Closing Disclosurefic-webinars.s3.amazonaws.com/bc360-22-Handouts.pdf · 5 E-Sign Compliant Email From the Commentary to the Rule (emphasis) Page(s) 1691 2. Electronic delivery. The

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Closing DisclosureComparisons

&Tolerance

Cures

Including:– Construction Only Loans– Lot Loans – Vacant Land– Loans Secured by 25 Acres or More

TRID Disclosure RulesApplications taken on or after

October 3, 2015Covers most Closed-End Consumer

Transactions secured by Real Propertyincluding those secured by cooperatives

whether real property or not

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Loans Excluded from the Rule

HELOC’s – Home Equity Lines of Credit

Reverse MortgagesMobile Homes – Chattel Dwellings

(Mortgages secured by a Mobile Home or by a dwelling that is not attached to real property)

Partial exemption for certain Housing Assistance Programs


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Cooperatives

TRID Disclosures must be provided for closed-end consumer loans secured by a cooperative unit regardless of whether or not state law classifies the coop’s as real property

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Trusts & TrusteesTrusts & Trustees are considered the same person for Reg Z

Right of Rescission must be provided to each person who has the Right to Rescind

LE & CD may include signature lines & insert Trustee’s name below, along with designation of Trustee for Trust


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Housing Assistance LoansReg Z provides partial exemption from TRID

requirements for low-cost, non-interest bearing, subordinate lien housing assistance loans that satisfy 6 criteria

Revises 2 of 6 – regarding costs payable by the consumer at consummation with out loss of eligibility for the partial exemption

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Revises 2 of 6 criteria- Transfer Taxes, in addition to recording, application, and housing counseling fees, may be payable by the consumer at consummation without losing eligibility for the partial exemption; and

- Recording Fees & Transfer Taxes are excluded from the 1% cap on total costs payable by the consumer at consummation


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CLOSING DISCLOSURE – H-25Creditor is required to ensure the Consumer receives the CD no later than 3 business days before the Consummation of the loan

Consummation may not occur until on or after the 7th business day following the LE being delivered or placed in the mail


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Business Day Definition3 Business Days prior to Closing

A business day is all calendar days except Sundays and the legal public holidays specified in 5 USC 6103(a), such as New Year's Day, the Birthday of Martin Luther King, Jr., Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.


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Actual Deliveryvs


Assumed Delivery

When the CD is not provided in person, the consumer is

assumed to have received it 3 business days after it is

delivered or mailedA business day is all calendar days except Sundays and legal public holidays


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E-Sign Compliant EmailFrom the Commentary to the Rule (emphasis)

Page(s) 16912. Electronic delivery. The three-business-day period provided in § 1026.19(e)(1)(iv) applies to methods ofelectronic delivery, such as email. For example, if a creditor sends the disclosures required under § 1026.19(e) via email on Monday, pursuant to § 1026.19(e)(1)(iv) the consumer is considered to have received the disclosures on Thursday, three business days later. The creditor may, alternatively, rely on evidence that the consumer received the emailed disclosures earlier. For example, if the creditor emails the disclosures at 1 p.m. on Tuesday, the consumer emails the creditor with an acknowledgement of receipt of the disclosures at 5 p.m. on the same day, the creditor could demonstrate that the disclosures were received on the same day. Creditors using electronic delivery methods, such as email, must also comply with § 1026.37(o)(3)(iii), which provides that the disclosures in § 1026.37 may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. For example, if a creditor delivers the disclosures required under § 1026.19(e)(1)(i) to a consumer via email, but the creditor did not obtain the consumer’s consent to receive disclosures via email prior to delivering the disclosures, then the creditor does not comply with § 1026.37(o)(3)(iii), and the creditor does not comply with § 1026.19(e)(1)(i), assuming the disclosures were not provided in a different manner in accordance with the timing requirements of § 1026.19(e)(1)(iii).

