CFPB – The Feds are Coming! TILA / RESPA Integrated …€¦ · TILA / RESPA Integrated...

2014 Texas Land Title Institute – CFPB – The Feds are Coming! P a g e | 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

Celia C. Flowers Flowers Davis, P.L.L.C.

1021 ESE Loop 323, Suite 200 ~ Tyler, Texas 75701 903-534-8063, Fax: 903-534-1650, Email: [email protected]

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 • 2010-2013 - 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.

• 2011-2013 - 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 - 2004-2009 and served as TLTA’s President for 2008-2009. PUBLICATIONS and HONORS: • 60th 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 30TH 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. • 2009 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.

• 2007 REVIEW OF OIL AND GAS LAW XXII, Energy Law Section Dallas Bar Association, August 17, 2007, “Exercising the Power of Eminent Domain,” Celia C. Flowers and Melanie S. Reyes.

• 2007 TEXAS LAND AND TITLE INSTITUTE, November 2007, “Minerals: Examination and Coverage Issues,” Celia C. Flowers, Melanie S. Reyes, and Meredith N. Todd.

• 2006 OIL, GAS & MINERAL LAW INSTITUTE, “Protecting and Defending Your Mineral Title”, Celia C. Flowers. • 2004 STATE BAR OF TEXAS CONTINUING EDUCATION SEMINAR: SUING AND DEFENDING

GOVERNMENTAL ENTITIES, November 2004, “Exercising the Power of Eminent Domain”, Celia C. Flowers

mailto:[email protected]

JANET S. MINKE, CTIA

Vice President, Underwriting Support Services

Alliant National Title Insurance Company Toll-free: 877-788-9800 x440

Direct: 303-647-4047 [email protected]

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 1970. 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, 1992-93 & 2011-12 Outstanding Young Title Person, 1985-86

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

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.


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, 2015. For the complete rule and other materials about the final rule, please go to www.consumerfinance.gov/regulatory-implementation/tila-respa.

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, 2012. 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


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, 2015.

2. 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 § 1026.1)

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 1026.19(e) and Section 1026.37 are added in regard to the Loan Estimate (early disclosures)


b) Section 1026.19(f) and Section 1026.38 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

• 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 1026.3(h) of the Final Rule]

• Loans that are not “consumer loans” – such as commercial or business purpose loans

F. Terminology

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 § 1026.37)

• 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


2. Closing disclosure (CD) – Model Form H-25 with variations (12 CFR § 1026.38)

• 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

• A “business day” is defined as all calendar days except Sunday and certain specified federal holidays

C. Timing of Disclosures

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 7th 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.


� 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.


• 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


• 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).


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§1026.37(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 §1026.37(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.)


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 §1024.7

� 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.


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.


� 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!


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

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

B. From CFPB

You can find the 2013 Integrated Disclosures Rule on the Bureau’s website at http://www.consumerfinance.gov/regulations/integrated-mortgage-disclosures-under-the-real-estate-settlement-procedures-act-regulation-x-and-the-truth-in-lending-act-regulation-z/ .

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 email 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 www.consumerfinance.gov/regulatoryimplementation.

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:

• Email [email protected].

• 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 voicemail at 202-435-7700.

FEBRUARY 7, 2014

H-24(B) Mortgage Loan Transaction Loan Estimate – Fixed Rate Loan Sample

TILA RESPA Integrated Disclosure

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 3.875 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.

Loan Terms Can this amount increase after closing?

Loan Amount $162,000 NO

Interest Rate 3.875% NO

Monthly Principal & InterestSee Projected Payments below for your Estimated Total Monthly Payment

$761.78

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

DATE ISSUED 2/15/2013APPLICANTS Michael Jones and Mary Stone 123 Anywhere Street Anytown, ST 12345 PROPERTY 456 Somewhere Avenue Anytown, ST 12345SALE PRICE $180,000

LOAN TERM 30 yearsPURPOSE Purchase cePRODUCT Fixed RateLOAN TYPE x Conventional FHA VA _____________LOAN ID # 1234567891330172608RATE LOCK NO x YES, until 4/16/2013 at 5:00 p.m. EDT

FICUS BANK4321 Random Boulevard • Somecity, ST 12340

Loan Estimate

Projected Payments

Payment Calculation Years 1-7 Years 8-30

Principal & Interest

Mortgage Insurance

Estimated EscrowAmount can increase over time

$761.78

+ 82

+ 206

$761.78

+ —

+ 206

Estimated Total Monthly Payment $1,050 $968

Estimated Taxes, Insurance & AssessmentsAmount can increase over time

$206 a month

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

Save this Loan Estimate to compare with your Closing Disclosure.

PAGE 1 OF 3 • LOAN ID # 123456789LOAN ESTIMATE

Visit www.consumerfinance.gov/mortgage-estimate for general information and tools.

See Section G on page 2 for escrowed property costs. You must pay for other property costs separately.

This estimate includes In escrow?x Property Taxes YESx Homeowner’s Insurance YES

Other:

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 Costs Other Costs

A. Origination Charges $1,802.25 % of Loan Amount (Points) $405Application Fee $300 Underwriting Fee $1,097

B. Services You Cannot Shop For $672Appraisal Fee $405Credit Report Fee $30Flood Determination Fee $20Flood Monitoring Fee $32Tax Monitoring Fee $75Tax Status Research Fee $110

C. Services You Can Shop For $3,198Pest Inspection Fee $135Survey Fee $65Title – Insurance Binder $700Title – Lender’s Title Policy $535Title – Settlement Agent Fee $502Title – Title Search $1,261

D. TOTAL LOAN COSTS (A + B + C) $5,672

E. Taxes and Other Government Fees $85Recording Fees and Other Taxes $85Transfer Taxes

F. Prepaids $867 Homeowner’s Insurance Premium ( 6 months) $605Mortgage Insurance Premium ( months) Prepaid Interest ( $17.44 per day for 15 days @ 3.875%) $262Property Taxes ( months)

G. Initial Escrow Payment at Closing $413Homeowner’s Insurance $100.83 per month for 23mo. $202Mortgage Insurance per month for 0 mo. Property Taxes $105.30 per month for 2 mo. $211

H. Other $1,017Title – Owner’s Title Policy (optional) $1,017

I. TOTAL OTHER COSTS (E + F + G + H) $2,382

J. TOTAL CLOSING COSTS $8,054D + I $8,054Lender Credits

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

Calculating Cash to Close


Closing Cost Details

LENDER Ficus Bank NMLS/__ LICENSE ID

LOAN OFFICER Joe Smith NMLS/__ LICENSE ID 12345EMAIL [email protected] 123-456-7890

Comparisons Use these measures to compare this loan with other loans.

