TILA-RESPA—Are You Ready?content.aba.com/briefings/3012166.pdf · Please call 1- 800-BANKERS if you have any questions about this resource or ABA membership

ABA BRIEFING | PARTICIPANT’S GUIDE

TILA-RESPA—Are You Ready? New CFPB Mortgage Origination Rules Series

Thursday, May 28, 2015 Eastern Time

2:00 p.m.–3:30 p.m. Central Time

1:00 p.m.–2:30 p.m. Mountain Time

12:00 p.m.–1:30 p.m. Pacific Time

11:00 a.m.–12:30 p.m.

American Bankers Association New CFPB Mortgage Origination Rules Briefing Series TILA-RESPA—Are You Ready? Thursday, May 28, 2015 ▪ 2:00 – 3:30 p.m. ET

DISCLAIMER This Briefing will be recorded with permission and is furnished for informational use only. Neither the speakers, contributors nor ABA is engaged in rendering legal nor other expert professional services, for which outside competent professionals should be sought. All statements and opinions contained herein are the sole opinion of the speakers and subject to change without notice. Receipt of this information constitutes your acceptance of these terms and conditions.

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Please call 1-800-BANKERS if you have any questions about this resource or ABA membership.


II

Table of Contents

TABLE OF CONTENTS ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II

SPEAKER & ABA STAFF LISTING ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III

SPEAKER BIOGRAPHIES ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-V

PROGRAM OUTLINE ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI

CONTINUING EDUCATION CREDITS INFORMATION ... . . . . . . . . . . . . . . . . . . . . . . . VII

CPA SIGN-IN/SIGN-OUT SHEET ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII

INSTRUCTIONS FOR REQUESTING CERTIFICATES OF COMPLETION .. IX

PROGRAM INFORMATION ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ENCLOSED

PLEASE READ ALL ENCLOSED MATERIAL PRIOR TO BRIEFING. THANK YOU.

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III

Speaker and ABA Staff Listing

Speakers Joseph J. Reilly Partner BuckleySandler LLP 1250 24th Street, NW, Suite 700 Washington, DC 20037 (202) 349-7965 [email protected] Benjamin K. Olson Partner BuckleySandler LLP 1250 24th Street NW, Suite 700 Washington, DC 20037 (202) 349-7924 [email protected] Jonathan W. Cannon Counsel BuckleySandler LLP 100 Wilshire Boulevard, Suite 1000 Santa Monica, CA 90401 (310) 424-3903 [email protected] Brandy A. Hood Associate BuckleySandler LLP 1250 24th Street NW, Suite 700 Washington, DC 20037 (202) 461-2911 [email protected]

Moderator Rod Alba Senior Vice President, Real Estate Finance and Senior Regulatory Counsel Office of Mortgage Finance, Risk Management and Public Policy American Bankers Association (202) 663-5592 [email protected] ABA Briefing Staff Cari Hearn Senior Manager (202) 663-5393 [email protected] Linda M. Shepard Senior Manager (202) 663-5499 [email protected]

American Bankers Association 1120 Connecticut Avenue, NW Washington, DC 20036 www.aba.com

mailto:[email protected]