Link: http://files.consumerfinance.gov/f/201311_cfpb_final-rule_integrated-mortgage-disclosures.pdf


E-Disclosures

The E-Disclosure process must comply with all requirements of the E-Sign Act, including demonstration of access, consent, receipt, and acceptance

As a “best practice” all of which should be logged with a time and date stamp for each event


Waiving 3 Day Waiting Period


- Extension of credit is needed to meet a bona fide personal financial emergency- Consumer has received Closing Disclosure- Consumer gives dated written statement describing the emergency with signatures of all consumers primarily liable- Creditor may not provide preprinted form

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Creditor is Responsible for the Closing Disclosure

Creditor may contract with settlement agents to have the settlement agent provide the Closing Disclosure to consumer’s on the Creditor’s behalf


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No Revised LE after CD

If rate is locked or other allowable revisions occur after CD is

provided, a corrected CD must be provided at or before

consummation to reflect changes


After Closing Disclosure is ProvidedIf the actual terms or costs change prior to consummation, Creditor must provide a corrected Closing Disclosure, but not necessarily require an additional 3 business day waiting period


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New 3 Business Day Waiting PeriodPrior to consummation, an additional 3 business day waiting period applies when there are changes to the Closing Disclosure resulting in:- A change in the APR making it inaccurate- Addition of a Prepayment Penalty- Changes to the Loan Product


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1026.22 Determination of APRRegular Transactions(a)(2) As a general rule, the APR shall be considered

accurate if it is not more than 1/8 of 1 percentage point above or below the APR determined in accordance with paragraph (a)(1).

Irregular Transactions(a)(3) In an irregular transaction, the APR shall be

considered accurate if it is not more than ¼ of 1 percentage point above or below the APR determined in accordance with paragraph (a)(1).


(a)(4) Mortgage loans. If the annual percentage rate disclosed in a transaction secured by real property or a dwelling varies from the actual rate determined in accordance with paragraph (a)(1) of this section, in addition to the tolerances applicable under paragraphs (a)(2) and (a)(3) of this section, the disclosed annual percentage rate shall be considered accurate if:(i) the rate results from the disclosed finance charge; and(ii) the disclosed finance charge would be considered accurate under 1026.18(d)(1) or 1026.38(o)(2)


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1026.18 Content of Disclosures(d) Finance charge. The finance charge, using that term, and a

brief description such as “the dollar amount the credit will cost you.”

(1) Mortgage loans. In a transaction secured by real property or a dwelling, the disclosed finance charge and other disclosures affected by the disclosed finance charge (including the amount financed and the annual percentage rate) shall be treated as accurate if the amount disclosed as the finance charge:

(i) Is understated by no more than $100; or

(ii) Is greater than the amount required to be disclosed.


1026.38 Content of disclosures for certain mortgage transactions (Closing Disclosure)(o) Loan calculations. In a separate table under the heading “Loan Calculations”:

* * * * * (2) Finance charge. The “Finance Charge,” using that term and expressed as a dollar amount, and the following statement: “The dollar amount the loan will cost you.” The disclosed finance charge and other disclosures affected by the disclosed financed charge (including the amount financed and the annual percentage rate) shall be treated as accurate if the amount disclosed as the finance charge:

(i) Is understated by no more than $100; or

(ii) Is greater than the amount required to be disclosed.


No New 3 Day Waiting PeriodOther Changes before consummation provide the updated revised Closing Disclosure to the Consumer at or before consummation

Consumer has the right to inspect the revised Closing Disclosure at least one business day prior to Consummation


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ConsummationOccurs when consumer becomes

contractually obligated to the creditor on a loan, not for example,

when a consumer becomes contractually obligated to a seller

on a real estate transaction


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Rescindable TransactionsClosing Disclosure must be provided separately to each person having the right to rescind

In addition, at consummation each person having the right to rescind will each receive 2 copies of the right of rescission


When can the Right to Rescindby Exercised?

The right can be exercised until midnight of the third business day following:

ConsummationDelivery of Right to Rescind Notice

Delivery of the Closing Disclosure

Whichever occurs last


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Transactions involving a SellerSettlement Agent must provide H-25(I) Closing Disclosure to the Seller no later than the day of consummation

Settlement Agent may also provide Seller with a separate disclosure that only includes the Sellers information but the Creditor must receive a copy of this separate disclosure


Post-Consummation within 30 daysProvide a corrected CD if an event related to the

settlement occurs during the 30 calendar days after consummation that causes the CD to become inaccurate and results in a change to an amount paid by the consumer (and in some cases paid by the seller) from what was previously disclosed

Deliver or place in the mail the revised Closing Disclosure no later than 30 calendar days after receiving information

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Corrected Closing Disclosure

Post-Consummation CD’s are not required if the only charges that changed

are per diem interest & disclosures affected by per diem interest –

If providing for other reasons the corrected per diem should be disclosed


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Post-ConsummationExample of a post-consummation event that would require a new Closing Disclosure is a discovery that a recording fee paid by the consumer is different from the amount disclosed on the CDHowever, other post-consummation events that are not related to settlement, such as tax increases, do not require revised CD


