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The TILA-RESPA Integrated Disclosure (TRID) Rule

Compiled by: 110 Title, LLC

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I. Introductory Note

The Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010 (Dodd-Frank),

ushered in the most comprehensive financial restructuring and regulatory reform taken since the

Great Depression. It is a 2,315 page bill, it creates a host of new agencies including the

Consumer Financial Protection Bureau (CFPB),

requires regulators to create 243 rules, conduct

67 studies, and issue 22 periodic reports.

As it relates to our industry, the new legislation

and regulation is primarily aimed at mortgage

lenders. The Act purports to provide rigorous

standards and supervision on financial

institutions, and the CFPB is tasked with

preventing predatory mortgage lending,

improving the clarity of paperwork, and reducing incentives for mortgage brokers to push buyers

into more expensive loans. Finally, lenders are in a position to potentially face millions of dollars

in liability if they are not compliant.

Though implementation and compliance will not be the responsibility of the real estate

agent/broker, because of the role you play as a liaison with your client, lender and settlement

provider, a working knowledge of the basics of these new rules will help you facilitate the

transaction.

What to know #1: The new laws/rules are vast and complex. Be patient with lenders and title/settlement

agents during the initial stages of implementation. There is a HIGHER RISK FOR DELAYS!

II. GENERAL

A. Introduction For more than thirty (30) years, Federal law has required lenders provide to consumers

two (2) different forms to consumers applying for a mortgage, and two different forms at

or shortly before closing on the loan. Over the years, real estate agents and other

professionals have become familiar with these various forms and disclosures. They are:

The Good Faith Estimate (GFE), the Initial Truth-In-Lending (initial TIL), the HUD-1,

and the Final Truth in Lending (Final TIL).

Two different federal agencies developed these forms under two different Federal laws:

The Truth in Lending Act (TILA), and the Real Estate Settlement Procedures Act

GOAL OF THE ACT

"Promote the financial stability of

the United States by improving the

transparency and accountability in

the financial system."

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(RESPA). The information on these forms is both overlapping and inconsistent, often

resulting in greater confusion to the consumer.

The CFPB, with its regulatory authority under Dodd-Frank, has created new disclosure

rules pertaining to certain residential mortgages, known as the TILA-RESPA integrated

disclosure rule (the "TILA-RESPA Rule" or the "Know Before You Owe" Rule), and has

mandated the use of two new forms for those disclosures.

1. The "Loan Estimate" (LE):

Generally, the Loan Estimate, three pages, combines the information from the

GFE and initial TIL, and must be provided to consumers no later than the third

business day after they submit a loan application.

2. The "Closing Disclosure" (CD):

The second disclosure, five pages, combines the HUD-1 and the Final TIL into

what is now referred to as the "Closing Disclosure", which must be provided to

the consumer at least three business days before consummation of the loan.1

What to Know#2: The old familiar HUD-1 will be going away for most transactions. The Closing

Disclosure will be the prominent form seen at the Closing Table.

B. Overview of Coverage The new TILA-RESPA rule applies to most "closed-end" consumer credit transactions

secured by real property.2 The new rule does not apply to HELOCs, reverse mortgages,

or mortgages secured by a mobile home or dwelling that is not attached to real property.

Additionally, the rule will not apply to loans made by a person or entity that makes five

or fewer mortgages in a calendar year, and is thus, not a "creditor" under the law.

C. Effective Date The effective date for implementation of the new disclosures is October 3, 2015. After

that date, all transactions covered by the new rules MUST use the new disclosures.

What to Know #3: These new rules take effect on October 3, 2015. All mortgages that this rule applies

to will use the new forms for applications received on and after that day.

1 For all intent and purposes, "consummation" is the same as "closing". However, they are technically different terms.

2 A loan or extension of credit in which the proceeds are dispersed in full when the loan closes and must be repaid,

including any interest and finance charges, by a specified date, is known as "Closed end credit". The loan may require periodic principal and interest payments, or may require the entire payment of principal at maturity. Most real estate and auto loans are closed-end credit, while credit cards and home-equity lines of credit are open-end or revolving lines of credit.

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III. THE LOAN ESTIMATE

A. Generally

What to Know #4: Keep in mind that the Loan Estimate is going to be exclusively within the Lender's

control. Nevertheless, understanding the basics will assist in communications with your client and keep

transactions going forward.

The "Loan Estimate" (or "LE"), 3

pages, provides the consumer with

"good-faith estimates" of credit costs

and transaction terms, and integrates and

replaces the existing RESPA GFE, and

the initial TIL. The lender is generally

required to provide the Loan Estimate

within three business days of the

receipt of the consumer's loan

application.

