THE NEW TILA/RESPA INTEGRATED DISCLOSURES IN PLAIN ENGLISH TRID Workshop Finals E F F E C T I V E October 3 rd, 2 0 1 5
WHAT YOU WILL LEARN The basics Coverage Exemptions Effective immediately Key definitions The new integrated disclosure forms Formatting Rounding Preliminary worksheets Record retention Disclosure and fee timing E-SIGN applicability Intent to proceed How to complete the new Loan Estimate How to complete the new Closing Disclosure Additional considerations Workshop 2
WHAT IT S ALL ABOUT Out with the old, in with the new Loan Estimate GFEand the early TIL Closing Disclosure HUD-1/1A and Final TIL RESPA vs. Regulation Z Look to Regulation X (RESPA) for completing current (2010) forms Look to Regulation Z for completing new forms Private right of action RESPA vs. Regulation Z 3
REGULATORY CHANGES 2015. TriNovus, LLC, A Temenos Company Regulation Z (12 CFR1026) 1026.1 Coverage 1026.2 Definitions 1026.3 Exemptions 1026.17 General Disclosure Requirements 1026.18 Content of Disclosures 1026.19 Certain Mortgage and Variable Rate Transactions 1026.20 Disclosure RequirementsRegarding Post-consummation Events 1026.22 APRAccuracy 1026.24 Advertising 1026.25 Record Retention 1026.37 Loan Estimate 1026.38 Closing Disclosure 1026.39 Scope Appendix D Construction Advances Appendix H Closed end Formsand Clauses RESPA (12 CFR1024) 1024.5 Coverage 1024.30 Mortgage Servicing Scope 1024.33 Mortgage Servicing Transfers Appendix A Instructionsfor Completing the HUD 1/1A Appendix B Illustrations of Requirements of RESPA Appendix C Instructionsfor completing the GFE 4
COVERAGE Coverage Closed end loan secured by real property Except Reverse mortgages subject to 1026.33 Does not apply to: Mobile home only loans No dirt HELOCs Acreage of any amount for business purpose Which applications Applications received on or after October 3, 2015 Applications received prior to effective date that are consummated, withdrawn or cancelled Generally, must use new forms May not use before effective date May use for non-covered transactions If new formis not required, use current GFE/HUD and TIL, as applicable 5
NOT EXEMPT FROM NEW FORMS NOTexempt: Loans on secured properties covering 25 acres or more that are for a consumer purpose Personal, family or household purposes Vacant land Construction only loans Regardless of transfer of title to the first user Certain trusts Consumer purpose Personal, family or household trusts established for tax or estate planning purposes is considered to be extended to a natural person rather than to an organization even if a legal entity 6
EFFECTIVE IMMEDIATELY (Octobrer 3rd, 2015*) Regardless of when the application was received, may not: Impose a fee before Loan Estimate or GFE (as applicable) has been received by consumer and intent to proceed indicated May charge reasonable credit report fee Must document the intent to proceed No model form No collecting post-dated checks or credit card numbers in advance for other fees or charges Provide written estimate of terms or costs before consumer receives Loan Estimate unless provide written statement informing consumer terms and costs may change Must use language in Model form H-26 Require consumer to submit documents verifying information before providing Loan Estimate or GFE (as applicable) 7
KEY DEFINITIONS Application 1. Name 2. Monthly income 3. SSN 4. Property address 5. Estimated value of the property 6. Loan amount Triggers timing for Loan Estimate disclosure No additional items permitted to be considered an application for triggering requirement to provide LE May add additional requirements for credit-decisioning But not for providing the Loan Estimate Be sure to update your policy and procedures 8
WHAT IS AN APPLICATION? TriComply TRID Quick Compliance Guide 2015. TriNovus, LLC, A Temenos Company 9
KEY DEFINITIONS Business Day Different definitions apply Loan Estimate Provide Loan Estimate/Revised LE Any day in which creditor soffices are open to public for carrying out substantially all of its businessfunctions Receive at least (7) BusinessDays prior to consummation All calendar days except Sundays and legal public holidays Closing Disclosure All calendar days except Sundays and legal public holidays Rescission definition of a businessday 10
KEY DEFINITIONS Consummation Consumer becomes contractually obligated to the creditor on the loan Based on State law vs. Closing Generally, when documents are signed by the consumer Could be same as consummation => check State law Generally, dates under TRID are tied to consummation date Closing date on CD enter consummation date Know your state law definitions 11
KEY DEFINITIONS Finance charge Finally, a break no changes! 12
KEY DEFINITIONS Product Comprised of (2) features Description of loan features that may change the periodic payment Disclose only the first applicable loan feature in the order the following features: Negative amortization Interest only Balloon payment Step payment Seasonal payment Description of the interest rate Adjustable rate Stepped rate Fixed rate Except for Seasonal payment and Fixed rate, description must be preceded by the duration of any introductory rate or payment period, and the first adjustment period, as applicable Examples 5/3 Adjustable rate (if no loan feature and only interest rate feature with introductory period) 0/3 Adjustable rate (if no loan feature and no introductory period) Fixed rate (if no loan feature) 5 Year Interest Only, Fixed Rate (with loan feature) Year 7 Balloon Payment, 3/1 Step Rate Rounding rules apply: > 24 months, use years up to (2) decimal points (e.g., 66 months = 5.5 years < mo./18mo. 24 months, Adjustable not whole Rate years, use mo. (e.g., 18 13