Curing Tolerance ViolationsTolerances violations must be cured with appropriate refunds to consumersIf amounts paid by the consumer exceed the amounts disclosed on the Loan Estimate beyond the applicable tolerances, no later than 60 calendar days the Creditor must:- Deliver or place in the mail a corrected CD reflecting the refunded amount- Refund the excess amount to the Consumer


No Fee May be Imposed for preparation or delivery

of the TILA RESPA Disclosures


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ClosingDisclosure

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Closing Information, Transaction Information, Loan Information

Loan TermsProjected PaymentsCosts at Closing

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Closing Information


Date Issued is the date the CD is deliveredClosing DateDisbursement DateSettlement AgentFile #, the settlement agent’s file number Property address or locationFor the property securing the loan: Sale Price,

Appraised Prop. Value, or Estimated Prop. ValueThe Appraised Prop. Value of the property securing the loan is disclosed for transactions without a seller. The Estimated Prop. Value of the property securing the loan is disclosed if the creditor has not obtained an appraisal for transactions without a seller.

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Common Errors

Incorrect completion or the omission of the issue date of the CD, the settlement agent name, File #, the seller’s address for a purchase transaction, and MIC#

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Incorrect CD issue date, could lead to the appearance that the initial CD was

not provided to the consumer with sufficient time prior to consummation.

If a revised CD is issued after the initial CD, the issue date of the

revised CD must be updated to reflect the date it was actually issued.

Transaction Information


For Transaction Information, disclose the name of the consumer as Borrower, the name of the seller as Seller, and the name of the creditor as Lender.

Loan InformationFor Loan Information, disclose the Loan Term, Purpose, Product, Loan Type, the creditor’s loan identification number as Loan ID #, and mortgage insurance case number, if required by the creditor, as MIC # under the Loan Information subheading.

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LOAN TERM is the term of the debt obligation

Loan Term as “years” when whole years.For example “1 year” or “30 years.”

Loan Term that is more than 24 months but is not whole years, describe using years and months abbreviations “yr” and “mo” respectively.

Loan Term that is less than 24 months - not whole years, use months only - “mo”

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PURPOSE is disclosed using one of four descriptions to describe the consumer’s intended use for the loan:

1. Purchase is disclosed if the loan will be used tofinance the Property’s acquisition.

2. Refinance is disclosed if the loan will be usedfor the refinance of an existing obligation that is secured by the Property (even if the creditor is not the holder or servicer of the original obligation). The consumer refinances an existing obligation already secured by the consumer’s dwelling to change the rate, term, or other loan features and may or may not receive cash from the transaction.

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3. Construction is disclosed if the loan will beused to finance the cost of initial construction-only of a dwelling on the property disclosed on the Loan Estimate, not renovations to existing dwellings. In a construction-only loan, the borrower may be required to make interest only payments during the loan term with the balance commonly due at the end of the construction project. Creditor’s should also use this category, in transactions where a multiple advance loan may be permanently financed by the same creditor (construction-to-permanent)

4. Home Equity Loan is disclosed if the loan willbe used for any other purpose, regardless of lien position.

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PRODUCTInclude 2 pieces of Information

The first piece of information is anypayment feature that may change the periodic payment, which includes Negative Amortization, Interest Only, Step Payment, Balloon Payment, or Seasonal Payment. Additionally, the duration of the relevant payment feature must be disclosed.

The second piece of information is whether the loan uses an Adjustable Rate, Step Rate or Fixed Rate to determine the interest rate applied to the principal balance.

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LOAN TYPE is the type of the loan

Conventional if the loan is not guaranteedor insured by a Federal or State government agency,FHA if the loan is insured by the Federal Housing Administration,VA if the loan is guaranteed by the U.S. Department of Veterans Affairs, andOther with a brief description if the loan is insured or guaranteed by another Federal or a State agency.

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LOAN ID# is the creditor’s loan identification number that may be used by a creditor, consumer, and other parties to identify the transaction. The Loan ID # may contain alpha-numeric characters and must be unique to the particular transaction. The same Loan ID # may not be used for different, but related, loan transactions (such as different loans to the same borrower). When a revised Loan Estimate is issued, the Loan ID # must be sufficient for the purpose of identifying the transaction associated with the initial Loan Estimate.

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Loan TermsProjected PaymentsCosts at Closing

These sections disclose the same information required to be disclosed on the Loan Estimate updated to reflect the terms of the legal obligation at consummation.