It must be in writing and contain specific

information. Delivery of the Loan Estimate

must satisfy certain timing and method of

delivery requirements. Creditors generally

aren't allowed to issue revisions to Loan

Estimates because they later discover

technical errors, miscalculations or

underestimation of charges. They are

permitted to issue revised Loan Estimates in

certain situations.

What to Know #5: The LE is provided by the Lender to the Consumer, and provides Good Faith

Estimates of credit costs and transaction terms.

1. The Loan Estimate - Page 1: General information, loan terms, projected

payments, and costs at closing

Page 1 of the LE includes general information, a "Loan Terms Table" with

descriptions of applicable information about the loan, a "Projected Payments

Table", a "Costs at Closing Table", and a link for consumers to obtain more

information. The top of the page includes the name and address of the creditor.

2. The Loan Estimate - Page 2: Closing Costs Details

Page 2 of the LE, called "Closing Costs Details", discloses four main categories

of charges:

1. A good-faith itemization of "Loan Costs" and "Other Costs", associated

with the loan;

2. A "Calculating Cash to Close" table to show the consumer how the

amount of cash needed at closing is calculated;

3. For transactions with adjustable monthly payments, an "Adjustable

Payment Table" with relevant information about how the monthly

payments will change; and

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4. For transactions with adjustable interest rates, an "Adjustable Interest

Rate Table" with relevant information about how the interest rate will

change.

The items associated with the mortgage are broken down into two general types,

"Loan Costs", and "Other Costs". Generally, "Loan Costs" are those costs paid by

the consumer to the creditor/lender and third-party providers of services that the

lender requires to be obtained by the consumer during the origination process.

"Other Costs", include taxes, governmental recordation charges, and certain other

payments involved in the closing process.

3. The Loan Estimate - Page 3: Additional Information About the Loan

Page 3 of the Loan Estimate contains Contact Information, a "Comparisons

Table", an "Other Considerations Table", and, a "Signature Statement" for the

consumer to acknowledge receipt.

B. Delivery of the Loan Estimate

1. Generally

The creditor/lender is responsible for ensuring that is delivers or places into the

mail the Loan Estimate no later than the third business day after receiving the

consumer's loan application. The Loan Estimate must also be delivered or

placed into the mail no later than the seventh business day before

consummation of the transaction. 3 If the Loan Estimate is not provided to the

consumer in person, the consumer is considered to have received the Loan

estimate three business days after it is delivered or placed in the mail.4

2. What is a "business day" for the delivery requirements of the Loan Estimate?

A business day is a day on which the creditor's offices are open to the public for

carrying out substantially all of its business functions.5

3 These delivery and timing requirements are of paramount importance. They cannot be dispensed with. It may be a good

idea to set reminders for each file in which you have a date set for closing to communicate with the lender regarding the delivery of these disclosures. Moreover, keep in mind that if you want to move a consummation to sooner date, the Loan Estimate must be sent to the consumer seven business days prior. 4 If placed in the mail, there is an additional 3 day waiting period. The consumer must have received the Loan Estimate at

least seven days prior to consummation. Thus, if the Loan Estimate is sent by mail, it must be sent no later than 10 business days prior to consummation - 3 days for the mail, then the seven day minimum period. 5 This is important to know, only because it means something different for purposes of counting days to ensure that the

consumer received the "Closing Disclosure".

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What to Know #6: Though delivery of the LE is the responsibility of the Creditor, know that the

Consumer is required to have the LE delivered or placed in the mail no later than 3 business days after

their application.

C. Good Faith Requirements and Tolerances

1. Generally

Creditors are responsible for ensuring that the figures stated in the Loan Estimate

are made in "Good Faith" and are consistent with the best information

reasonably available to the creditor at the time they are disclosed.

Whether or not a Loan Estimate was made in Good Faith is determined by

calculating the difference between the estimated charges originally provided in

the Loan Estimate and the actual charges paid by or imposed on the consumer in

the Closing Disclosure.

If the charge paid by or imposed on the consumer exceeds the amount originally

disclosed on the Loan Estimate, it is NOT in good faith, regardless of whether the

creditor later discovers a technical error, miscalculation, or underestimation of a

charge. There are exceptions in which the LE may still be in good faith even if

the charges imposed exceed those on the LE, and are briefly discussed below.

The LE is considered to be in Good Faith if the creditor charges the consumer less

than the amount disclosed on the LE, without regard to any tolerance limitations.

What to Know #7: If the LE was NOT in Good Faith, that is, the charges disclosed on the CD are higher

than those shown on the LE beyond the applicable tolerances, the Consumer is entitled to a refund from

the Lender.