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IV

Speaker Biographies

ROD ALBA (Moderator) Rod is the principal staff on ABA’s efforts on assisting members with Dodd-Frank mortgage-related implementation efforts. Rod is the ABA staff liaison to the Mortgage Markets Committee, responsible for policy formulation on issues affecting real estate finance. Prior to ABA, he served as Legislative Counsel to the Mortgage Bankers Association, advising and coordinating the industry’s state and federal legislative efforts. Rod also served as the Mortgage Bankers Association’s Senior Director of Government Affairs. In this capacity, Rod was lead counsel on all legal and regulatory issues affecting residential real estate finance issues. Rod served as head of the MBA’s Regulatory Compliance and Legal Issues Committees, where he organized the advisory and advocacy activities of the industry’s legal and regulatory experts. Before joining MBA, Rod was an attorney with the Department of Housing and Urban Development, in the Office of General Counsel, GSE/RESPA Division. As Senior Attorney for RESPA, Rod participated in the drafting and development of every rule and administrative interpretation under RESPA and Regulation X from 1994 to 2000. Rod is a frequent speaker on panels and conferences relating to legal and regulatory developments in mortgage lending. In his experience with the mortgage industry, Rod has held roles in both public and private sectors. From 2004 to 2007, Rod served as Vice President for Federal and Regulatory Affairs with ACC Capital Holdings, in Washington, DC. In addition, Rod served as special projects counsel to National Council of La Raza, the largest Latino civil rights organization. Rod has received numerous recognition awards in his years with MBA and HUD. Prior to that, Rod was recognized with a Congressional Fellowship and served in a legal capacity in various federal administrative agencies. He serves as board member in non-profit organizations focusing on emerging market issues. His education includes a Juris Doctor (1993) from Syracuse University College of Law and a B.A. in Economics (1990) from the University of Maryland, College Park Campus. JOSEPH J. REILLY Joe Reilly, a partner in BuckleySandler’s Washington, DC office, advises a variety of clients on Consumer Financial Protection Bureau (CFPB) and other federal and state consumer financial services matters before financial services regulators. Mr. Reilly’s regulatory practice focuses on residential mortgage origination and servicing, and includes frequent counseling on new CFPB rules, fair and responsible lending and servicing, truth in lending, RESPA, fair credit reporting, licensing, federal and state disclosures, default and loss mitigation, contract terms, fee authorization issues, and federal preemption of state law. Mr. Reilly is the author of “The New CFPB Mortgage Origination Rules Deskbook,” published in partnership with the American Bankers Association in October 2014. The free PDF version has been downloaded over 9,000 times. The CFPB Deskbook consolidates all the varied sources of regulatory guidance on every new origination rule made effective by the CFPB (and other agencies) in 2014, including the rules on ability-to-repay and qualified mortgages, points and fees, loan originator compensation, appraisals, and many others. Mr. Reilly also is Vice Chair of the TILA Subcommittee of the American Bar Association’s Committee on Consumer Financial Services.


V

BENJAMIN K. OLSON Ben Olson, former Deputy Assistant Director for the Office of Regulations at the Consumer Financial Protection Bureau (CFPB), is a partner in the Washington, DC office of BuckleySandler LLP. His practice includes advising clients on the following matters: Compliance with CFPB mortgage and credit card regulations, particularly the rules implementing the Dodd-

Frank Act and CARD Act amendments to the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA)

Preparations for upcoming changes in regulations, particularly the CFPB’s final rules and disclosure forms integrating regulations governing the mortgage origination and settlement process under TILA and RESPA (sometimes referred to as the Bureau’s TILA-RESPA Integrated Disclosure, or “TRID” rule, or the “Know Before You Owe” initiative)

Designing terms and disclosures for mortgage and credit card products and features, including home equity lines of credit (HELOCs) and deferred interest programs, consistent with established regulatory requirements and testing criteria and the evolving standards for unfair, deceptive, and abusive acts and practices (UDAAPs)

Trends in supervision and enforcement actions at the CFPB and other regulators Prior to joining BuckleySandler, Ben managed over 40 regulatory attorneys and staff in the CFPB’s Office of Regulations, which is responsible for researching and analyzing legal and policy issues, drafting proposed and final rules and providing guidance to CFPB leadership and supervision and enforcement staff regarding consumer financial protection laws. Before joining the CFPB in June 2011, he served as Counsel in the Regulations Branch of the Federal Reserve Board’s Division of Consumer and Community Affairs. JONATHAN W. CANNON Jonathan Cannon is counsel in the Los Angeles office of BuckleySandler LLP. He advises financial institutions, financial services companies, mortgage companies, mortgage servicers, banks, securities broker-dealers, and others on federal and state regulations, including consumer credit laws and regulations such as RESPA, TILA, FCRA, FDCPA, GLBA, SCRA, SAFE Act, ECOA, and HMDA. Mr. Cannon also counsels clients on UDAP/UDAAP compliance multi-state licensing issues, state-law compliance programs, and alternative mortgage transactions. BRANDY A. HOOD Brandy A. Hood is an associate in Buckley Sandler LLP’s Washington, DC office. Ms. Hood advises clients on federal and state consumer financial services issues, including the RESPA, TILA, FDPA, ECOA, UDAP, UDAAP, FDCPA, and FCRA. She has spent the past year working closely with mortgage lenders and service providers to unlock and resolve the trickiest questions regarding the TRID rule. Ms. Hood received her J.D. from Tulane University (cum laude) in 2008. During law school, she was a judicial extern for the Honorable Lance Africk in the U.S. District Court for the Eastern District of Louisiana and was an editor for the Tulane Journal of International and Comparative Law.