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Loan TermsExample : 30 Year Fixed Rate

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Loan TermsExample: 30 Year 5/5 ARM

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Loan TermsExample: 7 Year Balloon

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Projected PaymentsExample : 30 Year Fixed Rate - No MI

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Projected PaymentsExample: 30 Year 5/1 ARM – No MI

Projected PaymentsExample: 7 Year Balloon w/ MI

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ESTIMATED TAXES, INSURANCE & ASSESSMENTSDisclose the total monthly amount due for Property Taxes, Homeowner’s Insurance, charges imposed by a coop, condo or HOA; ground rent; leasehold payments; and certain insurance premiums or charges if required by the lender. Disclose Estimated Taxes, Insurance & Assessments as a rounded number.

Include these amounts as Estimated Taxes, Insurance & Assessments even if an escrow account will not be established under the terms of the legal obligation.

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Estimated Taxes, Insurance& Assessments

The HOA dues estimate should be identified on the initial application and be included as “Other” in this section of the Loan Estimate - If more than one item is being included under “Other,” identify

one item in the description, followed by the phrase “and additional charges”


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The “In escrow?” section must always be completed as YES, NO, or SOME for each checked item depending on the escrow disposition of the particular item

Make sure this is updated!Page 19

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Closing Disclosure - Bottom Pg1

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ClosingDisclosure

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Closing Cost Details

Loan CostsOther Costs

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0%

0% OR 10%If provider on written

list is used

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Good Faith Standard& Written List of Providers

The best information reasonably available standard (i.e., there is no tolerance limit on charges if they are based on the best information reasonably available) applies to bona fide 3rd party charges if:- Consumer is permitted to shop, &- Consumer selects provider not on the list, &- Estimated charges are best information reasonable available, even if paid to affiliate


Loan CostsThe items to be disclosed inthe Loan Costs table shouldgenerally be the same as theywere disclosed on the LoanEstimate, updated to reflectthe terms of the legalobligation at consummation,except as follows:

Origination Charges – Loan Originator CompensationServices the Consumer Did Not Shop ForServices the Consumer Did Shop For

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Loan Costs

Section A. Origination Charges should only include those items payable to each creditor and loan originator for originating and extending the credit. Misplacement of third party charges in Section A is a common error


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A. Origination ChargesThe items the consumer will pay to each creditor and loan originator for originating and extending credit.

First, include the amount paid, if any, by the consumer to the creditor to reduce the interest rate (sometimes referred to as “points”) as both a percentage of the loan amount and a dollar amount. Other Examples are:

Origination Fee Processing FeeUnderwriting Fee Application FeeRate-Lock Fee Administration Fee

0%

Loan Originator Compensation


Loan Originator Compensation is disclosed as Origination Charges, even though it is not disclosed on the LE. Compensation from the Consumer to a 3rd

party loan originator is designated as Borrower-Paid At Closing or Before Closing on the CD.

Compensation from the Creditor to a 3rd party Loan Originator is designated as Paid by Others. A designation of (L) can be listed with the amount to indicate the creditor pays compensation at consummation. Page 22


The amount of compensation from the Creditor to a 3rd party originator is the same as the amount of 3rd

party compensation included in points & fees for purposes of determining the Consumer’s Ability to Repay the loan.

Compensation to individual loan originators is not calculated or disclosed on the Closing Disclosure.

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Services Consumer Did andDid Not Shop For


Items that the consumer could have shopped for, but did not, are disclosed in the Services Borrower Did Not Shop For subheading, regardless of where the item was disclosed on the Loan Estimate.

When a consumer chooses a provider that was on the Written List of Providers for a service, that service is listed as Services Borrower Did Not Shop For in the Closing Disclosure Loan Costs table.

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B. Services BorrowerDid Not Shop For


Services provided by persons other than the creditor or mortgage broker that the consumer DID NOT shop for: Examples Might Include:

Appraisal Fee Appraisal Management Company Fee Credit Report Fee Flood Determination Fee Government Funding Fee (such as VAor USDA guarantee fee, or any other fee paid to a government entity as part of a governmental loan)

0%OR 10%if Provider on Written List is

Used


Homeowner’s Association Certification Fee Lender’s Attorney Fee Tax Status Search Fee Third-party Subordination Fee Title – Closing Protection Letter Fee Title – Lender’s Title Insurance Policy An Upfront Mortgage Insurance Fee (unless the fee is a prepayment of future premiums or a payment into an escrow account)

MORE Examples of ServicesBorrower DID NOT Shop For Might Include:

0%OR 10%if Provider on Written List is

Used

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10% Cumulative ToleranceThe 10% cumulative tolerance applies

to a required 3rd party non-affiliate settlement charge, even if the creditor failed to disclose on the written list of providers or the written list was not provided at all, as long as the consumer is permitted to shop


0% Zero ToleranceZero 0% tolerance applies to required settlement service charges paid to anyone, if, based on the relevant facts & circumstances, the consumer was not permitted to shop



Describe the services related to issuing

title insurance policieswith the word

Title – at the beginning of the item

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C. Services Borrower DID Shop For


The creditor permits a consumer to shop for an item if the creditor permits the consumer to select the provider of that item, subject to reasonable requirements (such as appropriate licensing of the provider). Examples Might Include:

Pest Inspection FeeSurvey FeeTitle – Closing Agent FeeTitle – Closing Protection Letter Fee

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Non-creditor required items, such as a Home Inspection fee, should not appear in Section C

These items should be included in Section H - Other


D. Total Loan Costs (Borrower Paid)


The amounts that are designated as Borrower-Paid At or Before Closing are subtotaled as Total Loan Costs (Borrower-Paid). The amounts that are designated Seller-Paid At or Before Closing and Paid by Others are not subtotaled as Total Loan Costs (Borrower-Paid).

Loan Costs Subtotals (A) + (B) + (C) Page 23

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Other Costs


The items to be disclosed in the Other Costs table should be disclosed as they would be disclosed on the Loan Estimate, updated to reflect the terms of the legal obligation and real estate transaction at consummation, except as specifically discussed below.

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Both lines hard-coded.No additional lines

Other: Max 5

All costs less lender credits(Blanket credit)

Prepaid Interest with pennies4 lines hard-coded.Max 3 additional lines

Show pennies3 lines hard-coded.Max 5 additional linesNow Use aggregate adjustment.

10%0%

0%

E. Taxes & Other Government Fees


An itemization of Transfer Taxes paid by the consumer and the seller is disclosed under the heading Taxes and Other Government Fees, instead of the sum total of Transfer Taxes to be paid by the consumer.

Recording fees must all be shown as a bundled charge on Line 01; however, only the recording fees for the deed, if any, and mortgage must be shown itemized in the description.

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Items to be paid by the consumer in advance of the first scheduled payment of the loan. Prepaids are:

Homeowner’s Insurance Premium, Mortgage Insurance Premium,Prepaid Interest,Property Taxes, and (max of 3 additional items)

Omitting the time period covered by the amount collected is a common error.

F. Prepaids

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G. Initial Escrow Payment at Closing


Property Taxes paid during different time periods can be disclosed as separate items. For example, general property taxes assessed for January 1 to December 31 and property taxes to fund schools for November 1 to October 31 can be disclosed as separate items. The last item disclosed in the Initial Escrow Payment at Closing is the Aggregate Adjustment. The Aggregate Adjustment is calculated under Regulation X.

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H. 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:

Real estate brokerage fees,HOA or Condo fees paid at consummation,Home warranties,Inspection fees, andOther fees paid at closing that are not required by the creditor or otherwise required to be disclosed elsewhere on the CD.

The amount of an earnest money deposit does not affect the amount of real estate commissions paid by the consumer or seller on the Closing Disclosure, even if the earnest money deposit is held by the real estate brokerage. Page 25

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I. Total Other Costs (Borrower Paid)


Other Costs Subtotals (E) + (F) + (G) + (H)(E) Taxes & Other Government Fees(F) Prepaids(G) Initial Escrow Payment at Closing(H) Other

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J. Total Closing Costs (Borrower Paid)

Closing Costs Subtotals (D + I)(D) Total Loan Costs (Borrower Paid)

Loan Costs Subtotals (A) + (B) + (C)

(I) Total Other Costs (Borrower Paid)Other Costs Subtotals (E) + (F) + (G) + (H)

less Lender Credits

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Lender Credits


All general lender credits, regardless of their reason or source, are included as Lender Credits. However, if the lender credit is attributable to a charge listed on the CD page 2, then the amount should be listed with the item and designated as Paid By Others. A designation of (L) can be listed with the amount to indicate that the creditor pays the item at consummation.

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The creditor should include the amount of any offset to resolve an excess charge by the creditor as Lender Credits. A statement that such an amount is paid by the creditor to offset an excess charge, with funds other than closing funds, is also included as part of Lender Credits. See form H-25(F) of appendix H to Regulation Z for an example of this statement)

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Closing Disclosure

Page 3

CalculatingCash to Close

Summaries of Transactions

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Calculating Cash to Close


The table has three columns to disclose the amount for each of these 9 items, as it was disclosed on the LE or an allowable revised LE, the Final amount for the item and an answer to Did this Change?