2. A creditor may charge more to the consumer than the amount disclosed in the

Loan Estimate in specific circumstances:

1. Certain variations between the amount disclosed and the amount charged

are expressly permitted by the TILA-RESPA rule, without regard to any

tolerance;

2. The amount charged falls with explicit tolerance limit thresholds, and the

estimated charge is not for a "zero tolerance" charge where variations are

never permitted; or

3. "Changed Circumstances" allow for a revised Loan Estimate or Closing

Disclosure, in which changes are allowed.

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a) Items that may change without regard to a tolerance limitation:

Certain costs or terms are permitted to change without any tolerance

limitation.

These charges are:

1. Prepaid interest, property insurance premiums, amounts placed

into escrow, impound, reserve, or a similar account;

2. For services required by the creditor if the creditor permits the

consumer to shop and the consumer selects a third party service

provider NOT on the creditor's written list of service providers.

3. Charges paid to third party service providers for services NOT

required by the creditor.

(1) When may the consumer "shop for a service"?

In addition to the Loan Estimate, if the consumer is permitted to

shop for a settlement service, the creditor must provide the

consumer with a written list of services for which the consumer

can shop. This written list of providers is separate from the Loan

Estimate, but must be provided within the same time frame - that

is, it must be provided to the consumer no later than three business

days after the creditor receives the consumer's application. The list

must:

1. Identify at least one available settlement service provider

for each service; and

2. State that the consumer may choose a different provider of

that service.

So with this definition in mind, if the consumer is permitted to

shop, and they select a service provider not on the lender's written

list, then it is not subject to a tolerance.

What to Know #8: It is important to understand the distinction of "being able to shop" and not. If a

"written list of service providers" is given to the Consumer by the Lender (within the same time frame as

the LE), then it is assumed that the Consumer is "permitted to shop for the service." Thus, you will be in

a position to refer your clients to providers of those services that they can shop for. "Services That You

Can Shop For" generally may include: i) Pest inspections, ii) Surveys, iii) Title - Closing Agent, v) Title

- Owner Title Insurance. "Services You Cannot Shop For" generally will include items such as: i)

Appraisals, ii) Credit Reports, iii) Flood Certifications

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b) Charges Subject to the a 10% Tolerance

Charges for third party services and recording fees paid by or imposed on

the consumer are grouped together and subject to a 10% cumulative

tolerance. This means the creditor may charge the consumer more than

the amount disclosed on the Loan Estimate for any of these charges so

long as the total sum of the charges added together does not exceed the

sum of all such charges disclosed on the Loan Estimate by more than 10%.

These charges are:

1. Recording Fees

2. Charges for third-party services where:

a. The charge is NOT paid to the creditor or the creditor's

affiliate; or

b. The consumer is permitted to shop for the third party

service, and the consumer selects a third-party service

provider on the creditor's written list of service providers.

Remember that for purposes of this section, a lender's LE was in good

faith if the cumulative of the settlement charges that are subject to the 10%

tolerance, are not greater than a 10% increase as shown on the Closing

Disclosure. Thus, even if a particular charge increased by more than 10%,

if the cumulative of the entire category is still within the 10% tolerance,

then the Loan estimate is said to be in "Good Faith."

Some fees are subject to a "zero tolerance". That is, they MAY NOT

increase at all from the LE to the CD. Those fees are:

1. Fees paid directly to the creditor or an affiliate;

2. Fees paid to unaffiliated third parties if the creditor did not permit

the consumer to shop for a third party service provider;

3. Transfer taxes.

3. Charges paid exceed the amounts disclosed on the Loan Estimate beyond the

applicable tolerance thresholds:

If the amounts paid by the consumer at closing exceeds the amounts disclosed on

the Loan Estimate beyond the applicable tolerance threshold, the creditor must

refund the excess to the consumer no later than 60 calendar days after

consummation.

1. For charges subject to a zero-tolerance, any amount charged beyond the

amount disclosed on the Loan Estimate must be refunded to the consumer.

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2. For charges subject to a 10% cumulative tolerance, to the extent the total

sum of the charges added together exceeds the sum of all such charges on

the Loan Estimate by more than 10%, the difference must be refunded to

the consumer.

D. Revisions and Correction to Loan Estimates

1. Generally

Creditors are bound by the LE provided within three business days of the

application, and may not issue revisions to Loan Estimates because they later

discover technical errors, miscalculations, or underestimations of charges.