FORMATTING Standard forms required Loan Estimate baseline Model Form H-24 Closing Disclosure baseline Model Form H-25 Additional standard forms provided for permissive changes Clear and conspicuous (legible and in a readily understandable form); in writing; and grouped together, segregated from everything else, and provided on (physically) separate pages that are not commingled with any other documents or disclosures, including any other disclosures required by State or other laws State law disclosures must be physically separate from LE/CD May not include is same pdf file May not include any other information unless expressly permitted 14
FORMATTING Must use designated order and grouping May omit certain non-applicable sections May not omit all, even if not applicable So... Check twice before you do! Some itemsare to be left blank if not applicable Some require enter zero 0 if not applicable Rounding rules TriComply TRID Quick Compliance Guide Page Options More on that later when we get to the actual forms Addenda Very limited circumstances where an addendum is permitted Must have format similar to LE/CD Must use same terminology as in applicable section TriComply TRID Quick Compliance Guide 15
FORMATTING Who writes this stuff? 2015. TriNovus, LLC, A Temenos Company (4) ROUNDING (i) Nearest dollar. (A)The dollar amounts required to be disclosed by paragraphs (b)(6) and (7), (c)(1)(iii), (c)(2)(ii) and (iii), (c)(4)(ii), (f), (g), (h), (i), and (l) of this section shall be rounded to the nearest whole dollar, except that the per diem amount required to be disclosed by paragraph (g)(2)(iii) of this section and the monthly amounts required to be disclosed by paragraphs (g)(3)(i) through (iv) of this section shall not be rounded. (B) The dollar amount required to be disclosed by paragraph (b)(1) of this section shall not be rounded, and if the amount is a whole number then the amount disclosed shall be truncated at the decimal pointṭricomply TRID (C) The dollar amounts required to be disclosed by paraq gr u a i p c h k (c)(2)(iv) of this section shall be rounded to the nearest whole dollacro, imf apnlyiaonfctehe component amounts are required by paragraph (o)(4)(i)(a) of this G s u e i c d tio en to be rounded to the nearest whole dollar. (ii) Percentages. The percentage amounts required to be disclosed under paragraphs (b)(2) and (6), (f)(1)(i), (g)(2)(iii), (j), and (l)(3) of this section shall not be rounded and shall be disclosed up to two or three decimal places. The percentage amount required to be disclosed under paragraph (l)(2) of this section shall be disclosed up to three decimal places. If the amount is a whole number then the amount disclosed shall be truncated at the decimal point. Watch for what is rounded and what is not Always be careful on escrow payments Rounding up a cushion could cause a violation 16
FORMATTING: PRELIMINARY ESTIMATES/WORKSHEETS Preliminary worksheets or estimates May provide preliminary worksheet or estimate Must avoid worksheets that could create confusion and cause the consumer to think it is the Loan Estimate form Expressly prohibited to use model Loan Estimate form headings, content and format substantially similar Mandatory disclosure - H-26 Clear and legible text and uses the required formatting, including bold font Must be on the top of the page May not be smaller than 12-point font Changes that are not expressly permitted may cause loss of protection from civil liability under TILA Model Form H-26: Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan. 17
RECORD RETENTION Loan Estimate Must maintain records of compliance with LEfor (3) years after the later of: Date of consummation, Date disclosures are required to be made, or Date the action is required to be taken Closing Disclosure Must maintain records of compliance with CD for (5) years after consummation Includes all documents related to CD Transfer of Servicing If sell, transfer or otherwise dispose of interest in a mortgage and no longer services the loan, Must provide a copy of Closing Disclosure to new servicer as part of loan file New servicer required to retain CD for remainder of 5-year period Originator must still retain for 5-year period after consummation You may retain records by any method that reproduces the disclosures and other records accurately 18
TIMING GENERAL RULES TRICOMPLY TRID QUICK COMPLIANCE GUIDE Application Initial Loan Estimate Impose Fees/Charges Revised LE Closing Disclosure Revised CD Right to inspect CD Receive (6) Items, LE triggered Must be delivered or placed in mail within (3) business days of application Must provide LE and receive intent to proceed before charging any fee other than a credit report fee Generally, within (3) business days of valid changed circumstance; Consumer must receive no later than (4) business days prior to closing; May not provide once CD is issued Must be received at least (3) business days prior to closing Must be received at least (3) business days prior to closing if: > APR out of tolerance, add prepayment penalty or product change; > Else, at or before closing for all other changes Changes post closing = Provide within 60 days (30 days to find issue) Consumer may request to view (1) business day prior to consummation 2015. TriNovus, LLC, A Temenos Company Waivers Waiting periods (7 business days for LE and 3 business days for CD) may be waived for bona fide personal financial emergency 19