In 5 Years$56,582 Total you will have paid in principal, interest, mortgage insurance, and loan costs.

$15,773 Principal you will have paid off.

Annual Percentage Rate (APR) 4.274% Your costs over the loan term expressed as a rate. This is not your interest rate.

Total Interest Percentage (TIP) 69.45% The total amount of interest that you will pay over the loan term as a percentage of your loan amount.

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.

Appraisal

Assumption

Homeowner’s Insurance

Late Payment

Refinance

Servicing

Other Considerations

Additional Information About This Loan

MORTGAGE BROKER NMLS/__ LICENSE ID LOAN OFFICER NMLS/__ LICENSE ID EMAIL PHONE

PAGE 3 OF 3 • LOAN ID #123456789LOAN ESTIMATE

Confirm ReceiptBy 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

FEBRUARY 7, 2014

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.





$737.91

NO


Prepayment Penalty NO

Balloon Payment NO

DATE ISSUED 2/15/2013APPLICANTS Michael Jones and Mary Stone 123 Anywhere Street Anytown, ST 12345 PROPERTY 123 Anywhere Street Anytown, ST 12345EST. PROP. VALUE $180,000

LOAN TERM 30 yearsPURPOSE Refinance cePRODUCT Fixed RateLOAN TYPE x Conventional FHA VA _____________LOAN ID # 1234567891330172608RATE LOCK NO x YES, until 4/16/2013 at 5:00 p.m. EDT

FICUS BANK4321 Random Boulevard • Somecity, ST 12340

Loan Estimate

Projected Payments



Mortgage Insurance


$737.91

+ 82

+ 206

$737.91

+ —

+ 206

Estimated Total Monthly Payment $1,026 $944

Estimated Taxes, Insurance & AssessmentsAmount can increase over time

$206a month

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

Save this Loan Estimate to compare with your Closing Disclosure.


Visit www.consumerfinance.gov/mortgage-estimate for general information and tools.

See Section G on page 2 for escrowed property costs. You must pay for other property costs separately.

This estimate includes In escrow?x Property Taxes YESx Homeowner’s Insurance YES

Other:

Estimated Closing Costs $5,099 Includes $3,521 in Loan Costs + $2,078 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.

Costs at Closing

From x To Borrower

Loan Costs Other Costs

A. Origination Charges $1,950.5 % of Loan Amount (Points) $750Application Fee $250 Origination Fee $450Underwriting Fee $500

B. Services You Cannot Shop For $635Appraisal Fee $425Credit Report Fee $30Flood Determination Fee $25Flood Monitoring Fee $45Tax Monitoring Fee $65Tax Status Research Fee $45

C. Services You Can Shop For $936Pest Inspection Fee $85Title – Insurance Binder $50Title – Lender’s Title Policy $251Title – Settlement Agent Fee $350Title – Title Search $200

D. TOTAL LOAN COSTS (A + B + C) $3,521

E. Taxes and Other Government Fees $80Recording Fees and Other Taxes $80Transfer Taxes

F. Prepaids $1,585 Homeowner’s Insurance Premium ( 6 months) $605Mortgage Insurance Premium ( 1 months) $82Prepaid Interest ( $17.71 per day for 15 days @ 4.25%) $266Property Taxes ( 6 months) $632

G. Initial Escrow Payment at Closing $413Homeowner’s Insurance $100.83 per month for 23mo. $202Mortgage Insurance per month for 23mo. Property Taxes $105.30 per month for 2 mo. $211

H. Other $0

I. TOTAL OTHER COSTS (E + F + G + H) $2,078

J. TOTAL CLOSING COSTS $5,099D + I $5,599Lender Credits – $500

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




Comparisons Use these measures to compare this loan with other loans.

In 5 Years$51,932 Total you will have paid in principal, interest, mortgage insurance, and loan costs.

$13,788 Principal you will have paid off.

Annual Percentage Rate (APR) 4.537% Your costs over the loan term expressed as a rate. This is not your interest rate.

Total Interest Percentage (TIP) 77.28% The total amount of interest that you will pay over the loan term as a percentage of your loan amount.

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.

Appraisal

Assumption

Homeowner’s Insurance

Late Payment

Loan Acceptance

Liability afterForeclosure

Refinance

Servicing

Other Considerations



LENDER Ficus Bank NMLS/__ LICENSE ID

LOAN OFFICER Joe Smith NMLS/__ LICENSE ID 12345EMAIL [email protected] 123-456-7890

MORTGAGE BROKER NMLS/__ LICENSE ID LOAN OFFICER NMLS/__ LICENSE ID EMAIL PHONE

FEBRUARY 7, 2014

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.

Projected Payments





$761.78

NO


Prepayment Penalty YES • As high as $3,240 if you pay off the loan during the first 2 years

Balloon Payment NO

Costs at Closing

CLOSING DISCLOSURE PAGE 1 OF 5 • LOAN ID # 123456789



Mortgage Insurance


$761.78

+ 82.35

+ 206.13

$761.78

+ —

+ 206.13

Estimated Total Monthly Payment $1,050.26 $967.91

Estimated Taxes, Insurance & AssessmentsAmount can increase over timeSee page 4 for details

$356.13a month

See Escrow Account on page 4 for details. You must pay for other property costs separately.

This estimate includes In escrow?x Property Taxes YESx Homeowner’s Insurance YESx Other: Homeowner’s Association Dues NO

Closing Costs $9,712.10 Includes $4,694.05 in Loan Costs + $5,018.05 in Other Costs – $0 in Lender Credits. See page 2 for details.

Cash to Close $14,147.26 Includes Closing Costs. See Calculating Cash to Close on page 3 for details.