Creditors are permitted to provide the consumer revised Loan Estimates (and use

them to compare estimated amounts to amounts actually charged for purposes of

determining "good faith") only in certain circumstances:

1. "Changed Circumstances" that occur after the LE is provided to the

Consumer that cause estimated settlement charges to increase more than is

permitted under the TILA-RESPA Rule;

2. "Changed circumstances" that occur after the LE is provided to the

consumer affect the consumer's eligibility for the terms for which the

consumer applied or the value of the security for the loan;

3. Revisions to the credit terms or the settlement are requested by the

Consumer;

4. The interest rate was not 'locked' when the LE was provided, and locking

the interest rate causes points or lender credits disclosed on the LE to

change;

5. The consumer indicates an "intent to proceed" with the transaction more

than 10 business days after the LE was originally provided; and

6. The loan is a new construction loan, and settlement is delayed by more

than 60 calendar days, if the original LE states clearly and conspicuously

that at any time prior to 60 calendar days before consummation, the

creditor may issue revised disclosures.

2. What is a "Changed Circumstance"?

A "Changed Circumstance" for purposes of a revised Loan Estimate is:

1. An extraordinary event beyond the control of any interested party or other

unexpected event specific to the consumer or transaction;

2. Information specific to the consumer or transaction that the creditor relied

upon when providing the Loan Estimate and that was inaccurate or

changed after the disclosures were provided; or

3. New information specific to the consumer or transaction that the creditor

did not rely on when providing the Loan Estimate.

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a) Changed Circumstances that Affect Settlement Charges:

A creditor may provide and use a revised LE redisclosing a settlement

charge if changed circumstances cause the estimated charge to increase or,

in the case of charges subject to the 10% cumulative tolerance, cause the

sum of those charges to increase by more than the 10% tolerance.

Examples of "changed circumstances" that affect settlement charges:

1. A natural disaster that damages the property or otherwise results in

additional closing costs;

2. New information not relied upon when providing the Loan

Estimate is discovered, such as a neighbor of the seller filing a

claim contesting the boundary of the property to be sold.

b) Changed Circumstances that Affect Eligibility:

A creditor may also provide and use a revised LE if a changed

circumstance affected the consumer's creditworthiness or the value of the

security of the loan, and resulted in the consumer being ineligible for an

estimated loan term previously disclosed.

Examples of "changed circumstances" that affect eligibility:

1. The creditor relied upon the consumer's representation of

$90,000.00 annual income, but underwriting determines that the

actual annual income is $80,000.00;

2. There are two co-applicants for a loan, but one of the applicants

subsequently becomes unemployed after the Loan Estimate is

provided.

3. Consumer Requests for Revisions to the Terms or other Changes

A creditor may use a revised Loan Estimate of a charge if the consumer requests

revisions to the credit terms or settlement that affects items disclosed on the Loan

Estimate and cause an estimated charge to increase

Remember that providing a revised Loan Estimate allows creditors to compare the

updated Loan Estimate to the Closing Disclosure. If amounts decrease, or

increase only to an extent that does not exceed the applicable tolerance limits

discussed above, the original LE is still deemed to be in good faith and

redisclosure of a Loan Estimate is not permitted.

4. Loan Estimate Expires

If the consumer indicates an "intent to proceed" with the transaction more than

10 business days after the Loan Estimate was delivered or placed in the mail to

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the consumer, a creditor may use a revised LE. No justification other than the

passage of 10 days is required to issue a revised Loan Estimate.

What to Know or Practice Tip #9: Keep in mind that as the Realtor, you often know of changes that

occur during a home purchasing process which may require that a Revised Loan Estimate be issued.

(Ex. - Tree limb falls on the house that reduces the home's value, or changes to the borrower(s)

employment or financial situation. Know that when the Revised LE is issued, it MUST be issued before

the Closing Disclosure. Because the Closing Disclosure must be received no later than 3 business days

before consummation, the new Revised Loan Estimate must be received by the Consumer no later than 4

business days prior to consummation. As such, to keep things moving forward, communicate any

changes to the Lender as soon as possible.

E. Timing for Revisions to the Loan Estimate

1. Generally

The general rule is that the creditor must deliver or place in the mail the revised

Loan Estimate to the consumer no later than three business days after receiving

the information sufficient to establish that a revised Loan Estimate is justified.

A creditor may not provide a revised Loan Estimate on or after the date it

provides the Closing Disclosure. The creditor must ensure that the consumer

receives the revised Loan Estimate no later than four business days prior to

consummation. Because the Closing Disclosure must be provided to the

consumer no later than three business days before consummation, this means that

the consumer must receive a Revised Loan Estimate no later than four business

days prior to consummation.

If the creditor is mailing the revised Loan Estimate and relying upon the three day

mailbox rule, the creditor would need to place in the mail the revised Loan

Estimate no later than seven business days before consummation of the

transaction to allow 3 business days for receipt.

