Know Before You Owe with New Haven Middlesex Association of - - PowerPoint PPT Presentation

TILA-RESPA Integrated Disclosure (TRID) Rule a.k.a. Know Before You Owe with New Haven Middlesex Association

• f REALTORS

July 16, 2015 Jeremy Potter, General Counsel and Chief Compliance Officer, Norcom Mortgage

1

What We’ll Cover:

• Basics: Why We’re Here
• Final Rule
• The New Forms
• Evaluating the Rule
• Challenges for banks and its attorneys
• Questions

2

CFPB Authority in our Industry

• Alternative Mortgage

Transaction Parity Act

• Consumer Leasing Act of

1976

• Electronic Fund Transfer Act*
• Equal Credit Opportunity Act
• Fair Credit Billing Act
• Fair Credit Reporting Act*
• Home Owners Protection Act
• f 1998
• Fair Debt Collection Practices

Act

• Federal Deposit Insurance

Act*

• Gramm-Leach-Bliley Act*
• Home Mortgage Disclosure

Act of 1975

4

• Home Ownership and Equity

Protection Act of 1994

• Real Estate Settlement

Procedures Act of 1974

• S.A.F.E. Mortgage Licensing

Act of 2008

• Truth in Lending Act
• Truth in Savings Act
• Omnibus Appropriations Act
• f 2009*
• Interstate Land Sales Full

Disclosure Act

• Mortgage Reform and Anti-

Predatory Lending Act*

*Indicates that portions of this Act transferred to the CFPB while other portions did not.

Basics:

• Applicable Loans
• Final rule applies to most consumer mortgages, EXCEPT:
• Home-equity lines of credit
• Reverse mortgages
• Mortgages secured by a mobile home or dwelling not

attached to land

• No-interest second mortgage made for down payment

assistance, energy efficiency or foreclosure avoidance

• Lenders who make 5 or fewer loans in a year
• Consumer instead of Borrower
• Creditor instead of Lender
• Variances reference changes to fees
• Tolerances reference the thresholds on fees

5

The New Forms:

• Loan Estimate
• 3 pages long
• Combines early two-page TIL

and three-page GFE

• Who provides?
• Two options: lender or

mortgage broker

• When?
• Within three days of

application

• Still subject to tolerances

6

• Closing Disclosure
• 5 pages long
• Combines three-page HUD-1

and final two-page TIL

• Who provides?
• Two options: lender or

combination of lender and settlement agent

• When?
• Three days before closing
• Exceptions

LOAN ESTIMATE

• The New Forms Must Be Used with Respect to Any

Applications Received for a Covered Transaction

• n or after October 3, 2015
• No change for the following:
• Cannot Impose Lender Fees (except for credit report) before

consumer Receives LE and indicates Intent to Proceed

• Cannot Require Submission of Verification Documents prior to

issuing the LE

• You Cannot Use New Forms Before Effective Date

7

LOAN ESTIMATE – Timing

• Must Be Provided Within Three (3) Business Days

(open for substantially all business) of Receiving an Application

• Delivered
• Or Placed in Mail
• That Delivery Date (or Date Placed in Mail) Must

Also Be no Later Than Seventh (7th) Business Date Before Consummation

• Trigger Date is Date When “Application” Received
• By Creditor
• Or by Mortgage Broker

8

LOAN ESTIMATE -

• Loan Estimate Must be Completed in “Good Faith”
• Based on Actual Information if Known
• Must Use “Good Faith” and Exercise “Due Diligence” to Try to

Obtain Information

• Estimate Must be Based on “Best Information Reasonably

Available”

• Using Good Faith
• Due Diligence
• CFPB has not addressed the scope of due diligence
• You Can Rely on Third Parties for Information
• Including Consumer

9

10

11

12

Consumer Shopping

• A creditor permits a borrower to shop for third party

settlement services when they:

• Inform borrowers on Loan Estimate
• Provide them with a written list of settlement service providers
• The creditor may still impose reasonable

qualifications for providers.

• Example:
• Provider must be licensed – Impact on closed list
• Creditor is not indemnifying “the list”

13

Summary of when new LE is possible

The exceptions include situations when: 1) The consumer asks for a change; 2) The consumer chooses a service provider that was not identified by the creditor; 3) Information provided at application was inaccurate or becomes inaccurate; or 4) The LE expires. When an exception applies, the creditor generally must provide an updated LE form within 3 business days.

14

Closing Disclosure (CD)

• Required form used by lenders
• Three business days before closing
• Provided by:
• Lender
• Lender may rely on Settlement Agent, but Lender

remains responsible for accuracy

• Contents covered by § 1026.38

15

Closing Disclosure Page 1

§ 1026.38(a)-(d)

16

(a) General Information (b) Loan Terms (c) Projected Payments (d) Costs at Closing

Closing Disclosure Page 5

§ 1026.38(o)-(q)

17

(o) Loan Calculations (p) Other Disclosures (q) Questions Notice

Closing Disclosure Page Five (cont.)

§ 1026.38(r)-(s)

18

(r) Contact information (Refinance)

Contact information for: 1. Lender 2. Mortgage Broker 3. Settlement Agent

(r) Contact Information (Sale)

Contact information for: 1. Lender 2. Mortgage Broker 3. Real Estate Broker (B) 4. Real Estate Broker (S) 5. Settlement Agent

(s) Signature Statement

Sale – Closing Date

Delivery By Hand:

19

SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 1 2 3 4 5 6 7 Hand Delivery = Receipt Disclosure Day 1 8 9 10 11 12 13 14 Sunday doesn't count Disclosure Day 2 Disclosure Day 3 - OK to close

Delivery By Mail:

SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 1 2 3 4 5 6 7 Closing Disclosure MAILED Mail Day 1 Mail Day 2 Mail Day 3 = Receipt Disclosure Day 1 8 9 10 11 12 13 14 Sunday doesn't count Disclosure Day 2 Disclosure Day 3 - OK to close