FEE TIMING Except for a reasonable credit report fee No other fee may be charged or imposed until consumer receives and indicates an intent to proceed No posted dated check No collecting credit card information to later be charged if intent to proceed X X 20
TIMING: E-SIGN APPLICABILITY Electronic delivery of LE and CD Subject to E-SIGN Must complete all components of E-SIGN before sending electronically Notice, consent, and reasonably demonstrate If disclosure subject to E-SIGN, sent electronically without completing E-SIGN, not considered delivered even if consumer prints and sends back to you If disclosure or required document is delivered electronically, mailbox rule applies It is considered delivered 3 business days after you send it just asif you put in snail mail Except Consumer may notify you that disclosure/document was indeed received Closes the time clock for waiting 3, 4, or 7 businessdays as may be applicable under the timing rules Do not assume applicant will indeed complete E-SIGN; you must still deliver timely 21
TIMING: E-SIGN DELIVERY For example If applicant completes E-SIGN on personal tablet while applying in institution, may deliver/email LE Applicant applies on Monday, indicating that they will complete E-SIGN when they get home; you email LETuesday; applicant actually does not complete E-SIGN until Friday LEis late as it was not delivered within 3 businessdays of application (Thursday) LE is not all $0 for CD Unlike current (2010) = no cost loan: Subject to regulator penalties ($4,000 per; up to $1million per missed timing) Subject to consumer private right of action / civil liability 22
TIMING: INTENT TO PROCEED Must document consumer sintent to proceed Consumer may show his or her intent to proceed in any manner he or she chooses unless your institution s policy requires a specific form/processof communication from consumer to show intent to proceed No model formprovided Not subject to E-SIGN Must provide LE first No new or additional intent to proceed for revised LE or CD As long as you verify intent first Be sure to add this step to your Monitoring / Audit schedule, too 23
INTENT TO PROCEED Must be documented No model form Documentation could be memo in file or in loan system notes file Best practice recommendation Have a consistent formand process to avoid violationsfor missing documentation Do not use post-it notes Not subject to E-SIGN 24
LOAN ESTIMATE TRID Workshop Finals 25
LOAN ESTIMATE Baseline Model FormH-24 = Standard Form Good faith estimate of costs of credit and transaction termsconsistent with the best information reasonably available to the creditor at the time disclosed To determine good faith: Look at difference between estimated chargesoriginally provided LEand actual chargespaid by or imposed on the consumer Generally, if the charge paid by or imposed on consumer exceedsamount originally disclosed on LE, not in good faith True regardlessof whether creditor later discovers technical error, miscalculation, or underestimationof a charge Except fallswithin Tolerances (all amounts must still be made based on best information available at time LE issued) More on Tolerancesand Changed Circumstance later If mortgage broker receives initial application, either creditor or mortgage broker may provide Creditor is responsible for ensuring LEcomplieswith the content and delivery requirements You may not contract away your obligations Be careful on who you rely on They will not be the one sitting in front of your regulator during an exam 26
LOAN ESTIMATE H-24(A) Mortgage Loan Transaction Loan Estimate Model Form STANDARD FORMS H-24(B) H-24(C) H-24(D) H-24(E) H-24(F) H-24(G) Mortgage Loan Transaction Loan Estimate Fixed Rate Loan Sample Mortgage Loan Transaction Loan Estimate Interest Only Adjustable Rate Loan Sample Mortgage Loan Transaction Loan Estimate Refinance Sample Mortgage Loan Transaction Loan Estimate Balloon Payment Sample Mortgage Loan Transaction Loan Estimate Negative Amortization Sample Mortgage Loan Transaction Loan Estimate Modification to Loan Estimate for Transaction Not Involving Seller Model Form 2015. TriNovus, LLC, A Temenos Company 27
LOAN ESTIMATE: PAGE OPTIONS Page 1 Page 2 Page 3 Sales Price (with a Seller) Estimated Prop. Value (without a Seller, e.g., refi) Fixed rate With Adjustable Payment (AP) Table and Adjustable Interest Rate (AIR) Table Loan Acceptance vs. Confirm Receipt Homeowners insurance not required With AP Table only Liability after Foreclosure (refinance loan secured by that property) With AIR Table only Appraisal notice 28
THE NEW LOAN ESTIMATE FORM Complete set provided in materials 2015. TriNovus, LLC, A Temenos Company 29
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LOAN ESTIMATE - PAGE 1 Key sections Heading information Loan Terms Projected Payments Costs at closing CFPB website reference (2) options Sales Price (Seller transaction) Estimated Prop. Value (No Seller) 31