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IV. Closing Disclosures

A. General Requirements of the Closing Disclosure

For loans that require a Loan Estimate and that proceed to consummation, creditors

MUST provide a new final disclosure reflecting the actual terms of the transaction. This

is called the "Closing Disclosure" (or "CD"). This form integrates and replaces the

existing HUD-1 and the final TIL. The creditor is generally required to ensure that the

consumer receives the Closing Disclosure no later than three business days before

consummation of the loan.

1. The Closing Disclosure generally must contain the actual terms and costs of the

transaction. Creditors may estimate disclosures using the best information

available when the actual term or cost is not reasonably available to the creditor at

the time the disclosure is made. They are required to provide a corrected

disclosure containing the actual terms of the transaction at or before

consummation.

2. The Closing Disclosure must be in writing and contain specific information.

3. If the actual terms or costs of the transaction change prior to consummation, the

creditor must provide a corrected disclosure that contains the actual terms of the

transaction.

4. New three-day waiting period: If the creditor provides a corrected disclosure, it

may also be required to provide the consumer with an additional three-business-

day waiting period prior to consummation.

Generally, for all "Federally related mortgage loans" subject to RESPA, the new

form is mandatory.

What to Know # 10: This is the form to become very familiar with. This is what will be reviewed at

closing. To the extent your client has any questions regarding the costs of their real estate transaction,

they will likely look to you for guidance on understanding the Closing Disclosure.

B. "Consummation": Is it the same thing as Closing or Settlement? While "consummation" may generally occur at the same time as closing or settlement, it

is a legally distinct event. Consummation occurs when the consumer becomes

contractually obligated to the creditor on the loan, not for example, when the consumer

becomes contractually obligated to a seller on a real estate transaction.

Typically, in Louisiana, this will occur when the funds are made available to the

consumer. Again, this is almost always done at the closing table. Nevertheless, to the

extent that this event occurs prior to the real estate transaction, the Closing Disclosure

must be provided three business days prior to that time.

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C. Information on the Closing Disclosure

1. Page 1: General Information, Loan Terms, Projected Payments, and Costs at

Closing

a) Top Section - Closing Information, Transaction Information, and Loan

Information

1. Closing information such as the date the CD was issued, the

closing date, disbursement date, settlement date, address of the

subject property, and sales price (or appraisal amount for loans

without a seller, or estimated appraisal if no appraisal was

required);

2. Transaction Information such as the Borrower, Seller, and Lender

(the name and address of each buyer and seller must be disclosed);

and

3. Loan Information such as the term, purpose, product, etc.

b) Loan Terms Table

1. The Loan Terms Table discloses the loan amount, the interest

rate, monthly principal and interest, whether or not there is a

prepayment penalty, and whether or not there is a balloon payment.

c) Projected Payments Table

1. The Projected Payments Table discloses the payment calculation

of principal and interest, mortgage insurance, and estimated

escrow, and an estimation of taxes, insurance and assessments.

d) Costs at Closing

1. The Costs At Closing Table discloses the total amount disclosed

as "Total Closing Costs" in the "Other Costs Table" on page 2 of

the CD. The amount is itemized to show the Total Loan Costs,

Total Other Costs, and Lender Credits.

2. The estimated amount of cash the consumer will pay at, or receive

from, closing is shown as Cash to Close. This is detailed on page

3 of the Closing Disclosure.

2. Page 2: Closing Costs Details

a) Loan Costs Table

The Loan Costs Table is broken down into three categories. The

amounts paid by the consumer, seller and others for item is disclosed here.

The items disclosed in the Loan Costs Table should generally be the same

as they were on the Loan Estimate, updated. The categories are:

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(1) Origination Charges

Loan originator compensation is disclosed as Origination Charges.

(2) Services the Consumer did and did not shop for:

When a consumer chooses a provider that was on the "Written List

of Service Providers" for a service (as provided by the

Lender/Creditor), that service is listed as Services Borrower Did

Not Shop For in the Closing Disclosure Loan Costs Table.

(3) Total Loan Costs

Totals the amounts that are designated as Borrower-Paid at or

Before Closing.

b) Other Costs Table

The items on the Other Costs Table are broken down into 4 categories:

(1) Taxes and Other Government Fees

(2) Prepaids

Items to be prepaid by the consumer in advance of the first

scheduled payment of the loan. Prepaids are:

1. Homeowner's Insurance Premiums;

2. Mortgage Insurance Premiums;

3. Prepaid Interest;

4. Property Taxes; and

5. A maximum of three additional items.

a. Each item must include the applicable time period

covered by the amount to be paid by the consumer

and the total amount to be paid.