Total Closing Costs, Closing Costs Paid Before Closing, Closing Costs Financed (Paid from your Loan Amount),Down Payment/Funds from Borrower, Deposit, Funds for Borrower, Seller Credits, Adjustments and Other Credits, &Cash to Close

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When the answer to the question Did this change? is Yes, indicate where the consumer can find the amounts that have changed on the LE.

For example, if the Seller Credit amount changed, the creditor can indicate that the consumer should “See Seller Credits in Section L.”

Other examples of language for these items are found in example form H-25(B) in appendix H of Regulation Z.

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Summaries of Transactions


Use the Summaries of Transactions table to disclose 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 be provided to the consumer and the seller that do not reflect the other party’s costs and credits by omitting certain disclosures on each separate Closing Disclosure.

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For Transactions without a Seller, a Payoffs and Payments Table may be substituted for the Summaries of Transactions table and placed before the Alternative Calculating Cash to Close table

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Alternative CalculatingCash to Close

for transactions without a seller

Total Closing Costs is the sum of Total Loan Costs, Total Other Costs, and Lender Credits.

An optional Alternative Calculating Cash to Close table can be disclosed for transactions without a seller. This Alternative Calculating Cash to Close table would be used in place of the previous table. A creditor that uses the optional Alternative Calculating Cash to Close table must also use the alternative disclosure provisions of the Alternative Costs at Closing table on Loan Estimate page 1.

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Calculating Cash to CloseClosing Disclosure - Alternate VersionNo Cash Out – Closing Costs Financed


Common ErrorsPage 3 of the CD includes the Calculating Cash to Close

table, common completion errors, include:

• The Loan Estimate column not reflecting the figures as disclosed on the last issued Loan Estimate

•Missing explanations in the “Did this change?” column when a change did occur, as indicated by the word YES

•Not identifying where a change resulted in a tolerance cure shown as a Section J. Total Closing Costs lender credit

•Using the wrong format for calculating cash to close so that it is inconsistent with the format used for the Calculating Cash to Close table in the Loan Estimate



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Closing Disclosure

Page 4

Additional Information About this Loan

Loan Disclosures, Escrow Account,AP and AIR Tables (when applicable)

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Additional Information


Loan DisclosuresAssumptionDemand FeatureLate PaymentNegative AmortizationPartial PaymentSecurity InterestEscrow Account

Do not leave these boxes blank!Page 38

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Escrow AccountWhen an escrow account will not be

established, the questions in the Escrow Account section concerning the reasons for not having an escrow

account are commonly left blank


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Adjustable Payment Table (AP)


The Adjustable Payment (AP) Table is 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 considered to be a Seasonal Payment product. If the loan does not contain these features, the AP Table is not disclosed.

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Adjustable Payment Table (AP)

Appears when: • Interest Only• Optional Payments• Step Payment• Seasonal Payments

Does not appear for ARM

Must be referenced on page 1

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Adjustable Interest Rate Table (AIR)


The Adjustable Interest Rate (AIR) Table is disclosed when the loan’s interest rate may increase after consummation. If the loan’s interest rate will not increase after consummation, the AIR Table is not disclosed.

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Adjustable Interest Rate Table (AIR)Index description can be abbreviated, but the consumer must be able to reasonably identify it.

Appears only when loan’s interest rate may increase after consummation.

Must be referenced on page 1

36 months

Every 36 months after 1st change

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Closing Disclosure

Page 5

Loan Calculations, Other Disclosures, Contact Information, Confirm Receipt

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P&I + MI + (D) Loan Costs)

Accrued Interest & Prepaid FC’s

Loan Amount less Prepaid FC’s

Costs as yearly Rate

Interest / Loan AmtIf prepaid interest has a negative value, it may either be included as a negative value in the TIP or not be included

Loan Calculations

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Total of Payments Disclosure

Tolerances for the Total of Payments disclosure mirror the tolerances applicable to the finance charge

It is considered accurate if it is overstated or if it is understated by no

more than $100


Other Disclosures


AppraisalContract DetailsLiability After ForeclosureRefinanceTax Deduction

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Contact InformationConfirm Receipt

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www.ficconferences.comCopyright © FIC Conferences, Inc. Page 45


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0%

0%

10%Cumulative

If provider on written list

10%Part of

Cumulative

1850.+ 70.1920. X 10% = $192.