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PROGRAM OUTLINE TIMES SESSION AND SPEAKERS

1:45 – 2:00 p.m. ET

Pre-Seminar Countdown

2:00 – 2:02

Welcome and Introduction Overview of Program Introduction of Moderator

1Source International

2:02 – 2:03

Speaker Introductions Rod Alba American Bankers Association

2:03 – 2:05

Introduction and Key Changes

2:05 – 2:35

Hot Topics: Scope Liability Effective Date and Application Preapprovals and Pre-qualifications

2:35 – 3:05

Hot Topic: Tolerances

3:05 – 3:25

Hot Topics: State Law Issues Home Loan Toolkit

3:25 – 3:30

Question and Answer Segment and Wrap-up


VII

Continuing Education Credits Information

The Institute of Certified Bankers™ (ICB) is dedicated to promoting the highest standards of performance and ethics within the financial services industry.

The ABA Briefing, “TILA-RESPA—Are Your Ready?” has been reviewed and approved for

2.0 continuing education credits towards the CRCM designation.

To claim these continuing education credits, ICB members should visit the Member Services page of the ICB Website at http://www.icbmembers.org/login.aspx. You will need your member ID and password to access your

personal information. If you have difficulty accessing the Website and/or do not recall your member ID and password, please contact ICB at [email protected] or 202-663-5092.

American Bankers Association is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org.

1.5 CPE credit hours (Regulatory Ethics) will be awarded for attending this group-live Briefing.

Participants eligible to receive CPE credits must sign in and out of the group-live Briefing on

the CPA Required Sign-in/Sign-out Sheet included in these handout materials. A CPA/CPE Certificate of Completion Request Form also must be completed online. See enclosed instructions.

Continuing Legal Education Credits This ABA Briefing is not pre-approved for continuing legal education (CLE) credits. However, it may be possible to work with your state bar to obtain these credits. Many states will approve telephone/ audio programs for CLE credits; some states require proof of attendance and some require application fees. Please contact your state bar for specific requirements and submission instructions.

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VIII

CPA Required Sign-in/Sign-out Sheet

CPAs may receive up to 1.5 hours of Continuing Professional Education (CPE) credit for participating in this group-live Briefing.

INSTRUCTIONS: 1. Each participating CPA must sign-in when he/she enters the room and sign-out when he/she

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Form (instructions found on the next page). 5. Individuals who do not complete both forms and submit them to ABA will not receive their

Certificate of Completion.

This CPE Sign In/Out Sheet must be uploaded with the CPE / CPA Request for

Certificate of Completion form (instructions found on next page of this kit) in order for the CPA to receive his/her Certificate of Completion.

FULL NAME

(PLEASE PRINT LEGIBLY) SIGNATURE TIME

IN TIME OUT

UNSCHEDULED BREAKS

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Please note: CPE credits are ONLY awarded to those who have listened to the live broadcast of this Briefing.

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IX

Instructions for Requesting Certificates of Completion

CPA/CPE Certificate of Completion

Submission of a sign-in/sign-out sheet AND request for a Certificate of Completion are required for the validation process to be completed.

NASBA requires ABA to validate your attendance in order for

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3. QUESTIONS about your certificate of completion? Contact us at [email protected].





5/27/2015

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1

Legal Counsel to the Financial Services Industry

Benjamin K. Olson

Joseph J. Reilly

Jonathan Cannon

Brandy A. Hood

TILA‐RESPA Integrated Disclosures

Are You Ready?