(3) Initial Escrow Payment at Closing

(4) Other

Items are disclosed as "Other" to reflect costs incurred by the

consumer or seller that were not required to be disclosed on the

Loan Estimate. These costs include:

1. Real Estate Brokerage Fees;

2. Homeowner or condo association fees paid at

consummation;

3. Home Warranties;

4. Other fees paid at closing that are not required to be

disclosed elsewhere.

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c) Total Other Costs and Total Closing Costs

The total of all closing costs paid by the consumer, reduced by the Lender

Credit.

3. Page 3: Calculating Cash to Close, and Summaries of Transactions

On page 3 of the Closing Disclosure, the Calculating Cash to Close Table and

Summaries of Transactions Table are disclosed. For transactions without a

seller, a Payoffs and Payments Table may be substituted for the Summaries of

Transactions table. It has three columns to disclose: i) the amount for each item

as it was disclosed on the Loan Estimate, ii) the Final amount for the item, and iii)

the Question: "Did this change?"

a) Calculating Cash to Close Table

The Calculating Cash to Close Table has nine items listed. They are:

1. Total Closing Costs,

2. Closing Costs Paid Before Closing,

3. Closing Costs Financed (Paid from your Loan Amount),

4. Down Payment/Funds from Borrower,

5. Deposit,

6. Funds for Borrower,

7. Seller Credits,

8. Adjustments and Other Credits, and

9. Cash to Close.

(1) Total Closing Costs

In the Final column, Total Closing Costs is the same amount as

the amount disclosed as Total Closing Costs (Borrower-Paid) on

page 2 of the Closing Disclosure.

(a) Increases in Total Closing Costs that Exceed the Legal Limits

When the increase in Total Closing Costs exceeds the legal

limits, disclose a statement that an increase in closing costs

exceeds the legal limits by the dollar amount of the excess

in the "Did this Change?" column.

b) Summaries of Transactions

The Summaries of Transactions Table discloses the amounts associated

with the real estate purchase transaction between the consumer and seller,

together with closing costs, in order to disclose the amounts due from or

payable to the consumer and seller at closing, as applicable.

A separate Closing Disclosure can/will be provided to each so as not to

reflect the other party's costs and credits.

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Generally speaking, the Summaries of Transactions Table is similar to the

Summary of the Borrower's Transaction and Summary of Seller's

Transaction on the HUD-1.

What to Know # 11: Borrowers and Sellers will likely be getting two different CDs with only the

information relevant to their transaction shown on each due to privacy concerns addressed by the new

rules. Keep in mind that if you represent Sellers, they are not required to receive their CD until the day

of consummation. If you would like to see it earlier, contact the Settlement Company. In addition,

Lenders may not send the consumer's CD to anyone due to privacy concerns. If you need to see the CD

earlier in the process, your client will probably have sign a consent form.

(1) Borrower's Transaction

(a) Due from Borrower at Closing

The amount due from Borrower at Closing is the sum of:

1. Sale price of the property;

2. Closing Costs Paid at Closing (as designated on

Page 2 of the CD as Borrower-Paid At Closing);

3. Other consumer charges;

4. Adjustments; and

5. Adjustments for Items Paid by the Seller in

Advance, pursuant to the contract.

(b) Paid Already By or on Behalf of Borrower at Closing

The amount Paid Already by or on Behalf of Borrower at

Closing is the sum of:

1. Deposit;

2. Loan Amount;

3. Existing Loans Assumed or Taken Subject to;

4. Seller Credits;

5. Other Credits; and

6. Adjustments for Items Unpaid by Seller pursuant to

the contract.

(c) Cash to Close To or From Borrower

The Total Due from the Borrower at Closing is disclosed as

a positive number, the Total Paid Already by or on Behalf

of the Borrower at Closing is disclosed as a negative

number, and the sum as Cash to Close from Borrower when

the number is a positive number, and disclose the sum as

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Cash to close To Borrower when the result is a negative

number.

(2) Seller's Transaction

The Settlement Agent completes and discloses the Seller's

Transaction column of the Summaries of Transactions Table.

(a) Due to Seller at Closing

Is shown as the sum of:

1. The Sale Price of the Property;

2. Adjustments; and

3. Adjustments for Items Paid by Seller in Advance

due to the seller pursuant to the contract.

(b) Due From Seller at Closing

Is shown as the sum of:

1. An excess deposit;

2. Closing Costs Paid at Closing by the Seller;

3. Existing Loan(s) Assumed or Taken Subject to by

the Consumer;

4. Payoff of Mortgages;

5. Payment of other seller obligations;

6. Seller Credit;

7. Adjustments; and

8. Adjustments for Items Unpaid by Seller due to the

consumer pursuant to the contract.