LE PAGE 1: HEADING INFORMATION Estimated Prop. Value Line added to show data required 32
LE PAGE 1 - HEADING INFORMATION PURCHASE TRANSACTION 1 Examples A 3 1 = Logo okay if fits 2 = SP vs. EPV 3 = Time Zone A = Addenda permitted 2 NON-PURCHASE TRANSACTION (NO SELLER INVOLVED) 2015. TriNovus, LLC, A Temenos Company 33
LE PAGE 1: LOAN TERMS 34
LE PAGE1 - LOAN TERMS PREPAYMENT PENALTY Must use specific terms EXAMPLES ADJUSTABLE RATE Adjust the frequency to reflect actual unitperiod, i.e., Quarterly, Bi-weekly, etc BALLOON PAYMENT Must state balloon amount and what year 2015. TriNovus, LLC, A Temenos Company 35
LE PAGE 1: PROJECTED PAYMENTS 36
LE PAGE1 - PROJECTED PAYMENTS FIXED RATE WITH PMI WITH ESCROW PMI drops off EXAMPLES INTEREST ONLY WITH ADJUSTABLE RATE WITHOUT ESCROW FIXED RATE WITH BALLOON PAYMENT Monthly estimate required even though NO Escrow 2015. TriNovus, LLC, A Temenos Company Balloon always goes in last column when due at end of term 37
LE PAGE 1: COSTS AT CLOSING (2) options Standard = with seller Alternate = without seller STANDARD (blank) ALTERNATE 38
LEPAGE 1 COSTS AT CLOSING STANDARD, PURCHASE TRANSACTION EXAMPLES ALTERNATE MUST BE USED IF USE ALTERNATE CALCULATING CASH TO CLOSE ON PAGE2 REFINANCE WITH CASH OUT NO SELLER Cash To/ FromBorrower 2015. TriNovus, LLC, A Temenos Company 39
LE PAGE 1: WEBSITE REFERENCE EXAMPLE Required Optional Administrative Information 40
LE PAGE 2: CLOSING COST DETAILS Options Calculating Cash to Close with Seller Calculating Cash without Seller No AP or AIR AP only AIRonly AP and AIR 41
LEPAGE 2: CLOSING COST DETAILS Origination Charges LOAN COSTS Maximum of (13), including Points -ALPHA ORDER - TITLE -WRITTEN LIST OF PROVIDERS Services You Cannot Shop For Maximum of (13) ServicesYou Can Shop For Maximum of (14) Must provide WrittenList of Providers with at least one (1) provider 2015. TriNovus, LLC, A Temenos Company Total Loan Costs 42
LEPAGE 2: LOAN COSTS With points and origination fee With points and no origination fee EXAMPLES Never delete _% Loan Amount (Points), even if $0 ; must leave blank LLPAs are origination charges Fees must be in Alphabetical Order Sum rolls up Title products always begin with Title 2015. TriNovus, LLC, A Temenos Company 43
EXAMPLE WRITTEN LIST OF PROVIDERS CAN SHOP FOR * MUST BE SEPARATE FROM THE LOAN ESTIMATE 2015. TriNovus, LLC, A Temenos Company 44
LEPAGE 2: OTHER COSTS Taxes& Other Gov t Fees OTHER COSTS Maximum of (3) more Prepaids Initial Escrow @ Closing Maximum of (5) more Maximum of (5) Other Title Owner stitle Policy (optional) Total Other Costs 2015. TriNovus, LLC, A Temenos Company 45
LE PAGE 2: OTHER COSTS EXAMPLES PURCHASE WITH NO MIP OR ESCROW Must include Owner stitle on Purchase 1 PURCHASE WITH NO ESCROW 4 REFINANCE WITH MIP, ESCROW No Owner stitle required onrefi 5 2 3 3 6 1) No MIP 2) With escrow 3) Purchase = Owner stitle 4) No escrow 5) With MIP 6) Refinance = No owner stitle 46
LE PAGE 2: CALCULATING CASH TO CLOSE Alternate Cash to Close (No Seller) Citation: (d)(2) 47
LEPAGE 2: CALCULATING CASH TO CLOSE STANDARD, PURCHASE EXAMPLES ALTERNATE CALCULATING CASH TO CLOSE (NO SELLER) CASH OUT REFINANCE 2015. TriNovus, LLC, A Temenos Company ALTERNATE MUST BE USED IF USE ALTERNATE COSTS AT CLOSING ON PAGE 1 48
LE PAGE 2: AP AND AIR TABLES Options AP only AIR only AP and AIR No AP and No AIR 49
LEPAGE 2: AP AND AIR TABLES PURCHASE INTEREST ONLY, ADJUSTABLE RATE EXAMPLE 2015. TriNovus, LLC, A Temenos Company 50
LOAN ESTIMATE - PAGE 3 Additional Information About this Loan Key Sections Heading information Comparisons Other Considerations Confirm Receipt Options Appraisal May remove promptly if not subject to Regulation B appraisal notice For example, 2 nd lien Homeowner sinsurance Loan Acceptance vs. ConfirmReceipt Liability after Foreclosure Refinance only ConstructionLoans You may receive a revised Loan Estimate at any time prior to 60 days before consummation. 51
LEPAGE 3: HEADING INFORMATION EXAMPLE 52
LE PAGE 3: COMPARISONS 53
PAGE 3: LOAN ESTIMATE COMPARISONS FIXED RATE EXAMPLES INTEREST ONLY, ADJUSTABLE RATE 5/1 2015. TriNovus, LLC, A Temenos Company 54
HOW TO CALCULATE A TIP 55
CALCULATING THE TOTAL INTEREST PERCENTAGE (TIP) Definition Total amount of interest consumer will pay over loan term, expressed as a percentage of the loan amount Example If the Loan Amount is $100,000 and the total amount of interest that the consumer will pay over the Loan Termis $50,000, then the TIP is 50% ($50,000/$100,000) 56
LET S TRY THAT AGAIN CALCULATING THE TIP Loan Amount $ 162,000.00 Term of loan in months 360 Monthly Payment $ 761.78 Total P&I payments (Monthly Payment * $ 274,240.80 360)= Total amount of interest from amortization schedule based on 360/365 $ 112,242.27 accrual basis= Plus Pre-paid Interest paid at closing (from Closing Disclosure $ 279.04 Other Costs, Block F Prepaids, Line 03)= Total Interest Paid (Sum of Total Interest from amort schedule plus $ 112,521.31 prepaid interest)= Total Interest Paid / Loan Amount * 1 (rounded to 2 decimals) as a 69.46% percentage Do not include Pointspaid in TIPcalculation (TIP) (based on CFPB scalculated # s) Be sure to use your actual accrual basis 57
LE PAGE 3: OTHER CONSIDERATIONS (m) ConstructionLoans You may receive a revised Loan Estimate at any time prior to 60 days before consummation. 58