Transaction InformationBorrower Michael Jones and Mary Stone 123 Anywhere Street Anytown, ST 12345Seller Steve Cole and Amy Doe 321 Somewhere Drive Anytown, ST 12345 Lender Ficus Bank

Loan InformationLoan Term 30 yearsPurpose PurchaseProduct Fixed Rate Loan Type x Conventional FHA

VA _____________Loan ID # 123456789MIC # 000654321

Closing InformationDate Issued 4/15/2013Closing Date 4/15/2013Disbursement Date 4/15/2013Settlement Agent Epsilon Title Co.File # 12-3456Property 456 Somewhere Ave Anytown, ST 12345 Sale Price $180,000

This form is a statement of final loan terms and closing costs. Compare this document with your Loan Estimate.Closing Disclosure

Borrower-Paid Seller-Paid Paid by OthersAt Closing Before Closing At Closing Before Closing

A. Origination Charges $1,802.0001 0.25 % of Loan Amount (Points) $405.0002 Application Fee $300.0003 Underwriting Fee $1,097.0004 05 06 07 08 B. Services Borrower Did Not Shop For $236.5501 Appraisal Fee to John Smith Appraisers Inc. $405.0002 Credit Report Fee to Information Inc. $29.8003 Flood Determination Fee to Info Co. $20.0004 Flood Monitoring Fee to Info Co. $31.7505 Tax Monitoring Fee to Info Co. $75.0006 Tax Status Research Fee to Info Co. $80.0007 08 09 10 C. Services Borrower Did Shop For $2,655.5001 Pest Inspection Fee to Pests Co. $120.5002 Survey Fee to Surveys Co. $85.0003 Title – Insurance Binder to Epsilon Title Co. $650.0004 Title – Lender’s Title Insurance to Epsilon Title Co. $500.0005 Title – Settlement Agent Fee to Epsilon Title Co. $500.0006 Title – Title Search to Epsilon Title Co. $800.0007 08 D. TOTAL LOAN COSTS (Borrower-Paid) $4,694.05Loan Costs Subtotals (A + B + C) $4,664.25 $29.80

Loan Costs


J. TOTAL CLOSING COSTS (Borrower-Paid) $9,712.10Closing Costs Subtotals (D + I) $9,682.30 $29.80 $12,800.00 $750.00 $405.00Lender Credits


Other CostsE. Taxes and Other Government Fees $85.0001 Recording Fees Deed: $40.00 Mortgage: $45.00 $85.0002 Transfer Tax to Any State $950.00F. Prepaids $2,120.8001 Homeowner’s Insurance Premium ( 12 mo.) to Insurance Co. $1,209.9602 Mortgage Insurance Premium ( mo.)03 Prepaid Interest ( $17.44 per day from 4/15/13 to 5/1/13 ) $279.0404 Property Taxes ( 6 mo.) to Any County USA $631.8005 G. Initial Escrow Payment at Closing $412.2501 Homeowner’s Insurance $100.83 per month for 2 mo. $201.6602 Mortgage Insurance per month for mo.03 Property Taxes $105.30 per month for 2 mo. $210.6004 05 06 07 08 Aggregate Adjustment – 0.01H. Other $2,400.0001 HOA Capital Contribution to HOA Acre Inc. $500.0002 HOA Processing Fee to HOA Acre Inc. $150.0003 Home Inspection Fee to Engineers Inc. $750.00 $750.0004 Home Warranty Fee to XYZ Warranty Inc. $450.0005 Real Estate Commission to Alpha Real Estate Broker $5,700.0006 Real Estate Commission to Omega Real Estate Broker $5,700.0007 Title – Owner’s Title Insurance (optional) to Epsilon Title Co. $1,000.0008 I. TOTAL OTHER COSTS (Borrower-Paid) $5,018.05Other Costs Subtotals (E + F + G + H) $5,018.05


BORROWER’S TRANSACTION

K. Due from Borrower at Closing $189,762.30

01 Sale Price of Property $180,000.0002 Sale Price of Any Personal Property Included in Sale03 Closing Costs Paid at Closing (J) $9,682.3004 Adjustments05 0607Adjustments for Items Paid by Seller in Advance08 City/Town Taxes to 09 County Taxes to10 Assessments to11 HOA Dues 4/15/13 to 4/30/13 $80.0012 131415

L. Paid Already by or on Behalf of Borrower at Closing $175,615.0401 Deposit $10,000.0002 Loan Amount $162,000.0003 Existing Loan(s) Assumed or Taken Subject to04 05 Seller Credit $2,500.00Other Credits06 Rebate from Epsilon Title Co. $750.0007 Adjustments0809 10 11 Adjustments for Items Unpaid by Seller12 City/Town Taxes 1/1/13 to 4/14/13 $365.0413 County Taxes to 14 Assessments to15 1617

CALCULATION

Total Due from Borrower at Closing (K) $189,762.30Total Paid Already by or on Behalf of Borrower at Closing (L) – $175,615.04

Cash to Close x From To Borrower $14,147.26

SELLER’S TRANSACTION

M. Due to Seller at Closing $180,080.00

01 Sale Price of Property $180,000.0002 Sale Price of Any Personal Property Included in Sale03 04 05 06 07 08Adjustments for Items Paid by Seller in Advance09 City/Town Taxes to 10 County Taxes to11 Assessments to12 HOA Dues 4/15/13 to 4/30/13 $80.0013141516

N. Due from Seller at Closing $115,665.0401 Excess Deposit 02 Closing Costs Paid at Closing (J) $12,800.0003 Existing Loan(s) Assumed or Taken Subject to04 Payoff of First Mortgage Loan $100,000.0005 Payoff of Second Mortgage Loan06 07 08 Seller Credit $2,500.0009 10111213Adjustments for Items Unpaid by Seller14 City/Town Taxes 1/1/13 to 4/14/13 $365.0415 County Taxes to 16 Assessments to17 1819

CALCULATION

Total Due to Seller at Closing (M) $180,080.00Total Due from Seller at Closing (N) – $115,665.04

Cash From x To Seller $64,414.96

Summaries of Transactions


Loan Estimate Final Did this change?