2

Disclaimer

This Briefing will be recorded with permission and isfurnished for informational use only. Neither the speakers,contributors nor ABA is engaged in rendering legal norother expert professional services, for which outsidecompetent professionals should be sought. All statementsand opinions contained herein are the sole opinion of thespeakers and subject to change without notice. Receipt ofthis information constitutes your acceptance of these termsand conditions.

5/27/2015

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Agenda

• Introduction and Key Changes

• Hot Topics:

– Scope

– Liability

– Effective Date and Application

– Preapprovals/Pre‐qualifications

– Tolerances

– State Law Issues

– Home Loan Toolkit

• Questions

4

Effective for applications received on or after August 1, 2015:

• GFE and initial TIL replaced with the Loan Estimate

– The items constituting an “application” are narrowed, requiring lenders to provide earlier disclosures based on more limited information

– “Tolerances” imposed by HUD in 2010 under RESPA that limit changes in estimated costs have been tightened and are now subject to CFPB enforcement and a TILA private right of action

• HUD‐1/1A and final TIL replaced with Closing Disclosure

– Disclosure must be received three business days before closing, requiring additional work earlier in process

– Lender is now responsible for errors in the settlement agent’s preparation of the settlement disclosures, creating private liability and vendor management risk

Key Changes

5/27/2015

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• TRID only applies to “closed‐end consumer credit transaction[s] secured by real property, other than a reverse mortgage subject to section 1026.33.”

• The rule does not apply to:– Home‐equity lines of credit – Reverse mortgages – Mortgages secured by a mobile home or by a dwelling that is

not attached to land– Loans made by a creditor who makes five or fewer mortgages in

a year– Certain no‐interest second mortgage loans made for the

purpose of downpayment assistance, property rehabilitation, energy efficiency, or foreclosure avoidance

Hot Topic 1: Scope

6

• Are co‐ops covered?

– “Real property” is not defined by Regulation Z, so state law or the contract controls

– CFPB staff have informally advised that they intended TRID to apply to co‐ops and would interpret it to apply if the co‐op is subject to state’s real property transfer tax or real estate law

– If creditor provides wrong disclosures, risk of private suit or rescission under TILA

Hot Topic 1: Scope

5/27/2015

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7

Hot Topic 2: Liability

• Liability Today: Two different statutes with two different liability schemes

TILA RESPA

Private right of action?

Yes for violations of TILA Part B No (for GFE/HUD‐1)

Damages? Yes for actual damages and statutory penalties up to $4,000 for

certain disclosures (e.g., APR, finance charge)

n/a

Attorney’s fees and costs?

Yes n/a

Assignee liability? Yes for violations apparent on the face of the disclosure and assigned

documents (e.g., note)

n/a

8


• Liability on August 1– Neither Congress nor the CFPB clearly defined liability under the

integrated TILA and RESPA disclosures

– CFPB states only that each provision of the rule carries the same liability as the statute on which it is based

• TILA liability for requirements based on TILA

• RESPA liability for requirements based on RESPA

– Each provision relies on TILA, RESPA, and Dodd‐Frank• But only a private right of action for violations of TILA Part B

• Most TILA authority cited from Part A

5/27/2015

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• Most TRID provisions adopted under TILA sec. 105(a) in Part A, which grants the CFPB authority to issue such regulations “as in the judgment of the Bureau are necessary or proper to effectuate the purposes of [TILA], to prevent circumvention or evasion thereof, or to facilitate compliance therewith”

• But, for example, tolerances: – In 2010, HUD interpreted the “good faith estimate” requirement in

RESPA to limit variations between estimated settlement charges on the GFE and actual settlement charges on the HUD‐1

– CFPB adopted tolerances under TILA’s good faith estimate requirement in Part B, creating a private right of action

10

Hot Topic 3: Effective Date and New “Application” Definition

• Rule generally applies to applications received on or after August 1, 2015

– Lenders must be ready to “flip the switch”

– No early usage of forms permitted

• Systems must be able to track the application date and provide the correct disclosures

– Application received on July 31 – Old disclosures

– Application received in August 1 – New disclosures

5/27/2015

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• “Application” means the submission of the following information for the purposes of obtaining an extension of credit:1. Borrower name;

2. Borrower income;

3. Borrower SSN to obtain credit report;

4. Property address;

5. Estimate of property value; and

6. Loan amount sought

• Creditor or broker may attempt to sequence the collection of information but cannot refuse to accept any of the six items

12


• Which rule applies if the six application items are already in the file on August 1, 2015 but GFE and TIL have not been issued because the application was not complete under the existing definition?