LEPAGE 3: CONFIRM RECEIPT VS. LOAN ACCEPTANCE (n) 59
PAGE 3: LOAN ESTIMATE REFINANCE: LOAN ACCEPTANCE, LIABILITY AFTER FORECLOSURE Permitted to remove promptly if not subject to Regulation B appraisal rules e.g., 2 nd lien EXAMPLE ConstructionLoans You may receive a revised Loan Estimate at any time prior to 60 days before consummation. 2015. TriNovus, LLC, A Temenos Company Required Order of Disclosures if all disclosures apply and no Confirm Receipt 60
PAGE 3: LOAN ESTIMATE REFINANCE WITH NO APPRAISAL OR HO INSURANCE, CONFIRM RECEIPT EXAMPLE 2015. TriNovus, LLC, A Temenos Company 61
REVISED LOAN ESTIMATE General Rule Bound by Loan Estimate and May not issue revisions because later discover technical errors, miscalculations, or underestimations of charges Permitted only in certain specific circumstances Changed circumstances occurs: After LE provided and event causes settlement charges to increase more than permitted After LEprovided affects consumer seligibility for terms applied for (creditworthiness) or value of collateral Consumer requests revisions Interest rate not locked when LE provided, and locking rate causes pointsor lender credits disclosed to change Consumer indicates intent to proceed more than 10 business days after LE originally provided New construction loan and settlement is delayed Subject to having provided special construction statement on original LE 62
VALID CHANGED CIRCUMSTANCE Changed circumstance means: An extraordinary event beyond control of any interested party or other unexpected event specific to consumer or transaction; Information specific to consumer or transaction that creditor relied upon when providing LE and that was inaccurate or changed after LE provided; or New information specific to consumer or transaction that creditor did not rely on when providing the original LE Must have acted in good faith 63
CHANGED CIRCUMSTANCE Must document Original estimate Reason for revision How affected costs Only increased to extent of change Timing requirementsmet (within 3 businessdays of aware of change/triggering event) No model form 64
REVISED LOAN ESTIMATE & THE TOLERANCES Revised Loan Estimate Event causes settlement fees to increase more than permitted Event does not increase fees or increase less than permitted Zero Tolerance 10% Tipping Point Unlimited/Not subject to tolerance Rate Lock Required vs. Good faith 65
TOLERANCE & REVISED DISCLOSURE TIPPING POINT 10% Tolerance CC#1:If valid changed circumstance but increase in fees does not exceed 10% of the aggregate fees originally disclosed on the LE, comparison on CD will reflect original amounts (not revised) on LEto final amounts For example, valid CC but total of fee increase is 5% of aggregate 10% bucket originally disclosed; no revised LEor fees CC#2: A 2 nd valid changed circumstance occurs and the aggregate of fees from this change is still under 10%, but when aggregate with CC#1, total now exceeds 10% tolerance = Revised LEand fees adjust for comparison to final amounts on CD 66
LET S LOOK AT THE MATH: ASSUME 10% BUCKET FEESTOTAL $2,500 ON ORIGINAL LE CHANGED CIRCUMSTANCE #1 CHANGED CIRCUMSTANCE#2 Survey fee changed from $200 to $400 because home on farmvs. SFR(valid changed circumstance) $200 price difference = 8% (200/2500=0.08x100=8%) CC#1 did not exceed 10% bucket, so no revised LEand compare original $200 to final amount of $400 on CD Unknown lien discovered causing additional title work; title services fees increase from $400 to $500 $100 price difference = 4% (100/2500=0.04x100=4%) Now because 8% + 4% = 12%, tipped the 10% bucket Re-issued revised LEfor both #1 and #2 10% bucket re-set Where aggregate of the (2) valid changed circumstances is now $300 or 12% of fees subject to 10% tolerance bucket, the tipping point has been reached Issue revised LEfor both the survey and the title work Within3 business days of tipping point 67
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CLOSING DISCLOSURE TRID Workshop Finals 69
CLOSING DISCLOSURE (CD) Baseline Model FormH-25 = Standard Form Reflect actual costsand terms of credit Certain changes are permitted when necessary to describe the actual terms of the loan (e.g. payment periods or additional line items for costs) May not be modified to state N/A even if you never offer a particular product Either creditor or mortgage broker may provide Creditor is responsible for ensuring CD complies with the content and delivery requirements You may contract with settlement agent to provide CD But lender still responsible for accuracy Settlement agent must provide CD to the Seller May provide revised CD only in certain circumstances May not provide revised LE once CD is provided Cures more on that later Be careful on who you rely on They will not be the one sitting in front of your regulator during an exam 70