Total Closing Costs (J) $8,054.00 $9,712.10 YES • See Total Loan Costs (D) and Total Other Costs (I)

Closing Costs Paid Before Closing $0 – $29.80 YES • You paid these Closing Costs before closing

Closing Costs Financed (Paid from your Loan Amount) $0 $0 NO

Down Payment/Funds from Borrower $18,000.00 $18,000.00 NO

Deposit – $10,000.00 – $10,000.00 NO

Funds for Borrower $0 $0 NO

Seller Credits $0 – $2,500.00 YES • See Seller Credits in Section L

Adjustments and Other Credits $0 – $1,035.04 YES • See details in Sections K and L

Cash to Close $16,054.00 $14,147.26

Use this table to see a summary of your transaction.

Use this table to see what has changed from your Loan Estimate.

AssumptionIf you sell or transfer this property to another person, your lender

will allow, under certain conditions, this person to assume this loan on the original terms.

will not allow assumption of this loan on the original terms.

Demand FeatureYour loan

has a demand feature, which permits your lender to require early repayment of the loan. You should review your note for details.

does not have a demand feature.

Late PaymentIf your payment is more than 15 days late, your lender will charge a late fee of 5% of the monthly principal and interest payment.

Negative Amortization (Increase in Loan Amount)Under your loan terms, you

are scheduled to make monthly payments that do not pay all of the interest due that month. As a result, your loan amount will increase (negatively amortize), and your loan amount will likely become larger than your original loan amount. Increases in your loan amount lower the equity you have in this property.

may have monthly payments that do not pay all of the interest due that month. If you do, your loan amount will increase (negatively amortize), and, as a result, your loan amount may become larger than your original loan amount. Increases in your loan amount lower the equity you have in this property.

do not have a negative amortization feature.

Partial PaymentsYour lender

may accept payments that are less than the full amount due (partial payments) and apply them to your loan.

may hold them in a separate account until you pay the rest of the payment, and then apply the full payment to your loan.

does not accept any partial payments.If this loan is sold, your new lender may have a different policy.

Security InterestYou are granting a security interest in 456 Somewhere Ave., Anytown, ST 12345

You may lose this property if you do not make your payments or satisfy other obligations for this loan.


Loan Disclosures

Escrow AccountFor now, your loan

will have an escrow account (also called an “impound” or “trust” account) to pay the property costs listed below. Without an escrow account, you would pay them directly, possibly in one or two large payments a year. Your lender may be liable for penalties and interest for failing to make a payment.

Escrow

Escrowed Property Costs over Year 1

$2,473.56 Estimated total amount over year 1 for your escrowed property costs:Homeowner’s InsuranceProperty Taxes

Non-Escrowed Property Costs over Year 1

$1,800.00 Estimated total amount over year 1 for your non-escrowed property costs:Homeowner’s Association Dues

You may have other property costs.

Initial Escrow Payment

$412.25 A cushion for the escrow account you pay at closing. See Section G on page 2.

Monthly Escrow Payment

$206.13 The amount included in your total monthly payment.

No Escrow

Estimated Property Costs over Year 1

Estimated total amount over year 1. You must pay these costs directly, possibly in one or two large payments a year.

Escrow Waiver Fee

will not have an escrow account because you declined it your lender does not offer one. You must directly pay your property costs, such as taxes and homeowner’s insurance. Contact your lender to ask if your loan can have an escrow account.

In the future, Your property costs may change and, as a result, your escrow pay-ment may change. You may be able to cancel your escrow account, but if you do, you must pay your property costs directly. If you fail to pay your property taxes, your state or local government may (1) impose fines and penalties or (2) place a tax lien on this property. If you fail to pay any of your property costs, your lender may (1) add the amounts to your loan balance, (2) add an escrow account to your loan, or (3) require you to pay for property insurance that the lender buys on your behalf, which likely would cost more and provide fewer benefits than what you could buy on your own.


x

x

x

x

x

Contact Information

Confirm Receipt

Other Disclosures

AppraisalIf the property was appraised for your loan, your lender is required to give you a copy at no additional cost at least 3 days before closing. If you have not yet received it, please contact your lender at the information listed below.

Contract DetailsSee your note and security instrument for information about

• what happens if you fail to make your payments, • what is a default on the loan,• situations in which your lender can require early repayment of the

loan, and • the rules for making payments before they are due.

Liability after ForeclosureIf your lender forecloses on this property and the foreclosure does notcover the amount of unpaid balance on this loan,

state law may protect you from liability for the unpaid balance. If you refinance or take on any additional debt on this property, you may lose this protection and have to pay any debt remaining even after foreclosure. You may want to consult a lawyer for more information.

state law does not protect you from liability for the unpaid balance.

RefinanceRefinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan.

Tax DeductionsIf you borrow more than this property is worth, the interest on the loan amount above this property’s fair market value is not deductible from your federal income taxes. You should consult a tax advisor for more information.

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.



Total of Payments. Total you will have paid after you make all payments of principal, interest, mortgage insurance, and loan costs, as scheduled. $285,803.36

Finance Charge. The dollar amount the loan will cost you. $118,830.27

Amount Financed. The loan amount available after paying your upfront finance charge. $162,000.00

Annual Percentage Rate (APR). Your costs over the loan term expressed as a rate. This is not your interest rate. 4.174%

Total Interest Percentage (TIP). The total amount of interest that you will pay over the loan term as a percentage of your loan amount. 69.46%

Loan Calculations

x

Lender Mortgage Broker Real Estate Broker (B)

Real Estate Broker (S)

Settlement Agent

Name Ficus Bank FRIENDLY MORTGAGE BROKER INC.

Omega Real Estate Broker Inc.

Alpha Real Estate Broker Co.

Epsilon Title Co.

Address 4321 Random Blvd.Somecity, ST 12340

1234 Terrapin Dr.Somecity, MD 54321

789 Local LaneSometown, ST 12345 45

987 Suburb Ct.Someplace, ST 12340

123 Commerce Pl.Somecity, ST 12344

NMLS ID 222222

ST License ID Z765416 Z61456 Z61616

Contact Joe Smith JIM TAYLOR Samuel Green Joseph Cain Sarah Arnold

Contact NMLS ID 12345 394784

Contact ST License ID

P16415 P51461 PT1234

Email [email protected]

JTAYLOR@ FRNDLYMTGBRKR.CM

[email protected] [email protected] sarah@ epsilontitle.com

Phone 123-456-7890 333-444-5555 123-555-1717 321-555-7171 987-555-4321

Questions? If you have questions about the loan terms or costs on this form, use the contact information below. To get more information or make a complaint, contact the Consumer Financial Protection Bureau at www.consumerfinance.gov/mortgage-closing?

