days are all calendar days except Sundays and the legal public holidays: New Year s Day, Martin Luther King Birthday, Washington Birthday, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, and Christmas Day 8

9 IMPOSING A FEE According to the CFPB, creditors or other persons 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 their Intent to Proceed with the transaction. This restriction includes limits on imposing application fees, appraisal fees, underwriting fees and other fees imposed on the consumer. The only exception to this exclusion is for a bona fide and resonable fee for obtaining a consumer s credit report. WHAT DOES THIS MEAN? You may not take a consumer s credit card number or payment option prior to the consumer receiving the Loan Estimate and indicating the intent to proceed with the loan transaction. Further, you will not be able to order the appraisal on their behalf, prior to the consumer receiving the Loan Estimate and indicating their intent to proceed with the loan transaction The consumer may indicate their intent to proceed with the loan transaction, and the key is to document that intent. AFR requires the borrower(s) to provide a signed and dated intent to proceed disclosure to document that the borrower(s) intent to proceed (the intent must be within 10 business days from the LE) 9

10 FEES & TOLERANCES TRID imposes several revised tolerances. One key change in the tolerances is that the services listed under the Services You Cannot Shop For section of the Loan Estimate such as the appraisal, credit report, and flood are now subject to 0% tolerances. These charges cannot increase at closing. Careful consideration is required when determining the amounts of these fees; especially in the wholesale market. FEE TOLERANCES TOLERANCES EXPLAINED The goal is to use the best information available at the time, thus, in good faith. These fee tolerance can be broken down into three categories: Zero Tolerance 10% Tolerance No Tolerance The new rule sets out a new standard for what will be considered a good faith estimate. It also establishes more stringent tolerances for the disclosure of all fee types associated with the origination and closing process. Generally, this means that fees at the time of closing cannot exceed those at application Zero Tolerance Fees paid to creditor, broker, or affiliate of either Unaffiliated 3rd party fees consumer was not allowed to shop Transfer taxes 10 % Tolerance Recording fees Aggregate of 3rd party charges paid by consumer (aggregate of 3rd party charges where the consumer was allowed to shop and selected a provider from the Written List of Service Providers) No Tolerance Prepaid interest, property insurance, and amounts in escrow Charges paid for 3rd party services that are not required by the creditor, even if paid to an affiliate of the creditor or broker If creditor permits consumer to shop and consumer selects 3rd party provider not on the Written List of Service Providers 10

11 FEES & TOLERANCES Lender-Paid Broker Compensation: Only borrower-paid broker compensation appears on the Loan Estimate. Lender-paid broker compensation cannot be included. Lenders will have to verify compliance through other means (e.g., certification). Lender-paid broker compensation disclosed on the Closing Disclosure as Paid by Others CLOSING COST DETAILS Broker Fee (XYZ Broker) $4,050 (L) 11

12 RECORD RETENTION REQUIREMENTS What are the record retention requirements for the TRID rule? Both mortgage brokers and lenders must retain records of the Loan Estimate for a period of 3 years from the date the loan was consummated, not the date the LE was issued. The creditor must retain copies of the Closing Disclosure (and all documents related to the Closing Disclosure) for five years after consummation. The creditor, or servicer if applicable, must retain the Post-Consummation Escrow Cancellation Notice (Escrow Closing Notice) and the Post-Consummation Partial Payment Policy disclosure for two years. For all other evidence of compliance with the Integrated Disclosure provisions of Regulation Z (including the Loan Estimate) creditors must maintain records for three years after consummation of the transaction. IS THERE A REQUIREMENT ON HOW THE RECORDS ARE RETAINED? Regulations X and Z permit, but do not require electronic recordkeeping. Records can be maintained by any method that reproduces disclosures and other records accurately, including computer programs If a creditor sells, transfers, or otherwise disposes of its interest in a mortgage and does not service the mortgage, the creditor shall provide a copy of the Closing Disclosure to the new owner or servicer of the mortgage as a part of the transfer of the loan file. Both the creditor and such owner or servicer shall retain the Closing Disclosure for the remainder of the five-year period. 12

13 RESOURCES This document is current as of August 11, This document does not represent legal interpretation, guidance or advice from the any of the sponsors, speakers or promoters, including American Financial Resources, Inc. (AFR Wholesale). While efforts have been made to ensure accuracy, this document is not a substitute for the rule. Only the rule and its official Interpretations can provide complete and definitive information regarding requirements. This document does not bind any of the speakers or their companies and does not create rights, benefits, or defenses, substantive or procedural that are enforceable by any party in any manner. RESOURCES TILA-RESPA Integrated Disclosure Rule Consumer Financial Procetion Bureau ARCH MI EllieMae 13

14 ABOUT US AMERICAN FINANCIAL RESOURCES, INC. American Financial Resources, Inc. (AFR), the corporate entity for AFR Wholesale ( and elend ( is a national residential mortgage lender dedicated to helping homeowners, home buyers, and mortgage professionals achieve their financing goals by delivering innovative mortgage solutions and an unparalleled customer experience. Based in Parsippany, NJ, American Financial Resources, Inc. (est. 1997) is a Ginnie Mae, Fannie Mae and Freddie Mac Seller / Servicer, FHA Mortgagee, USDA National Lender and VA Automatic Lender. AFR has proven itself a pioneer in the mortgage lending industry, offering an extensive program suite, eclectic business-to-business (B2B) channels of operations, and multiple divisional expansions. AFR offers several methods of doing business with dedicated sales and operations support. Flexible business relationships give you the freedom to choose your preferred submission method on a loan-level basis. AFR Lending Channels include Wholesale Brokered, Wholesale Direct (offering free processing), Table Funded, Correspondent Delegated (flow or bulk) and Correspondent Non-Delegated options. COMPANY HIGHLIGHTS RANKED #1 IN 203(K) LENDING FOR SPONSORED ORIGINATIONS DIVERSE FINANCING OPTIONS INCLUDING FHA, VA, USDA, FANNIE MAE AND FREDDIE MAC RENOVATION AND MANUFACTURED HOME FINANCING OPTIONS AVAILABLE LOW CREDIT REQUIREMENTS AND MINIMAL OVERLAYS HIGH LEVELS OF CUSTOMER SERVICE THROUGHOUT THE LOAN PROCESS MAXIMIZE PROFITABILITY WITH NO LENDER FEES* *No Lender Fees only applies to AFR s Wholesale Brokered, Wholesale Direct, and Table Funded lending channels. This does not include Correspondent Delegated or Correspondent Non-Delegated lending channels. 14

15 CONNECT WITH US AMERICAN FINANCIAL RESOURCES, INC. If you are a Mortgage Lender new to American Financial Resources, Inc. Wholesale Division (AFR Wholesale), we welcome the opportunity to discuss our programs with you. For our current Lending Partners, we want to hear from you. Please contact us directly with your comments, questions and, feedback. VISIT US LINKEDIN CALL US TOLL FREE: FACEBOOK US TWITTER LIVE CHAT WITH US VISIT OUR WEBSITE FOR THE FULL DEPARTMENT LIST 15

16 ATTRIBUTIONS TRID AT A GLANCE Photography by: [David Carillet] 123RF.com Illustrations by: [Jozef Mičic] 123RF.com [Khanisorn Chalermchan] 123RF.com 16

17 THANK YOU AFRWHOLESALE.COM