CLOSING DISCLOSURE STANDARD FORMS H-25(A) Mortgage Loan Transaction Closing Disclosure Model Form H-25(B) Mortgage Loan Transaction Closing Disclosure Fixed Rate Loan Sample H-25(C) Mortgage Loan Transaction Closing Disclosure Borrower Funds from Second- Lien Loan in Summaries of Transactions Sample H-25(D) Mortgage Loan Transaction Closing Disclosure Borrower Satisfaction of Seller s Second-Lien Loan Outside of Closing in Summaries of Transactions Sample H-25(E) Mortgage Loan Transaction Closing Disclosure Refinance Transaction Sample H-25(F) Mortgage Loan Transaction Closing Disclosure Refinance Transaction Sample (amount in excess of 1026.19(e)(3)) H-25(G) Mortgage Loan Transaction Closing Disclosure Refinance Transaction with Cash from Consumer at Consummation Sample 2015. TriNovus, LLC, A Temenos Company H-25(H) Mortgage Loan Transaction Closing Disclosure Modification to Closing Cost Details Model Form H-25(I) Mortgage Loan Transaction Closing Disclosure Modification to Closing Disclosure for Disclosure Provided to Seller Model Form H-25(J) Mortgage Loan Transaction Closing Disclosure Modification to Closing Disclosure for Transaction Not Involving Seller Model Form 71
CLOSING DISCLOSURE: PAGE OPTIONS Page 1 Page 2 Page 3 Page 4 Page 5 Sales Price (with a Seller) Appraised Prop. Value (no Seller) Estimated Prop. Value (no appraisal) Borrower with Seller Borrower without Seller Replace Summaries of Transactions with Payoffs and Payments Alternate cash to close table (no Seller) Fixed rate With Adjustable Payment (AP) Table and Adjustable Interest Rate (AIR) Table Loan Acceptance vs. Confirm Receipt Liability after Foreclosure for a refinance loan secured by that property Seller-side only With AP Table only Appraisal notice Loan Costs and Other Costs each as a single page (p. 2a and 2b) With AIR Table only 72
THE CLOSING DISCLOSURE STANDARD FORMS Complete set of formsprovided in materials 2015. TriNovus, LLC, A Temenos Company 73
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PAGE 1: CLOSING DISCLOSURE Key Sections Heading information Loan Terms Projected Payments Costs at Closing Options Sales Price Appraised Prop. Value Estimated Prop. Value Checkboxes to indicate cash To/From Borrower 75
CD PAGE 1: HEADING INFORMATION (a)(3) (t)(5) 76
CD PAGE1: HEADING INFORMATION PURCHASE, FIXED RATE EXAMPLE Could all be the same day, but never in a rescindable transaction Ooops! 2013 date on Model Form Appears to assume revised CD without triggering new (3) business day waiting period or period waived 2015. TriNovus, LLC, A Temenos Company 77
CD PAGE 1: LOAN TERMS 78
CD PAGE1: LOAN TERMS FIXED RATE, PREPAYMENT PENALTY EXAMPLES Could be same as LE; must reflect final terms REFINANCE Initial Principal & Interest Payment Must use specific language when applicable 2015. TriNovus, LLC, A Temenos Company Reflect actual unit-period frequency of payments 79
CD PAGE 1: PROJECTED PAYMENTS 80
CD PAGE1: PROJECTED PAYMENTS FIXED RATE, MIP, PREPAYMENT PENALTY EXAMPLES Slightly different than LE 2015. TriNovus, LLC, A Temenos Company 81
CD PAGE1: PROJECTED PAYMENTS PROJECTED PAYMENTS ONLY FOR INTEREST ONLY, 5/1 ADJUSTABLE RATE Maximum # columns EXAMPLES BALLOON PAYMENT Use ranges if would run out of columns Balloon always goes in last column 2015. TriNovus, LLC, A Temenos Company 82
CD PAGE 1: COSTS AT CLOSING STANDARD ALTERNATE WITHOUT SELLER 83
CD PAGE1: COSTS AT CLOSING FIXED RATE, PREPAYMENT PENALTY EXAMPLES REFINANCE, ALTERNATE COSTS AT CLOSING TABLE Cash From/To Borrower 2015. TriNovus, LLC, A Temenos Company 84
CD PAGE 2: CLOSING COST DETAILS Key Sections Loan Costs Other Costs Who paid at or before closing Options Borrower with Seller Borrower without Seller Seller-side only Loan Costs as single page Other Costsas a single page 85
CD PAGE 2: CLOSING COST DETAILS Origination Charges Services Borrower Did Not Shop For Services Borrower Did Shop For Total Loan Costs 86
CD PAGE 2a: CLOSING COST DETAILS All fees must be in Alphabetical Order (except A.01 Points) ALTERNATE LOAN COSTS SINGLE PAGE OPTION NOTE: Page # change to 2a 2015. TriNovus, LLC, A Temenos Company 87
CD PAGE2: LOAN COSTS PURCHASE TRANSACTION 5 4 EXAMPLES 3 1 3 2 All fees must be in Alphabetical Order (except A.01 Points) 5 6 2015. TriNovus, LLC, A Temenos Company 1) Line A.01 is always % of Loan Amount (Points) 2) Fees can move from Can Shop to Did Not Shop if select Written Provider 3) Note title change from Loan Estimate 4) Monies must be separated out; all headings and subheadings required 5) Totals roll upward to Subsection 6) Must indicate to whom fee is paid 88
CD PAGE2: LOAN COSTS REFINANCE EXAMPLES Seller columns omitted 2015. TriNovus, LLC, A Temenos Company 89
CD PAGE 2: OTHER COSTS Taxesand Other Government Fees Prepaids Initial Escrow Payment at Closing Other Totals 90
CD PAGE 2b: CLOSING COST DETAILS ALTERNATE OTHER COSTS Don t forget Alphabetical order within each Block (SINGLE PAGE) NOTE: Page # change to 2b 2015. TriNovus, LLC, A Temenos Company 91
CD PAGE2: OTHER COSTS PURCHASE TRANSACTION 3 EXAMPLES 1 2 2015. TriNovus, LLC, A Temenos Company 1) Owner stitle under H. Other; if not required insert (optional) 2) Lender Credits also used for tolerance cures if cure at time of consummation 3) Totals roll upward to Subsection 92
CLOSING DISCLOSURE: PAGE 3 Key Sections Calculating Cash to Close Loan Estimate Comparisons/Changes Summaries of Transactions Payoffsand Payments Page options Replace Summaries of Transactionswith Payoffsand Payments and move Calculating Cash to Close to bottom of page 93
CD PAGE3: CALCULATING CASH TO CLOSE Replaces HUD-1 page 3 Comparison table (t)(5) 2015. TriNovus, LLC, A Temenos Company 94
CD PAGE 3: CALCULATING CASH TO CLOSE LIST AT TOP OF PAGE WHEN USING SUMMARIES OF TRANSACTIONS EXAMPLES REFINANCE Moved to bottom of page when using Payoffs and Payments table 2015. TriNovus, LLC, A Temenos Company 95