FEBRUARY 7, 2014

H-25(E) Mortgage Loan Transaction Closing Disclosure – Refinance Transaction Sample


This is a sample of a completed Closing Disclosure for the refinance transaction illustrated by form H-24(D). The purpose, loan amount, loan term, and interest rate have not changed from the estimates provided on the Loan Estimate. The outstanding balance of the existing mortgage loan securing the property was less than estimated on the Loan Estimate. The creditor requires an escrow account and that the consumer pay for private mortgage insurance for the transaction.

Projected Payments





$737.91

NO


Prepayment Penalty NO

Balloon Payment NO

Costs at Closing

Closing Costs $5,757.57 Includes $3,495.50 in Loan Costs + $2,762.07 in Other Costs – $500 in Lender Credits. See page 2 for details.

Cash to Close $29,677.43 Includes Closing Costs. See Calculating Cash to Close on page 3 for details.




Mortgage Insurance


$737.91

+ 82.35

+ 206.13

$737.91

+ —

+ 206.13

Estimated Total Monthly Payment $1,026.39 $944.04

Estimated Taxes, Insurance & AssessmentsAmount can increase over timeSee details on page 4

$356.13a month

See page 4 for escrowed property costs. You must pay for other property costs separately.

This estimate includes In escrow?x Property Taxes YESx Homeowner’s Insurance YESx Other: HOA Dues NO

From x To Borrower

Transaction InformationBorrower Michael Jones and Mary Stone 123 Anywhere Street Anytown, ST 12345Lender Ficus Bank

Loan InformationLoan Term 30 yearsPurpose RefinanceProduct Fixed Rate Loan Type x Conventional FHA

VA _____________Loan ID # 123456789MIC # 009874513

Closing InformationDate Issued 4/15/2013Closing Date 4/15/2013Disbursement Date 4/15/2013Settlement Agent Zeta TitleFile # 12-3456Property 123 Anywhere Street Anytown, ST 12345 Appraised Prop. Value $180,000

This form is a statement of final loan terms and closing costs. Compare this document with your Loan Estimate.Closing Disclosure

Borrower-Paid Paid by OthersAt Closing Before Closing

A. Origination Charges $1,950.0001 .5 % of Loan Amount (Points) $750.0002 Application Fee $250.0003 Origination Fee $450.0004 Underwriting Fee $500.0005 06 07 08 B. Services Borrower Did Not Shop For $610.0001 Appraisal Fee to John Smith Appraisers Inc. $405.0002 Credit Report Fee to Information Inc. $30.0003 Flood Determination Fee to Info Co. $20.0004 Flood Monitoring Fee to Info Co. $45.0005 Tax Monitoring Fee to Info Co. $65.0006 Tax Status Research Fee to Info Co. $45.0007 08 09 10 C. Services Borrower Did Shop For $935.5001 Pest Inspection Fee to Pests Co. $85.0002 Title – Insurance Binder to Epsilon Title Co. $50.0003 Title – Lender’s Title Policy to Epsilon Title Co. $250.5004 Title – Settlement Agent Fee to Epsilon Title Co. $350.0005 Title – Title Search to Epsilon Title Co. $200.0006 07 08 D. TOTAL LOAN COSTS (Borrower-Paid) $3,495.50Loan Costs Subtotals (A + B + C) $3,060.50 $435.00

Loan Costs


J. TOTAL CLOSING COSTS (Borrower-Paid) $5,757.57Closing Costs Subtotals (D + I) $5,822.57 $435.00Lender Credits – $500.00


Other CostsE. Taxes and Other Government Fees $60.0001 Recording Fees Deed: Mortgage: $60.00 $60.0002 F. Prepaids $2,125.1201 Homeowner’s Insurance Premium ( 12 mo.) to Insurance Co. $1,209.9602 Mortgage Insurance Premium ( mo.)03 Prepaid Interest ( $17.71 per day from 4/15/2013 to 5/1/2013 ) $283.3604 Property Taxes ( 6 mo.) to Any County USA $631.8005 G. Initial Escrow Payment at Closing $576.9501 Homeowner’s Insurance $100.83 per month for 2 mo. $201.6602 Mortgage Insurance $82.35 per month for 2 mo. $164.7003 Property Taxes $105.30 per month for 2 mo. $210.6004 05 06 07 08 Aggregate Adjustment – $0.01H. Other01 02 03 04 05 06 07 08 I. TOTAL OTHER COSTS (Borrower-Paid) $2,762.07Other Costs Subtotals (E + F + G + H) $2,762.07


TO AMOUNT

01 Rho Servicing to pay off existing loan $115,000.00

02

03

04

05

06

07

08

09

10

11

12

13

14

15

K. TOTAL PAYOFFS AND PAYMENTS $115,000.00

Payoffs and Payments Use this table to see a summary of your payoffs and payments to others from your loan amount.


Loan Estimate Final Did this change?

Loan Amount $150,000.00 $150,000.00 NO

Total Closing Costs (J) – $5,099.00 – $5,757.57 YES • See Total Loan Costs (D) and Total Other Costs (I)

Closing Costs Paid Before Closing $0 $435.00 YES • You paid these Closing Costs before closing

Total Payoffs and Payments (K) – $120,000.00 – $115,000.00 YES • See Payoffs and Payments (K)

Cash to Close $24,901.00

From To Borrower

$29,677.43

From To Borrower Closing Costs Financed (Paid from your Loan Amount) $5,322.57

Use this table to see what has changed from your Loan Estimate.

x x

AssumptionIf you sell or transfer this property to another person, your lender

will allow, under certain conditions, this person to assume this loan on the original terms.

will not allow assumption of this loan on the original terms.

Demand FeatureYour loan

has a demand feature, which permits your lender to require early repayment of the loan. You should review your note for details.

does not have a demand feature.

Late PaymentIf your payment is more than 15 days late, your lender will charge a late fee of 5% of the monthly principal and interest payment.