(c) Cash to Close Due to or From Seller

"The Total Due to the Seller at Closing" is shown as a

positive number, and the "Total Due from Seller" at

Closing is shown as a negative number. When the result

of the sum of the "Total Due to Seller at Closing" and

"Total Due from Seller" at closing is positive, it will read

"Cash to Seller", and when the result of the sum is

negative, it will read "Cash from Seller."

4. Page 4: Additional Information About the Loan

a) Loan Disclosures Table

In the Loan Disclosures Table, here you'll find:

1. Information concerning future Assumption of the loan by a

subsequent purchaser;

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2. Whether the legal obligation contains a Demand Feature that can

require the early payment of the loan;

3. The terms of the legal obligation that impose a fee for a Late

Payment including the amount of time that passes before a fee is

imposed and the amount of such fee or how it is calculated;

4. Whether the regular periodic payments can cause the principal

balance of the loan to increase, creating a Negative Amortization;

5. The creditor's policy in relation to Partial Payments by the

consumer;

6. A statement that the consumer is granting a Security Interest in the

property (along with an identification of the property); and

7. Information related to any Escrow Account held by the servicer (or

a statement that an Escrow Account has not been established with

a description of estimated property costs during the first year after

consummation).

b) Escrow Account Information

(1) When an escrow account is established, disclosed in this section is:

1. The amount of Escrowed Property Costs over Year 1, with

a list of the costs that will be paid by the Escrow Account;

2. The amount of Non-Escrowed Property Costs over Year 1

with a lists of the costs that will not be paid by the Escrow

Account;

3. Initial Escrow Payment; and

4. Monthly Escrow Payment.

(2) When an escrow account is not established, disclosed is:

1. The amount of Estimated Property Costs over Year 1; and

2. The amount of any Escrow Waiver Fee imposed for

waiving the creation of an Escrow Account with the loan.

(a) Property Costs include:

1. Property Taxes;

2. Homeowner's insurance;

3. Charges imposed by a cooperative, condominium or

homeowners' association;

4. Ground rent;

5. Leasehold payments; and

6. Certain insurance premiums or charges if required

by the lender.

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c) Adjustable Payment Table

The Adjustable Payment Table will be disclosed when the periodic

principal and interest payment may change after consummation, but not

because of a change to the interest rate, or the loan is a seasonal payment

product. If the loan does not disclose these features, the AP Table will not

be disclosed.

d) Adjustable Interest Rate Table

When the loan's interest rate may increase after consummation, this table

will be disclosed.

5. Page 5: Loan Calculations, Other Disclosures, Contact Information, and

Confirmation of Receipt

a) Loan Calculations

Under this subheading will be the total of payments, the finance charge,

the amount financed, the APR, and the Total Interest Percentage.

b) Other Disclosures

Under this subheading will be i) A statement related to the consumer's

rights in relation to any Appraisal conducted for the property, ii) A

statement informing the consumer of consequences of nonpayment, what

constitutes default, when a creditor can accelerate maturity, and

prepayment rebates and penalties pursuant to contract details, iii) A

statement of whether State law provides for continued consumer

responsibility for any Liability after Foreclosure, a iv) A statement

concerning the consumer's ability to Refinance the loan, and v) A

statement concerning the extent that interest on the loan can be included as

a Tax Deduction by the consumer.

D. Delivery of the Closing Disclosure

1. Generally

The creditor is responsible for ensuring that the consumer receives the Closing

Disclosure from no later than three business days before consummation. To

ensure for delivery, creditors must arrange for delivery as follows:

1. By providing it to the consumer in person; or

2. By mailing, or by other delivery methods, including email. Creditors may

use electronic delivery methods subject to compliance with consumer

consent.

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What to Know #12: Creditors face big fines for not complying with this timing requirement. As such, to

the extent that the timing requirement conflicts with a scheduled closing date, know that lenders will

NOT close. Realtors can play an important role in communicating with lenders with respect to their

delivery arrangements. Keep in mind that if the lender will deliver it electronically, or via mail, the

three business day presumption until receipt applies. Thus, for it to be received three days prior to

consummation, it needs to be mailed three days before that. Thus the last day before consummation that

it could be sent, and still close on the scheduled date is six days before consummation. Remember, there

will be HIGHER RISK FOR DELAYS!

2. When has "Receipt" occurred?

If the Closing Disclosure was provided in person, it is considered to have been

received by the consumer on the day that it is provided. If it is mailed or

delivered electronically, the consumer is considered to have received the Closing

Disclosure three business days after it is delivered or placed in the mail. If the

creditor has evidence that the consumer received the Closing Disclosure earlier

than three business days after it is mailed or delivered, it may rely on that

evidence and consider it to be received on that date.