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10%Cumulative

If provider on written list

10%Part of Cumulative

0%

0%

1920.-75. (Notary)1845.

Loan EstimateTitle – Closing/Escrow Fee $500Title – Endorsement Fee $150Title – Lender’s Title Policy $1,000Title – Title Search $125Recording Fee $70TOTAL $1845

Closing DisclosureTitle – Closing/Escrow Fee $500Title – Endorsement Fee $350Title – Lender’s Title Policy $1,000Title – Title Search $150Recording Fee $100TOTAL $2100

Total Increase in Comparison for 10% Cumulative Tolerance $2100 – $1845. = $255.

255.-184.50

70.50 $70.50 Difference due in Lender Credit

0%

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Copyright © FIC Conferences, Inc.

Loan EstimateTitle – Closing/Escrow Fee $500Title – Endorsement Fee $150Title – Lender’s Title Policy $1,000Title – Title Search $125Recording Fee $70(Title- Notary Fee $75)TOTAL $1845

Closing DisclosureTitle – Closing/Escrow Fee $500Title – Endorsement Fee $350Title – Lender’s Title Policy $1,000Title – Title Search $150Recording Fee $100TOTAL $2100

Total Increase in Comparison for 10% Cumulative

Tolerance$2100 - $1845 = $255.

255.-184.50

70.50

$70.50Difference due in

Lender Credit

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Separation ofConsumer & Seller Information

H-25(I) Seller Closing Disclosure

Settlement Agent must provide Closing Disclosure to the Seller no later than the day of consummation

Settlement Agent may also provide Seller with a separate disclosure that only includes the Sellers information but the Creditor must receive a copy of this separate disclosure


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Page 58

Pg - 807

Page 59

Construction Loans


Finance Charges, Points & Fees for Constructionphase must be allocated to the Construction phaseLoan Estimate must be provided within 3 businessdays of Construction ApplicationLoan Estimate must be provided within 3 businessdays of Permanent ApplicationOne Application for Construction/Permanent but separate disclosures must both be provided within 3 business days of Construction/Permanent Application

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If creditor charges an origination fee for construction financing only but charges a greater origination fee for construction/permanent financing, the difference between the two fees must be allocated to the permanent phase.

All other finance charges and points & fees must be allocated to the permanent financing.

Page 60


Fees & charges that are not used to compute the finance charge or

points & fees may be allocated between the transactions in any

manner the creditor chooses

Page 60

LE Timing & Delivery


Construction Only ApplicationLE must be provided within 3 business daysOne Application for Construction/PermanentSeparate LE must be provided within 3 business days of Construction/Permanent Application or Combined LE must be provided within 3 business days Construction Application received on one date and

Permanent Loan Application received on a later dateLE issued for the construction loan and permanent loan within three business days from the respective application dates

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Inspection & Handling

Construction inspection & handling charges collected at or before

consummation are disclosed in the loan costs table, and that such

costs are collected after consummation are disclosed in a

separate addendum


Page 60-61

Construction Loansthat are NOT Purchases


(i.e. loan to build where NO land is being purchased)

LE may include the estimated value of theimprovements to be madeCD must include the value of the propertyused for the approval, including improvements if used to determine the approval of the transaction

Page 61

Construction/Permanent Loan Term


Disclosed as a Single TransactionLoan Estimate shows combined loan term forexample 12 month construction and 30 year permanent is disclosed as 31 years

Disclosed as Two Separate TransactionsLoan Estimate for the permanent phase begins on thedate that interest for the permanent phase’s periodic payments begin to accrue, regardless of when the loan is disclosed

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Multiple Advance Construction


A one-year fixed rate interest only construction loan is disclosed as:

11 mo Interest Only, Fixed Rate

A fixed rate construction/permanent loan with a 12 month interest only construction period is disclosed as:

1 Year Interest Only, Fixed RatePage 61


When disclosing a construction/permanent loan separately, the permanent loan is disclosed as a fixed rate, if the rate remains the same as the construction phase.

Page 61


When disclosing a construction-permanent loan separately, if the interest rate may adjust at the time of conversion to the permanent phase (i.e., based on an index), the permanent phase is disclosed as an adjustable rate even if the interest rate will then remain fixed for the life of the permanent loan and will require an ARM payment change notice at least 60 days prior to conversion.

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Disclosure of Product

If there is a final balloon payment that includes principal, it is not counted for purposes of determining the duration of the “Interest Only” payment period.