Negative Amortization (Increase in Loan Amount)Under your loan terms, you

are scheduled to make monthly payments that do not pay all of the interest due that month. As a result, your loan amount will increase (negatively amortize), and your loan amount will likely become larger than your original loan amount. Increases in your loan amount lower the equity you have in this property.

may have monthly payments that do not pay all of the interest due that month. If you do, your loan amount will increase (negatively amortize), and, as a result, your loan amount may become larger than your original loan amount. Increases in your loan amount lower the equity you have in this property.

do not have a negative amortization feature.

Partial PaymentsYour lender

may accept payments that are less than the full amount due (partial payments) and apply them to your loan.

may hold them in a separate account until you pay the rest of the payment, and then apply the full payment to your loan.

does not accept any partial payments. If this loan is sold, your new lender may have a different policy.

Security InterestYou are granting a security interest in 123 Anywhere Street, Anytown, ST 12345

You may lose this property if you do not make your payments or satisfy other obligations for this loan.


Loan Disclosures

Escrow AccountFor now, your loan

will have an escrow account (also called an “impound” or “trust” account) to pay the property costs listed below. Without an escrow account, you would pay them directly, possibly in one or two large payments a year. Your lender may be liable for penalties and interest for failing to make a payment.

Escrow

Escrowed Property Costs over Year 1

$2,473.56 Estimated total amount over year 1 for your escrowed property costs:Property Taxes, Homeowner’s Insurance

Non-Escrowed Property Costs over Year 1

$1,800.00 Estimated total amount over year 1 for your non-escrowed property costs:HOA Dues

You may have other property costs.

Initial Escrow Payment

$576.95 A cushion for the escrow account you pay at closing. See Section G on page 2.

Monthly Escrow Payment

$206.13 The amount included in your total monthly payment.

No Escrow

Estimated Property Costs over Year 1

Estimated total amount over year 1. You must pay these costs directly, possibly in one or two large payments a year.

Escrow Waiver Fee

will not have an escrow account because you declined it your lender does not offer one. You must directly pay your property costs, such as taxes and homeowner’s insurance. Contact your lender to ask if your loan can have an escrow account.

In the future, Your property costs may change and, as a result, your escrow pay-ment may change. You may be able to cancel your escrow account, but if you do, you must pay your property costs directly. If you fail to pay your property taxes, your state or local government may (1) impose fines and penalties or (2) place a tax lien on this property. If you fail to pay any of your property costs, your lender may (1) add the amounts to your loan balance, (2) add an escrow account to your loan, or (3) require you to pay for property insurance that the lender buys on your behalf, which likely would cost more and provide fewer benefits than what you could buy on your own.


x

x

x

x

x

Contact Information

Confirm Receipt

Other Disclosures

AppraisalIf the property was appraised for your loan, your lender is required to give you a copy at no additional cost at least 3 days before closing. If you have not yet received it, please contact your lender at the information listed below.

Contract DetailsSee your note and security instrument for information about

• what happens if you fail to make your payments, • what is a default on the loan,• situations in which your lender can require early repayment of the

loan, and • the rules for making payments before they are due.

Liability after ForeclosureIf your lender forecloses on this property and the foreclosure does notcover the amount of unpaid balance on this loan,

state law may protect you from liability for the unpaid balance. If you refinance or take on any additional debt on this property, you may lose this protection and have to pay any debt remaining even after foreclosure. You may want to consult a lawyer for more information.

state law does not protect you from liability for the unpaid balance.

RefinanceRefinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan.

Tax DeductionsIf you borrow more than this property is worth, the interest on the loan amount above this property’s fair market value is not deductible from your federal income taxes. You should consult a tax advisor for more information.

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.



Total of Payments. Total you will have paid after you make all payments of principal, interest, mortgage insurance, and loan costs, as scheduled. $273,214.50

Finance Charge. The dollar amount the loan will cost you. $121,029.00

Amount Financed. The loan amount available after paying your upfront finance charge. $148,241.94

Annual Percentage Rate (APR). Your costs over the loan term expressed as a rate. This is not your interest rate. 4.543%

Total Interest Percentage (TIP). The total amount of interest that you will pay over the loan term as a percentage of your loan amount. 77.29%

Loan Calculations

x

Lender Mortgage Broker Settlement Agent

Name Ficus Bank Zeta Title

Address 4321 Random Blvd.Somecity, ST 12340

321 Uptown Dr. Anytown, ST 12345

NMLS ID 222222

ST License ID P76821

Contact Joe Smith Joan Taylor

Contact NMLS ID 12345

Contact __ License ID

Email [email protected]

[email protected].

Phone 123-456-7890 555-321-9876

Questions? If you have questions about the loan terms or costs on this form, use the contact information below. To get more information or make a complaint, contact the Consumer Financial Protection Bureau at www.consumerfinance.gov/mortgage-closing?

FEBRUARY 7, 2014

H-25(H) Mortgage Loan Transaction Closing Disclosure – Modification to Closing Cost Details – Model Form


This is a blank model form of the modification to Closing Cost Details permitted by 12 CFR § 1026.38(t)(5)(iv)(B).

Loan Costs

CLOSING DISCLOSURE PAGE 2a OF 5 • LOAN ID # 0000000000

Borrower-Paid Seller-Paid Paid by OthersAt Closing Before Closing At Closing Before Closing

A. Origination Charges 01 % of Loan Amount (Points)02 03 04 05 06 070809101112131415161718192021B. Services Borrower Did Not Shop For 01 02 03 04 05 06 07 08 09 101112131415161718192021C. Services Borrower Did Shop For 01 02 03 04 05 06 070809101112131415161718192122 D. TOTAL LOAN COSTS (Borrower-Paid)Loan Costs Subtotals (A + B + C)


CLOSING DISCLOSURE PAGE 2b OF 5 • LOAN ID # 0000000000

J. TOTAL CLOSING COSTS (Borrower-Paid)Closing Costs Subtotals (D + I)Lender Credits

Closing Cost DetailsBorrower-Paid Seller-Paid Paid by

OthersAt Closing Before Closing At Closing Before ClosingE. Taxes and Other Government Fees 01 Recording Fees Deed: Mortgage: 02030405060708091011121314 F. Prepaids 01 Homeowner’s Insurance Premium ( mo.) 02 Mortgage Insurance Premium ( mo.) 03 Prepaid Interest ( per day from to ) 04 Property Taxes ( mo.) 05060708091011121314 G. Initial Escrow Payment at Closing 01 Homeowner’s Insurance per month for mo.02 Mortgage Insurance per month for mo.03 Property Taxes per month for mo.04 05 060708091011121314 Aggregate AdjustmentH. Other01 02 03 04 05 060708 09101112131415 I. TOTAL OTHER COSTS (Borrower-Paid)Other Costs Subtotals (E + F + G + H)

Other Costs

FEBRUARY 7, 2014

H-25(I) Mortgage Loan Transaction Closing Disclosure – Modification to Closing Disclosure for Dislcosure Provided to Seller – Model Form


This is a blank model form of the modification permitted by 12 CFR § 1026.38(t)(5)(vi).

