← TILA-RESPA INTEGRATED DISCLOSURE (TRID) RULE Effective August 1, 2015 Part 1: Understanding...

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TILA-RESPA INTEGRATEDDISCLOSURE (TRID) RULEEffective August 1, 2015

Part 1: UnderstandingIntegrated Disclosures

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This is an introductory presentation which will cover the basic information about the new rules including a:• Practical description of the new rules and • An overview of the changes

There will be subsequent presentations over the next several months which will provide:• Specific details on each new form • Suggestions on how to prepare for the change

← →HOMEBRIDGE FUNDING | Partners for the Path AheadA Division of HomeBridge Financial Services, Inc.

WELCOME TO TRID

HomeBridge is providing information on TRID rules and HomeBridge requirements. Sellers are responsible to ensure all loans submitted for purchase to HomeBridge are in compliance with TRID and HomeBridge guidelines. Additionally, Sellers are responsible to ensure all applicable disclosures required under TRID are provided. Sellers should consult with their own legal counsel to guarantee compliance.

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OVERVIEW Truth-in-Lending Act (TILA)/RESPA Integrated Disclosures, or TRID as it is commonly being

referred to, is the most significant regulatory event that has occurred in the residential mortgage industry in over 30 years.

For more than 30 years, lenders have been required to provide disclosures under (2) different Federal regulations: The Truth-in-Lending Act (TILA) and the Real Estate

Settlement Procedures Act (RESPA). The forms provided were commonly referred to as:• The Good Faith Estimate (GFE)• The Reg Z / Truth-in-Lending Disclosure (TIL) – issued both at application and at settlement• The HUD-1 Settlement Statement

These forms had overlapping information and in some instances the language was inconsistent.

As part of the Dodd-Frank Wall Street Reform Act, enacted by Congress, the Consumer Financial Protection Bureau (CFPB) was established. Dodd-Frank directed the CFPB to consolidate and simplify these forms to be more consumer friendly, transparent and eliminate inconsistency.

The result of those efforts are TRID.HomeBridge is providing information on TRID rules and HomeBridge requirements. Sellers are responsible to ensure all loans submitted for purchase to HomeBridge are in compliance with TRID and HomeBridge guidelines. Additionally, Sellers are responsible to ensure all applicable disclosures required under TRID are provided. Sellers should consult with their own legal counsel to guarantee compliance.

HOMEBRIDGE FUNDING | Partners for the Path AheadA Division of HomeBridge Financial Services, Inc.

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THE FORMS

There are two new disclosures which form the basis of TRID:The Loan Estimate (LE) – Replaces the GFE and Initial TILThe Closing Disclosure (CD) – Replaces the HUD-1 and the Final TIL

Although these 2 forms are the foundation of the change, it would be a mistake to assume that TRID is just 2 new forms that replaced 3 old forms.



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HOW DOES THIS IMPACT YOU

The requirements surrounding TRID are ultimately the responsibility of the lender.

Knowledge is Power. It is important to understand how this regulation impacts the entire residential lending process, which ultimately affects you and your business.



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EFFECTIVE DATE

The regulation is effective for all applications received on and after August 1, 2015.• Applications received on or before July 31, 2015 are NOT

subject to the new regulations and will continue to be subject to existing criteria and will use existing disclosures.



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THE APPLICATION The definition of an application has also changed with the implementation of TRID. There is now a

consistent and universal definition of what constitutes an application. When a lender has received the following 6 pieces of information, it will be deemed an application:

1. Borrower Name2. Borrower Income3. Borrower Social Security Number4. The subject property address5. Estimated property value6. Loan amount sought

Existing criteria permits lenders to develop their own unique 7th item in order to deem an application complete. This 7th catch-all item option is eliminated for applications subject to TRID.

The only loans NOT covered by TRID are:• Reverse Mortgages, HELOCs and mobile homes or dwellings that are not attached to real

property / land



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TIMING

The Loan Estimate (LE) must be delivered to the borrower within 3 business days of the application

• It is anticipated with the elimination of the 7th item, loans will need to be disclosed earlier in the process.

The regulation provides a lender with the ability to issue a closing cost worksheet in advance of an application being taken.• There are specific provisions in the regulation regarding the format of the worksheet so that it is not misconstrued as an LE.

No fees may be imposed on a borrower in connection with the application before the borrower has received the LE and has indicated to the creditor their intent to proceed with the transaction. In addition, no payment information may be requested or held until intent to proceed is provided.



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APPLICATION DOCUMENTATION

A lender cannot require a borrower to provide ANY documentation to verify the information on their application in order to issue the LE. Once the 6 items are received, a lender has a complete application and the LE must be issued within 3 business days.

The ability for a lender to provide any type of meaningful Pre-Approval or Pre-Qualification letter may be impacted by this restriction.



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WHAT HAS NOT CHANGED?

The borrower must still: Sign an Intent to Proceed;

Be given the Settlement Cost Booklet and the Adjustable Rate Mortgage Booklet;

Be given all appraisal and valuation models used in the lending decision; and

There must still be a legitimate change of circumstance in order to change certain fees.



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THE CLOSING PROCESS

The lender must provide the Closing Disclosure (CD) to the borrower 3 business days prior to closing / settlement. THERE IS NO EXCEPTION TO THIS RULE.

Previously the HUD-1 Settlement Statement was customarily prepared by the closing agent. The new regulation now gives lenders the option to issue the Closing Disclosure, including any revisions that are needed.• Many lenders are considering this option due to magnitude of the change and the lender’s

responsibility for accuracy and timing.• Since the borrower must receive the CD prior to settlement, lenders will need to accommodate

both borrower and settlement agent questions. In addition lenders must also accommodate corrections that must be made at the time of settlement.

In order to meet these deadlines, at a minimum the lender, the Realtor, the Builder, the Settlement Agent and the Borrower’s Insurance Agent must all proactively work together to obtain all information needed, much sooner than today’s process.



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NEXT PRESENTATION IN APRIL

The next TRID presentation will focus specifically on the Loan Estimate• A review of the form• New information that is required to be presented to the

borrower, such as the TIP (Total Interest Percentage)• What has changed – no more HUD-1 Line Numbers• No more blanks



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THANK YOU



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CFPB TRID Implementationhttp://consumerfinance.gov/regulatory-implementation/tila-respa/

CFPB Webinars https://consumercomplianceoutlook.org/outlook-live/

The more you know the more you’re informed.

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http://consumerfinance.gov/regulatory-implementation/tila-respa/

https://consumercomplianceoutlook.org/outlook-live/

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MAKE THE CONNECTION:HOMEBRIDGEFUNDING.COMTOLL FREE: 855.242.3863



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