– CFPB has addressed in Official Interpretations (Comment 1(d)(5)‐1.i):

“Assume a creditor receives an application, as defined under § 1026.2(a)(3) of the TILA–RESPA Final Rule [the new six‐item TRID definition], for a transaction subject to §1026.19(e) and (f) on July 31, 2015, and that consummation of the transaction occurs on August 30, 2015. The amendments of the TILA–RESPA Final Rule, including the requirements to provide the Loan Estimate and Closing Disclosure under § 1026.19(e) and (f), do not apply to the transaction, except that the provisions of § 1026.19(e)(2) [limitations on predisclosure activity], specifically § 1026.19(e)(2)(i) [prohibition on fees before intent to proceed], (e)(2)(ii) [requirements for worksheets], and (e)(2)(iii) [prohibition on requiring verifying information], do apply to the transaction beginning on August 1, 2015 because they become effective on August 1, 2015, without respect to whether an application, as defined under § 1026.2(a)(3) of the TILA–RESPA Final Rule, has been received by the creditor or mortgage broker on that date.”

5/27/2015

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Hot Topic 4: Application, Pre‐approvals & Pre‐qualifications

• Are pre‐qualifications and pre‐approvals allowed under the new rule? – CFPB addressed in preamble to the final rule (78 Fed. Reg. 79730, 79767 (Dec.

31, 2013):

[T]he Bureau does not believe that the definition of application will restrict creditors' ability to provide pre‐qualification cost estimates or grant pre‐approvals. The Bureau believes that creditors could provide pre‐qualification estimates and grant pre‐approvals without obtaining all of the six specific items of information that make up the definition of application. Specifically, the Bureau believes that there is little need for creditors to gather specific information about the loan transaction, such as the property address or loan amount sought, to make pre‐qualification estimates because pre‐qualification estimates and pre‐approvals are not subject to the tolerance rules in § 1026.19(e)(3) and are generally for a range of loan amounts and property values. In fact, comments made by a national trade association representing community banks asked that the Bureau designate “property address” as an optional item in the definition of application for purchase transactions. This suggests to the Bureau that creditors may not need the “property address” to issue pre‐qualification estimates.

14

Hot Topic 5: Tolerances and the 10% Category

• Once the Loan Estimate has been provided, tolerances apply

– Zero Tolerance ‐ Disclosed amounts cannot increase

– 10 % Aggregate Tolerance ‐ Aggregate disclosed amount for third‐party services selected from List of Providers and recording fees cannot increase by more than 10%

– No Tolerance – Disclosed amount must be based on “best information reasonably available at the time” using “reasonable due diligence” but otherwise no limitation on increases

5/27/2015

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Hot Topic 5: Tolerances and the 10% Category

• Tolerance is not reset by an increase caused by a changed circumstance until the aggregate charges have increased by more than 10%

• For example: – Tolerance is not reset if increase in title insurance premium results in a

7% increase in the total due a changed circumstance

– But tolerance is reset if (1) appraisal fee later increases original total by 4% due to another changed circumstance; and (2) creditor reissues Loan Estimate within three business days

• Timing of revised Loan Estimate tied to date on which creditor receives information sufficient to establish that charges have increased by more than 10%

16

Hot Topic 6: Informational Loan Estimates

• If a closing cost increases but the prior estimate remains “in good faith,” may the creditor provide a revised Loan Estimate?