CLOSING DISCLOSURE PAGE 1 OF 2

Transaction InformationBorrower Seller

Closing InformationDate Issued Closing Date Disbursement Date Settlement Agent File # Property Sale Price

Closing Disclosure

SELLER’S TRANSACTION

Due to Seller at Closing

01 Sale Price of Property 02 Sale Price of Any Personal Property Included in Sale03 04 05 06 07 08Adjustments for Items Paid by Seller in Advance09 City/Town Taxes to 10 County Taxes to11 Assessments to12 13141516

Due from Seller at Closing 01 Excess Deposit02 Closing Costs Paid at Closing (J) 03 Existing Loan(s) Assumed or Taken Subject to04 Payoff of First Mortgage Loan 05 Payoff of Second Mortgage Loan06 07 08 Seller Credit 09 10111213Adjustments for Items Unpaid by Seller14 City/Town Taxes to 15 County Taxes to 16 Assessments to17 1819

CALCULATION

Total Due to Seller at Closing Total Due from Seller at Closing

Cash From To Seller

Summaries of Transactions Contact InformationREAL ESTATE BROKER (B)

Name

Address

__ License ID

Contact


Email

Phone

REAL ESTATE BROKER (S)

Name

Address

__ License ID

Contact


Email

Phone

SETTLEMENT AGENT

Name

Address

__ License ID

Contact


Email

Phone

Questions? If you have questions about the loan terms or costs on this form, use the contact information above. To get more information or make a complaint, contact the Consumer Financial Protection Bureau at www.consumerfinance.gov/mortgage-closing?

Loan Costs

CLOSING DISCLOSURE PAGE 2 OF 2

Seller-PaidAt Closing Before Closing

A. Origination Charges 01 % of Loan Amount (Points)02 03 04 05 06 07 08 B. Services Borrower Did Not Shop For 01 02 03 04 05 06 07 08 C. Services Borrower Did Shop For 01 02 03 04 05 06 07 08

J. TOTAL CLOSING COSTS


E. Taxes and Other Government Fees 01 Recording Fees Deed: $120.00 Mortgage: $32.0002 F. Prepaids 01 Homeowner’s Insurance Premium ( 12 mo.) 02 Mortgage Insurance Premium ( mo.)03 Prepaid Interest ( $26.31 per day from 3/23/12 to 3/31/12))04 Property Taxes ( mo.)05 G. Initial Escrow Payment at Closing 01 Homeowner’s Insurance per month for mo.02 Mortgage Insurance per month for mo.03 Property Taxes per month for mo.04 05 06 07 08 Aggregate AdjustmentH. Other01 02 03 04 05 06 07 080910111213

Other Costs

11/17/2014

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CFPB – The Feds Are ComingCelia C. Flowers

Janet S. Minke

Thomas F. Vetters, II

2014 TEXAS LAND TITLE INSTITUTE

Introduction – from CFPB

Consumer Financial Protection Bureau (CFPB) has issued a rule that will simplify and improve disclosure forms for mortgage transactions.

BackgroundDodd-Frank Wall Street Reform and Consumer

Protection Act (Dodd-Frank Act) Rule amends 12 CFR 1024 (RESPA – Reg X) and 12 CFR 1026 (TILA – Reg Z)

2014 TEXAS LAND TITLE INSTITUTE

INTRODUCTION

Effective datesMost provisions apply to applications received

by creditor/broker on and after August 1, 2015Some provisions take effect for lenders on

August 1, 2015 Stated Purpose Regulatory Change

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COVERAGE

New disclosures apply to most closed-end consumer mortgage loans

New disclosures do not apply toHome equity lines of credit (not subject to

RESPA)Reverse mortgages (subject to RESPA)Personal property mobile home transactionsCreditor making 5 or fewer loans in a yearCertain special-type subordinate liensLoans that are not “consumer loans”

Terminology

TerminologyLender = “creditor”Borrower = “consumer”Tolerance = “variation”Closing/Settlement = “consummation” – but

what does that mean?

LOAN ESTIMATE (LE)

Model Form H-24 with variations Provided to consumer – by lender or brokerWithin 3 business days after application

Replaces early TIL and GFE Contains:Summary of key loan termsEstimates of loan and closing costs Includes “cash to close”

Idea is to promote comparison shopping

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CLOSING DISCLOSURE (CD)

Model Form H-25 with variations Provided to consumer – by lender or settlement

agentMust be “received” 3 days or more before

closing Replaces final TIL and HUD-1 Provides a detailed accounting of the transactionLoan termsFinal costsComparison of LE with final terms and costs

“Application”

Defined by 6 elementsBorrower Name IncomeSocial Security NumberProperty AddressEstimated Value of PropertyMortgage Loan Amount Sought

Once lender has “application” must deliver Loan Estimate within 3 “business days”

2 Definitions of “Business Day”

Provision of LE to consumer within 3 business daysBusiness day = Day on which the creditor’s

offices are open to the public to carry on substantially all functions

Waiting period between LE and consumer receipt of CD – and between CD and closingBusiness day = All calendar days except

Sunday and certain Federal holidays.