CD PAGE3: CALCULATING CASH TO CLOSE REFINANCE WITH OUT OF TOLERANCE EXAMPLE Must use specific language when applicable 2015. TriNovus, LLC, A Temenos Company 96
RECOMMENDATION Ask vendor if it will produce page 3 of current (2010) HUD comparison table for ease of determining changes Not to be provided to consumer 97
CD PAGE 3: SUMMARIES OF TRANSACTIONS 98
CD PAGE 3: SUMMARIES OF TRANSACTIONS PURCHASE TRANSACTION EXAMPLE 2015. TriNovus, LLC, A Temenos Company 99
CD PAGE 3: SUMMARIES OF TRANSACTIONS SATISFACTION 2 ND LIEN POC 1 EXAMPLES 1) Satisfaction of Junior Lien paid outside (POC) of closing by Borrower 2015. TriNovus, LLC, A Temenos Company 100
CD PAGE3: PAYOFFS AND PAYMENTS REFINANCE TRANSACTION WITH ALTERNATE PAYMENTS AND PAYOFFS TABLE EXAMPLE Itemize amounts of payments made at closing to other parties from credit extended to consumer or funds provided by consumer, including designeesof consumer; the payees and description of purpose of disbursements Move calculating Cash to Close to bottomof page and use few calculations 2015. TriNovus, LLC, A Temenos Company 101
CLOSING DISCLOSURE PAGE 4 Additional Information About this Loan Key Sections Loan Disclosures Adjustable Payment table (AP) Adjustable Interest Rate table Options WithAP table WithAIR table WithAP and AIR tables Without APand AIRtables 102
CD PAGE 4: LOAN DISCLOSURES 103
CD PAGE4: LOAN DISCLOSURES EXAMPLES 2015. TriNovus, LLC, A Temenos Company 104
CD PAGE4: LOAN DISCLOSURES EXAMPLES 2015. TriNovus, LLC, A Temenos Company 105
CD PAGE4: ESCROW ACCOUNT ESCROW REQUIRED ESCROW NOT REQUIRED AND DECLINED EXAMPLES x x $3,275 $200 2015. TriNovus, LLC, A Temenos Company 106
CD PAGE4: IN THE FUTURE EXAMPLE Standard language 2015. TriNovus, LLC, A Temenos Company 107
CD PAGE 4: AP AND AIR TABLES EXAMPLE 108
CLOSING DISCLOSURE PAGE 5 Key Sections Loan Calculations Questions? Other Disclosures Contact Information ConfirmReceipt Options Appraisal Loan Acceptance vs. Confirm Receipt Liability after Foreclosure State law 109
CD PAGE 5: LOAN CALCULATIONS What we once called a Fed Box! 110
CD PAGE5: LOAN CALCULATIONS EXAMPLE OMG it s that TIP again! 2015. TriNovus, LLC, A Temenos Company Do not include PointsinTIPcalculation Based on CFPB model form calculations 111
CALCULATING THE TOTAL INTEREST PERCENTAGE (TIP) Definition: The TIPis the total amount of interest that the consumer will pay over the loan term, expressed as a percentage of the loan amount Example: If the Loan Amount is $100,000 and the total amount of interest that the consumer will pay over the Loan Termis $50,000, then the TIP is 50% ($50,000/$100,000) 112
CD PAGE 5: QUESTIONS? Who are you going to call? Possible unintended consequences Yes, that big question mark is required! 113
CD PAGE 5: CONTACT INFORMATION 114
CD PAGE5: CONTACT INFORMATION EXAMPLES 2015. TriNovus, LLC, A Temenos Company 115
CD PAGE 5: OTHER DISCLOSURES & CONFIRM RECEIPT 116
CD PAGE5: OTHER DISCLOSURES WITH CONFIRM RECEIPT May omit if no appraisal required WITH LOAN ACCEPTANCE EXAMPLES 2015. TriNovus, LLC, A Temenos Company Required order 117
REVISIONS AND CORRECTIONS TO CLOSING DISCLOSURE General Rule: Creditors must re-disclose CD terms or costs if certain changes occur that cause disclosures to become inaccurate (3) categories of changes require corrected CD containing all changed terms: Changes before consummation that require new (3) business day waiting period Changes before consummation that do not require new (3) business day waiting period Changes that occur after consummation Consumer has right to inspect revised Closing Disclosure during the business day before consummation 118
CHANGES BEFORE CONSUMMATION New (3) business day waiting period required when: Disclosed APRbecomes inaccurate Loan product changes Prepayment penalty is added New (3) businessday waiting period not required for other changes But must provide to consumer before or at consummation 119
CHANGES AFTER CONSUMMATION Corrected CD is required after consummation: When, within 30 days after consummation, CD becomes inaccurate due to some event and that results in a change to an amount paid by consumer or seller; To document refunds for tolerance violations; or To correct non-numerical clerical errors An error is clerical if doesnot affect a numerical disclosure and doesnot affect the timing, delivery or other certain requirements 120
NOT SUBJECT TO A TOLERANCE LIMITATION Certain charges may exceed amount disclosed on LE by any amount Prepaid interest; property insurance premiums; amounts placed into an escrow, impound, reserve or similar account; Services required by creditor if creditor permits consumer to shop and consumer selects 3 rd party service provider not on creditor s written list of service providers; and Charges paid to 3 rd party service providers for services not required by creditor (may be paid to affiliates of creditor) However... Creditors may only charge more than amount disclosed when original estimate, or lack thereof, was based on best information reasonably available at the time of disclosure Good faith 121
10% TOLERANCE THRESHOLD Some charges subject to a 10% cumulative tolerance Recording fees Charges for third-party services where Charge is not paid to creditor or creditor saffiliate Consumer is permitted by creditor to shop but selectsa third-party service provider on creditor swritten list of service providers Critical distinction from current rules Must meet Tipping Point to re-set the fees 122