– Yes, but the revised Loan Estimate will not reset tolerances– Comment 19(e)(3)(iv)(A)‐1.ii (emphasis added):

• Assume a creditor provides a $400 estimate of title fees, which are included in the [10% tolerance] category ... An unreleased lien is discovered and the title company must perform additional work to release the lien. However, the additional costs amount to only a five percent increase over the sum of all fees included in the [10% tolerance] category ... A changed circumstance has occurred (i.e., new information), but the sum of all costs subject to the 10 percent tolerance category has not increased by more than 10 percent. Section 1026.19(e)(3)(iv) does not prohibit the creditor from issuing revised disclosures, but if the creditor issues revised disclosures in this scenario, when the disclosures required by § 1026.19(f)(1)(i) are delivered, the actual title fees of $500 may not be compared to the revised title fees of $500; they must be compared to the originally estimated title fees of $400 because the changed circumstance did not cause the sum of all costs subject to the 10 percent tolerance category to increase by more than 10 percent.

5/27/2015

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Hot Topic 7: Tolerance Comparison Chart

• Where is the comparison chart that shows applicable tolerance levels and how the charges on the LE and CD compare?

– The HUD‐1 comparison chart was removed, so tolerances must be tracked off‐sheet

– However, creditor must make certain disclosures if tolerances were violated and violation is cured using general lender credits

18

Hot Topic 7: Tolerance Comparison Chart

CD Page 2

CD Page 3

5/27/2015

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Hot Topic 8: Tolerances, Credits, and the Loan Estimate

• Loan Estimate requires disclosure of costs “the consumer will pay”

• “The disclosures shall reflect the terms to which the consumer and creditor are legally bound as of the outset of the transaction”– If borrower obligated but lender or seller will pay, disclose charge with

offsetting credit

– If borrower will not be charged (e.g., lender absorbs as costs of doing business), do not disclose

– But can disclose Owner’s Title paid by seller

• Different tolerance rules apply– Lender credits subject to zero tolerance and cannot decrease absent a

changed circumstance or other exception

– Seller credits are not subject to tolerances

20

Hot Topic 9: Tolerances and Shopping

• The importance of permitting the consumer to “shop” for a settlement service provider– Not permitted – zero tolerance applies

– Permitted – 10% tolerance applies

– Permitted and consumer selects own provider – tolerances do not apply

• How does a creditor permit the consumer to “shop”?– Consumer allowed to select provider, subject to reasonable requirements (e.g.,

licensure)

– Loan Estimate identifies services for which consumer may shop

– Written List of Providers identifies at least one available provider for each service and informs consumer that they may choose a different provider

5/27/2015

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• What if a shoppable service is added after the initial LE is provided? – Section 1026.19(e)(1)(vi)(C) requires the written list to be provided

separately from the Loan Estimate but also within three business days of application

– No provision allowing for subsequent written lists with revised LEs

– For example, if a changed circumstance occurs such that a termite inspection is required on the home and the original written list did not include a termite inspector, the rule does not provide for the provision of a new written list with the revised LE that identifies a termite inspector

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• What if a shoppable service is added after the initial LE is provided? (continued) – Official interpretations say that when no list is provided, the 10% tolerance

still applies to a shoppable service

• Comment 19(e)(3)(iii)‐2: “If the creditor permits the consumer to shop consistent with § 1026.19(e)(1)(vi)(A) [select the provider subject to creditor’s reasonable requirements] but fails to provide the list required by §1026.19(e)(1)(vi)(C) [which includes a timing requirement], good faith is determined pursuant to § 1026.19(e)(3)(ii) [10% tolerance] instead of §1026.19(e)(3)(iii) [no tolerance] regardless of the provider selected by the consumer, unless the provider is an affiliate of the creditor in which case good faith is determined pursuant to § 1026.19(e)(3)(i) [zero tolerance].”