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Timing of Disclosures

Loan Estimate (LE) – “Application” is triggerMust deliver or place in mail no later than 3 business

days after applicationMust deliver or place in mail not later than the 7th

business day before closing Consumer considered to have received 3 business days

after delivered or placed in mailWaiting period between LE and closing can be waived

for bona fide financial emergencyMust re-disclose within 3 business days of learning of a

change (“changed circumstance”)

Timing of Disclosures

Closing Disclosure (CD)Consumer must receive 3 business days before

consummation (closing) Waiting period may be waived for bona fide financial

emergencyConsumer considered to have received 3

business days after delivered or placed in mailSeller must receive no later than closing

Subsequent Changes

CD becomes inaccurate before closingSome changes require re-disclosure and a new

3-day waiting period APR changes above tolerance levels Loan product changes Addition of prepayment penalty

Otherwise Provide corrected disclosure at or before closing Consumer must be able to inspect one business day

prior to closing

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Subsequent Changes

Changes after closing require revised CDEvent related to settlement

Re-disclose within 30 days after learning the event occurred

Non-numeric clerical errors Re-disclose within 60 days after closing

Refunds related to the good faith analysis Variation (tolerance) violation Refund and re-disclose within 60 days after closing

Who Provides Disclosures?

Loan Estimate to consumerCreditor or Loan BrokerCreditor fully

liable/responsible Closing Disclosure to

consumerCreditor or Settlement Agent Creditor fully

liable/responsible Closing Disclosure to sellerSettlement Agent

Written List of Providers

Model Forms H-27B and H-27C If consumer is permitted to shop – creditor

must provide consumer with Settlement Service Providers List (SSPL)At least one provider for each serviceSSPL must be on a separate sheet of paperSame timing as LEMay include affiliates

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Settlement Service Provider List

It will still be important to be “on the list” Lenders will be even more concerned about

knowing the fees/charges for providers on the list

Lenders will need to know the geographic area in which services can be performed

Itemizing Fees and Charges

Amount imposed on consumer – or on 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 (not permitted in Texas).Fees must be separately itemizedFees and charges must be listed alphabeticallyTitle insurance charges (including closing fee)

must be preceded by “Title –”

Variations = Tolerances

Category where no variation is allowed (current Zero Tolerance bucket)Creditor’s own chargesCharges by affiliates of creditorFees paid to unaffiliated SSP for which

consumer cannot shop Category where limited increases are

allowed (current 10% bucket)Charge paid to unaffiliated SSP selected from

the SSPL provided by creditor

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Variations Permitted

SSP selected by consumer and not on SSPL

Charges for services not required by creditor Prepaid interest Property insurance premiums Escrow amounts, impound reserves

However – creditor must give consumer the “best information reasonably available”

Changed Circumstances

“Good faith” for purposes of fee variation can be based on a revised LE under specified circumstances.

Creditor must provide revised LE within 3 business days of learning of the change.

Creditor may not provide a revised LE on the same day as delivery of the Closing Disclosure

The Forms - Generally

Fees and charges will move around.

Forms require full itemization with rollup of totals.

Lines in sections are limited. If there are too many charges

for a section on Page 2 –must create Page 2a and 2bSee sample H-25(H)

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The Forms - Generally

Multiple variations for each form depending on type of loan, etc. Forms are dynamic

Differences in the names used for fees and charges will make auditing from the Closing Disclosure difficult.

There is a separate Closing Disclosure for a seller.

Settlement Agent will require some sort of receipt and acknowledgment signed by the seller and buyer.

Title Policy Premiums

Lender’s Title PolicyFull basic rate for coverage required by lender.Make no adjustment for possible simultaneous

owner’s policy. Owner’s Policy (Optional)May disclose cost of “enhanced” owner’s

coverage, if known.Full basic rate for owner’s coverage +

simultaneous rate for loan policy – full basic rate for loan policy.

Proposed Texas Disclosures Form

TLTA and TDI are working toward a promulgated Texas Disclosures form To disclose actual title insurance simultaneous-

issue premium rates”To disclose payment to others for services such

as “closing the transaction” and “title evidenceTo disclose payments from real estate

commissionsTo allow detailed listing of “pass through”

charges paid to settlement agent from escrow if lumped by lender into “Settlement Agent Fee”

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Impact on AFBAs

Fees charged by affiliates of creditor are in the “no variation” bucket

Creditor may list affiliates on the SSPLHowever – this constitutes a “referral”

Who Will Do What?

CFPB holds lender responsible Lenders will decide what role

settlement agents will play Not all lenders will make the same

decisionResult will be a mix of disclosure

scenariosSettlement agents must be nimble

Note: Wells has announced

Implementation Concerns

Substantial technology changesNo distinct line for specific servicesNo uniform terminologyMultiple templatesThe Closing Disclosure will be different for each

transaction More employee training than in 2009 Costs for software and possibly hardware Data exchange without re-keying = unknown

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Information Flow

Loan Estimate about the same as for GFE IF Lender prepares Closing Disclosure

Contract regarding who pays what, credits, etc. Info for prorations/adjustments between seller/buyer Complete and accurate detail about all fees and

charges – not just those related to the loan IF Settlement Agent prepares Closing Disclosure

Copy of Loan Estimate and Service Provider List Detailed final loan and lender fee information

Hindered by lack of uniform “names” for fees Benefited by possible electronic exchange of info

Scheduling Closings – Etc.

Loan approved – lender contacts settlement agent Closing no sooner than _______

Settlement agent schedules closing & tells lender Settlement agent & lender exchange information

Not sure yet how this will work Settlement agent and/or lender prepares CD Lender (probably) delivers CD to borrower and settlement agent Settlement agent reviews CD for accuracy

As to proper settlement of the real estate transaction Advises lender if CD is not accurate

Someone revises and advises borrower Must be available for review day before consummation

Settlement agent prepares Seller Disclosure At closing

Settlement agent obtains signatures from borrower and seller on something to approve receipts & disbursements and to authorize funding

What Can We All Do Now?

Lenders and settlement agents need to talk Lenders and settlement agents need to talk with

real estate agents Talk with your software provider!

Think about training Think about implementationBudgetTime LineChanges to current process

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Want to Know More?

Go to the CFPB website:http://www.consumerfinance.gov/regulatory-

implementation/tila-respa/ Sign up to receive eNews BrowseTraining aidsVideos (recorded webinars)Sample FormsAnd more

CFPB – The Feds are Coming! TILA / RESPA Integrated …€¦ · TILA / RESPA Integrated...

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Transcript of CFPB – The Feds are Coming! TILA / RESPA Integrated …€¦ · TILA / RESPA Integrated...