The New TILA/RESPA RuleThe New TILA/RESPA Rule

A briefing on the new federal regulations effective October 3, 2015

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What you will see in the following slides are national regulations. Please also refer to your local and state laws to ensure you are in compliance with state regulations.

Course OverviewCourse Overview

In this course, we will:• Review the new TILA/RESPA rule• Share tips for a smooth, stress-free closing

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The TRID RuleThe TRID Rule

TTruth in Lending Act

RReal Estate Settlement Procedures Act

IIntegrated

DDisclosures

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TTRRIIDDThe rule

It’s the LawIt’s the Law

• This is a federal law and impacts the entire real estate industry

• This change is brought to you by: the Consumer Financial Protection Bureau

• Effective date: October 3, 2015

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The Rationale for This The Rationale for This ChangeChange

• Give a borrower more time to fully understand the actual charges for a particular loan

• Simpler, easy-to-understand language • No surprises in terms of fees or how a loan works

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New Forms IntroducedNew Forms Introduced

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New Forms IntroducedNew Forms Introduced

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Two New DisclosuresTwo New Disclosures

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The Closing DisclosureThe Closing Disclosure(replaces the HUD-1 and(replaces the HUD-1 andfinal Truth in Lending)final Truth in Lending)

The Loan EstimateThe Loan Estimate(replaces the Truth in Lending(replaces the Truth in Lending

and Good Faith Estimate)and Good Faith Estimate)

Applications received on Oct 3, 2015 will use the new documents

Loan Estimate

Closing Disclosure

Applications received before Oct 3, 2015 will continue to be processed through using old forms

HUD1Good Faith

EstimateTruth in Lending

Disclosure

Oct 3, 2015

There Will Be a Transition There Will Be a Transition PeriodPeriod

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NOTE: The new Integrated Disclosures must be provided by a mortgage broker that receives an application from a consumer for a closed-end credit transaction secured by real property on or after October 3, 2015

The Closing TimelineThe Closing Timeline

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The closing date determines when the Closing Disclosure (CD) must be sent by the lender and received by the homebuyer. The CD must be received at least three business days before the closing.

The Closing TimelineThe Closing Timeline

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Sundays and holidays are NOT included as “business days” for the review period.Regular mail via US Postal Service adds three days to the process. Overnight mail or courier delivery adds one day.

When emailing, we count days, not hours. It can be received any time during the business day.

The Clock Will Be ResetThe Clock Will Be ResetA new, 3 business-day waiting period is required if:

• The APR increases more than 1/8% for fixed-rate loans and 1/4% for adjustable-rate loans

• A prepayment penalty is added• There is a change to the basic loan product*

In these cases, the clock resets and a new 3 business-day period begins. Basic Loan Basic Loan

Product Change*Product Change*Added Added

PrepaymentPrepayment

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*For example, a switch from fixed to adjustable interest rate loan or to a loan with interest-only payments.

% for adjustable

Increase of Increase of More ThanMore Than

APRAPR

% for fixed

Re-setRe-set

Other Changes to the CDOther Changes to the CD• For changes other than an increase in APR, addition

of a prepayment penalty, or to the basic loan product, the Borrower has the right to inspect a changed CD one business day before the day of the actual Closing.

• This may change the date Closing actually occurs.• EXAMPLE: If the CD is changed on the date of Closing for

reasons other than cited above, the Borrower has the right to push the Closing to the following business day in order to review the changed CD. The Borrower may waive this right and close on the same business day.

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The Good News . . . The Good News . . .

• Now your buyers will know all the fees in advance (3 days in advance)

• With the new 3-business-day waiting period, the buyers can review everything and have the time to go to the bank, get any cash needed, be better prepared for a much smoother closing

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You Need Mortgage, Title & You Need Mortgage, Title & Insurance Partners who:Insurance Partners who: Are educated and competent to comply with

the new regulations and ensure an on-time closing

Have the infrastructure and technology to handle the new forms and process

Coordinate among all parties so closings are efficient and stress-free

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Tips for a Smooth ClosingTips for a Smooth Closing

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Reminder: The tips we are about to provide are to assist in getting to a smooth closing. Please also refer to your state and local requirements and regulations to confirm these tips are in line with local and state regulations.

Tips for a Smooth Closing for Tips for a Smooth Closing for BuyersBuyers

• Introduce your buyers to yourGold Services/Mortgage Partners early on in the process.

• Guide buyers to be prepared to provide all needed documents so they can put a loan application in right away.

• Consult with your Gold Services/Mortgage Partners at the outset of any contract for guidance on how closing dates and timeline may be impacted by TRID.

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Tips for a Smooth Closing for Tips for a Smooth Closing for BuyersBuyers

• Best practice: Recommend TWO walk-throughs – one 7 to 10 days before closing to allow time for any needed changes to the CD and one the day of closing to verify the property condition.

• When scheduling back-to-back closings, advise clients to be mindful of the rule’s potential to affect closing dates.

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Tips for a Smooth ClosingTips for a Smooth Closing

• Be sure to offer your clients a home warranty

• It can reduce expenses for unforeseen repairs

• Avoid unpleasant surprises

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Tips for a Smooth ClosingTips for a Smooth ClosingFor BOTH buyers and sellers• Advise buyers and sellers to avoid

last-minute changes as this may impact their Closing timeline.

• Avoid closing on the last day of the month . . . – Lower volume, therefore, revisions to CDs

can happen more quickly.– Make it easier to arrange for movers and

other needed services.

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Use the Buyer ConsultationUse the Buyer Consultation• It’s more important than

ever to conduct a Buyer Consultation with every buyer.

• Introduce your buyers to the Gold Services/Mortgage Partner

• Show your value. • Explain the process.

Suggested DialogueSuggested Dialogue

“I want to introduce you to my Gold Services/Mortgage Partner. His name is Bob and he will review how this new federal regulation could impact your closing.  He has some information that will definitely help you through this process.”*

*When you introduce the GSM, have buyer sign the RESPA/AfBA form if applicable.

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