Page 61-62


For a combined construction/permanent disclosure, the “Interest Only” payment period is disclosed as the full term of the construction phase, plus any additional interest only period in the permanent phase. There is no balloon payment at the end of the construction phase if a construction-permanent loan is disclosed as a single transaction.

Page 61-62


For construction/permanent loans with a single consummation (with combined or separate disclosures), if the interest rate for the permanent phase is not known at consummation, the Product for the permanent phase is an Adjustable Rate product, as the interest rate may increase after consummation.

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Similarly, if the interest rate for the permanent phase is known but is different from the interest rate of the construction phase, the Product for the permanent

phase is a Step Rate, as the interest rate will change after consummation and the change is known.

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Any disclosures that would accompany the applicable Product would also apply, such as disclosure of the duration of the introductory rate period, the AP Table or the AIR Table.

Page 62


If the permanent loan has an adjustable rate and separate disclosures are provided, the rate disclosed for the permanent phase is the fully-indexed rate.

If the permanent loan has a fixed rate that is not known at consummation, it is treated as an adjustable rate, and if separate disclosures are provided, the rate disclosed for the permanent phase is the fully-indexed rate.

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Disclosure of Interest Rate

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If the permanent loan has a fixed rate that is known at consummation and will not be adjusted upon conversion from the construction phase and separate disclosures are provided, the rate is disclosed.

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Disclosure of Interest Rate

Loan Terms:


Requires a YES answer to whether payments can increase after closing on multiple advance loans when the timing of advances is unknown…

When answering YES, it will require the disclosure of “Adjusts every mo. starting in mo. 1” and “Can go as high as $[insert maximum possible periodic principal and interest payment] in year 1”. Month or years can be used as appropriate.

Page 63

AP Table


Also requires the insertion of an AP table. Interest Only Payment will be answered YES. The amount or range of payments will be left blank in the First Change/Amount disclosure, but will disclose the first change as 1st Payment. Subsequent Changes will reflect “Every Month” and the Maximum Payment will disclose the maximum possible interest payment “Starting at 1st Payment”

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AIR Table


Also requires the insertion of an AIR table. For loans that are adjustable rate where interest is payable only on the amount advanced for the time it is outstanding and Appendix D is used to calculate the periodic payment:

The increase in periodic payment disclosures are based on changes in the interest rate and total amount advanced.

Page 63

Projected Payments Table


If the Construction and Permanent phases are disclosed as separate transactions:

Construction phase must be disclosed according to requirements for the Projected Payments table, including disclosing the number and amounts of the interest only payments.

If the terms of the construction phase do not account for repayment of the entire principal, it must disclose a balloon payment. Page 63

Projected Payments Table


If the Construction and Permanent phases are disclosed as a single transaction:

Projected Payments table must reflect the interest only payments during the construction phase in the first column. The first column should also reflect the amortizing payments, and mortgage insurance and escrow payments, if any, for the permanent phase if the term of the construction phase is not a full year.

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Disclosing Mortgage Insurance & Escrow Payments in Projected Payments Table


On a combined construction/permanent disclosure the first column in the Projected Payments table reflects the interest only payment during the construction phase and if the construction phase is less than one year, the first column also reflects the amortizing payments, and mortgage insurance and escrow payments, if any, for the permanent phase. The interest only payment is calculated using the Appendix D assumptions.

Page 63

Clarification on Construction Costs


Requires the disclosure of the entireamount of construction costs whether the loan proceeds will pay all or part of those costs.

The construction costs on the LE arefactored into the Funds for Borrower calculation similar to any other existing debt of the borrower being satisfied by the transaction.

Page 64


The creditor has the option to disclose any construction reserve account established by thecreditor as either a separate line item or togetherwith the construction costs. If a reserve account isdisclosed as a separate line item, the labeling ofthe reserve account needs to meet the “clear andconspicuous” standards.

Any inspection and handling fees disclosed on theaddendum for the Loan Estimate and ClosingDisclosure must be included in the calculation ofthe “In 5 Years” and “Total of Payments”disclosures, respectively.

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QUIZOnce you have completed the Quiz for this “Boot Camp 360” Webcast Training, that is included in the workbook, the Answer Key along with your Certificate of Completion have also been provided for you records.If you have questions or need assistance please email [email protected]

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Documents

Closing Disclosurefic-webinars.s3.amazonaws.com/bc360-22-Handouts.pdf · 5 E-Sign Compliant Email From the Commentary to the Rule (emphasis) Page(s) 1691 2. Electronic delivery. The