3. Closing Disclosure for the Seller

The settlement agent (title company) is required to provide the seller with the

Closing Disclosure reflecting the actual terms of the seller's transaction. It must

be provided to the Seller no later than the day of consummation.

4. Waiving the Three Day Waiting Period

Consumers may waive or modify the three business day waiting period when:

1. The extension of credit is needed to meet a bona-fide personal financial

emergency (not an easy standard to meet);

2. The consumer has received the Closing Disclosure; and

3. The consumer gives the creditor a dated and written statement that

describes the emergency, specifically modifies or waives the waiting

period, and bears the signatures of all of the consumers who are primarily

liable on the legal obligation.

a. This will not happen often. Lenders will be very cautious to waive the

three day waiting period.

a) Three day waiting period and corrected Closing Disclosures

The three-business-day waiting requirement applies to a corrected Closing

Disclosure that is provided when there are:

1. Changes to the loan's APR;

2. Changes to the loan product; or

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3. The addition of a prepayment penalty.

E. Revisions and Corrections to the Closing Disclosure

1. Generally

Creditors must redisclose terms or costs on the Closing Disclosure if certain

changes occur to the transaction after the Closing Disclosure was first provided,

that causes the Closing Disclosure to become inaccurate. There are three

categories of changes that require a corrected Closing Disclosure containing all

changed terms:

1. Changes that occur before consummation that require a new three-

business-day waiting period;

2. Changes that occur before consummation that do not require a new three-

business-day waiting period; and

3. Changes that occur after consummation.

a) Changes before Consummation that Require a New Waiting Period

If one of the following occurs after delivery of the Closing Disclosure and

before consummation, the creditor must provide a corrected Closing

Disclosure containing all changed terms and ensure that the consumer

receives it no later than three business days before consummation.

(1) The Disclosed APR becomes inaccurate

If the Annual Percentage Rate (APR) previously disclosed become

inaccurate, the creditor must provide a corrected Closing

Disclosure with the corrected APR disclosure and all other terms

that have changed.

(2) The Loan Product Changes; or

(3) A Prepayment Penalty is Added.

Practice Tip: To the extent that a discovery is made in a walk-through could increase the APR (which

is rare), it may be a good idea to perform a first walk through 10 days (or earlier) in advance of

consummation. If any major issues are present that do in fact impact APR, it will still be early enough

in the process to change the Closing Disclosure, and still close on time. A second walk through the day

before is also advised.

b) Changes before Consummation that DO NOT Require a New Waiting

Period

For any other changes before consummation that do not fall under one of

the three categories above, the creditor must still provide a Corrected

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Closing Disclosure with any terms or costs that have changed and ensure

that the customer receives it, however, there is no additional three day

waiting period required. The creditor must only ensure that the consumer

receives it at or before consummation.

What to Know #13: Many Realtors are under the impression that any changes to the transaction

between the time the CD was received by the consumer and consummation will require a new CD and

new three day wait period. RELAX. This is not the case! The ONLY instances in which a change

necessitates a new three day wait period is if the APR increases by .25%, the loan product changes, or a

prepayment penalty is added. Only in some situations would a change caused by the parties result in an

increase in APR, so there is not much to worry about. Nevertheless, apprise Lenders of any changes to

the transaction, as a new CD must still be issued at or before consummation, whether or not a new three

day waiting period is required.

c) Post-Consummation Corrected Closing Disclosures

(1) Generally

In some circumstances, creditors must provide a corrected Closing

Disclosure if an event in connection with the settlement occurs

during the 30-calendar-day period after consummation that causes

the Closing Disclosure to become inaccurate and results in a

change to an amount paid by the consumer from what was

previously disclosed. (For example, recording charges were less

than estimated).

(2) Seller Charge Changes

In some circumstances, Settlement Agents must provide a

corrected Closing Disclosure if an event in connection with the

settlement occurs during the 30-day period after consummation

that causes the Closing Disclosure to become inaccurate and

results to a change in the amount actually paid by the seller. The

Settlement Agent must deliver or place in the mail a corrected

Closing Disclosure not later than 30 calendar days after receiving

information establishing that the event has occurred.

(3) Clerical Errors on the Closing Disclosure

Creditors must also provide a revised Closing Disclosure to correct

non-numerical clerical errors and document refunds for tolerance

violations no later than 60 calendar days after consummation.

(4) Curing Tolerance Violations

If the creditor cures a tolerance violation by providing a refund to

the consumer, the creditor must deliver or place into the mail a

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corrected Closing Disclosure that reflects the refund no later than

60 calendar days after consummation.