– But Bureau staff stated during webinar on May 26th that if a creditor fails to provide a revised written list with a revised LE showing a new shoppableservice, the service is subject to 0% tolerance

5/27/2015

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Hot Topic 10: Tolerances and the Closing Disclosure

• Final revised Loan Estimate must be received by consumer no later than four specific business days before consummation– If there are less than four specific business days between the time the revised

Loan Estimate would be provided and consummation, tolerances can be reset using Closing Disclosure [Comment 19(e)(4)(ii)‐1]

– “If the event occurs after the first Closing Disclosure has been provided to the consumer (i.e., within the three‐business‐day waiting period before consummation), the creditor may use revised charges on the Closing Disclosure provided to the consumer at consummation, and compare those amounts to the amounts charged for purposes of determining good faith and tolerance. (Comment 19(e)(4)(ii)‐1) [Small Entity Compliance Guide § 9.5]

– Creditor can use final Closing Disclosure to reset tolerances for changed circumstances that occur 7‐8 specific business days before closing

• But if closing date is delayed after initial Closing Disclosure provided, a revised Closing Disclosure may not reset the tolerances– Example: If defect discovered during walkthrough and closing is delayed by two

weeks for repairs, lender cannot impose a rate lock extension fee

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Hot Topic 10: Tolerances and the Closing Disclosure

6 7 8 SIX BUS. DAYS BF. CLOSING 9 FIVE BUS. DAYS BF. CLOSING

10 FOUR BUS. DAYS BF. CLOSING

11 THREE BUS. DAYS BF. CLOSING

12 TWO

Initial CD mailed based on expected closing date of 9/15.

Initial CD presumed received (closing may occur on 9/15)

BUS. DAYS BF. CLOSING

13 14 ONE BUS. DAY BF.

CLOSING

15 Original CLOSINGDATE

16 17 18 19

CLOSING DATE DELAYED UNTIL 9/29. Rate lock extension fee incurred causing increase to zero tolerance fee. Revised disclosures could have been provided on final CD at a closing on 9/23 or earlier, but closing was delayed by too many days so tolerances cannot be reset.

[closing moved back to 9/29] [Revised LE with lock extension fee would have been due]

Not “Open for Bus.” Day

20 21 22 23 24 25 26

[Last day to close with CD reflecting rate lock fee]

TWO BUS. DAYS BF.NEWCLOSING

Not “Open for Bus.” Day

27 28 29 Closing 30

Final CD must be provided

5/27/2015

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Hot Topic 11: State Law Conflicts ‐ Blank Spaces

• Blank spaces

– Prohibited from using “N/A” or otherwise noting a particular line is not applicable on the Loan Estimate

– Some state laws prohibit blank lines

– Home Loan Toolkit: “Don’t sign documents where important details are left blank.”

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Hot Topic 12: State Law Conflicts – Title Insurance

• Lender’s Policy:– Services you can or cannot shop for (as applicable)– How to calculate: Full premium without any adjustment that

might be made for the simultaneous purchase of an owner’s title insurance policy

– Can use enhanced policy or endorsements if the lender knows that these products will be purchased

• Owner’s Policy:– “Other” category – Must be listed as “optional” unless contract says seller will pay– How to calculate: Full owner’s title insurance premium, adding

the simultaneous issuance premium for the lender’s coverage, and then deducting the full premium for lender’s coverage

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TRID Rule Requires:

Owners Title Insurance Policy Premium+ Lenders Simultaneous Title Insurance Policy Premium‐ Full Lenders Title insurance Premium____________________________________________Owners Title Insurance Policy Premium Disclosure

Lenders Title Insurance Policy Premium Disclosure = Full Lenders Title Insurance Policy Premium without any discount for simultaneous issuance discount

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For example:

$600 (full owners title premium)+ $200 (lenders title premium with simultaneous issuance discount)‐ $500 (full lenders title premium)____________________________________________$300 (owners title premium disclosure)

Lenders Title Insurance Policy Premium Disclosure = $500

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• At least three ways to disclose seller credits that pay for owner’s title insurance (if the cost of owner’s title insurance exceeds the amount disclosed on the CD because of the simultaneous issuance calculation)– Remaining credit may be applied to any other title insurance

costs, including lender’s title insurance

– Remaining credit may be applied as a general seller credit and disclosed as such on page 3 of the Closing Disclosure

– Separate credit may be provided on page 3 that specifies it is a credit for title insurance under the purchase and sale contract

• Disclosure dependent on terms of the contract between buyer and seller

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Hot Topic 13: APR Tolerances

• Revised Closing Disclosure and new three business day waiting period required if the APR “becomes inaccurate, as defined in § 1026.22”

• Only change to Reg. Z accuracy standards is addition of cross‐reference to § 1026.38(o)(2)– § 1026.22(a)(4) continues to provide that, “[i]f the annual percentage rate

disclosed in a transaction secured by real property or a dwelling varies from the actual rate … , the disclosed annual percentage rate shall also 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), as applicable….”