ZERO TOLERANCE THRESHOLD Creditor may never charge more than estimated amount unless changed circumstance (or other triggering event) Feespaid to creditor, mortgage broker, or an affiliate of either Feespaid to an unaffiliated third party if creditor did not permit consumer to shop Transfer taxes 123
TOLERANCE CURES General Rule If amounts paid by consumer at closing exceed amounts disclosed on LE beyond applicable tolerance threshold, creditor must: Refund excessno later than 60 days after consummation, and Deliver or place in the mail a corrected CD that reflects such refund Lender Credits (tolerance cure) Zero tolerance charges Must be refunded to consumer 10% cumulative tolerance charges Amount that exceeds the 10%, must be refunded to consumer 124
TOLERANCE CURE ON CD 2015. TriNovus, LLC, A Temenos Company 125
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OTHER CONSIDERATIONS AND DISCLOSURES TRID Workshop Finals 127
NEW: YOUR HOME LOAN TOOLKIT Replaces Special Information Booklet Toolkit must be provided to mortgage applicants as part of the applicationprocess Must be provided within 3 businessdaysof receipt of application Do not have to provide if withdrawn or denied within 3 businessdaysof receipt of application An interactive electronic version is available Electronic version meets federal accessibility standards to ensure that all consumers, including those with disabilities, can use the resource CFPBencourageslenders to keep same level of accessibility when delivering the PDF to consumers Spanish language version will also be made available later in 2015 Available on CFPB site Hard copiesare for sale Not required for: Refinance Subordinate lien Reverse mortgage 128
ESCROW CLOSING NOTICE If loan issubject to Escrow Cancellation Notice, creditor or servicer must disclose: When and why the escrow account will be closed That an escrow account may also be called an impound or trust account That without an escrow account the consumer must directly pay all property costs(i.e., taxes, homeowner sinsurance) A Cost to you table itemizing the amount of any fee imposed on the consumer in connection with the closure of the escrow account and a statement that the fee isfor closing the escrow account Under In the future, consequencesfor failure to pay property costs, a telephone number for additional information, whether escrow account can be kept open and whether there is a deadline to request that the escrow account be kept open 2015. TriNovus, LLC, A Temenos Company 129
ESCROW CLOSING NOTICE Must be provided to a consumer prior to cancelling an escrow account for whom an escrow account was established in connection with a closed-end consumer credit transaction secured by a first-lien on real property (covered by RESPA) or by a one-to-four (covered by TILA) or both, except for reverse mortgages Timing: If cancellation requested, creditor or servicer must provide notice no later than (3) business days before escrow account is closed For any other reason, notice must be received by consumer no later than (30) business days before escrow account is closed Exceptions: Not required if cancellation due solely in connection with consumer s default or delinquency Not required if cancellation result of termination of debt obligation through repayment, refinancing, rescission, or foreclosure 130
PARTIAL PAYMENT NOTICE When transferring servicing of a mortgage covered by TILA, must include in hello/goodbye letter information related to partial payment policy that will apply to the mortgage loan as implemented by the new servicer Applies to closed-end consumer credit transaction secured by a dwelling (covered by TILA) or real property (covered by RESPA) or both, other than a reverse mortgage 131
ADDITIONAL STANDARD FORMS H-26 Mortgage Loan Transaction Pre-Loan Estimate Statement Model Form H-27(A) H-27(B) H-27(C) Mortgage Loan Transaction Written List of Providers Model Form Mortgage Loan Transaction Sample of Written List of Providers Mortgage Loan Transaction Sample of Written List of Providers with Services You Cannot Shop For 2015. TriNovus, LLC, A Temenos Company H-28(A) H-28(B) H-28(C) H-28(D) H-28(E) H-28(F) H-28(G) H-28(H) H-28(I) H-28(J) Mortgage Loan Transaction Loan Estimate Spanish Language Model Form Mortgage Loan Transaction Loan Estimate Spanish Language Purchase Sample Mortgage Loan Transaction Loan Estimate Spanish Language Refinance Sample Mortgage Loan Transaction Loan Estimate Spanish Language Balloon Payment Sample Mortgage Loan Transaction Loan Estimate Spanish Language Negative Amortization Sample Mortgage Loan Transaction Closing Disclosure Spanish Language Model Form Mortgage Loan Transaction Closing Disclosure Spanish Language Purchase Sample Mortgage Loan Transaction Closing Disclosure Spanish Language Refinance Sample Mortgage Loan Transaction Loan Estimate Modification to Loan Estimate for Transaction Not Involving Seller Spanish Language Model Form Mortgage Loan Transaction Closing Disclosure Modification to Closing Disclosure for Transaction Not Involving Seller Spanish Language Model Form
2015. TriNovus, A TemenosCompany
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