– § 1026.38(o)(2) mirrors current § 1026.18(d)(1) by providing that, “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 . . is greater than the amount required to be disclosed.”

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Hot Topic 14: Home Loan Toolkit

• Special Information Booklet required by RESPA and described in § 1026.19(g) was renamed “Your Home Loan Toolkit” and made available on April 1, 2015.

• Must be given to consumers for applications received on or after August 1, 2015

• Must be delivered or placed in the mail not later than three business days after application received.

• Only required if loan purpose is for purchase of 1‐4 family residential property

– Not required for refinance, second lien, or reverse mortgage

32

Hot Topic 13: Home Loan Toolkit

• Bureau is encouraging all market participants to provide Toolkit as early as possible

– Have also suggested integrating Toolkit with consumer marketing materials

• Electronic version available at: http://www.consumerfinance.gov/learnmore/#respa

– Link to order printed copies also available here

• Spanish language version not yet available

• Cover may include logos (see § 1026.19(g)(2)(iv) for additional information regarding what may appear on the cover)

5/27/2015

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ABA BRIEFING SERIES

New CFPB Mortgage Origination Rules February – June 2015 ▪ 2:00–3:30 p.m. ET*

The American Bankers Association announces the five-part New CFPB Mortgage Origination Rules Briefing/Webinar Series to complement the recently released free ABA publication, “The New CFPB Mortgage Origination Rules Deskbook,” which has been downloaded over 8,000 times since its release. Our featured speakers, Joseph J. Reilly, Partner, BuckleySandler LLP (principal author of the CFPB Deskbook) and Benjamin K. Olson, Partner, BuckleySandler LLP (former Deputy Assistant Director, Office of Regulations, CFPB) will provide you and your staff with a comprehensive review of the CFPB’s new mortgage origination rules. Other Key Issues from the CFPB’s Origination Rules – Thursday, June 25, 2015 While most of the spotlight is on ATR/QM, Loan Originator Compensation and TILA-RESPA, these are not the only CFPB Origination Rules giving lenders heartburn. This briefing/webinar will focus on other key issues from the CFPB’s Origination Rules: “Higher-Priced Mortgage Loan” vs. “High-Cost Mortgage” vs. “Higher-Priced Covered Transaction,” ECOA Valuation Disclosure and Delivery, TILA Regulations of Loan Originators (other than compensation) at banks, and other CFPB Origination Rules. Learn how to: Distinguish between HPML, High-Cost Mortgage

and HPCT, and what the differences are Apply the ECOA Valuation delivery and

disclosure requirements, including in the loss mitigation context

Comply with TILA’s requirements on bank loan originators relating to background, fitness and training

Resource: Chapters 5-9 of the CFPB Deskbook ATR / QM: Minimizing Examination Risk (Part 1) Aired: Feb 26, 2015 Recording Now Available ATR/QM has revolutionized mortgage underwriting. This recording focuses on the issues that have generated the most examiner criticism. Learn how to: Identify when a change in obligors does (and does

not) trigger the rule Identify when an exemption can help Verify income of self-employed borrowers and

handle other tricky verifications issues Build a record that will stand-up in court (against

objections on authenticity, hearsay, and completeness grounds)

Resource: Chapter 1 of the CFPB Deskbook

ATR/QM: Minimizing Examination Risk (Part 2) and Calculating Points and Fees Aired: Mar 26, 2015 Recording Now Available This recording finishes the review of what examiners have focused on with respect to ATR/QM. Then it addresses collateral issues, such as fair lending concerns when following ATR/QM, and cover QM rules by HUD-FHA and VA. It also addresses critical points-and-fees issues and following questions: What are the fair lending implications of the

ATR/QM Rules? Does the loan qualify as a “small creditor QM?” How to navigate the FHA’s QM Rule When and how much private mortgage insurance

should be included in points and fees? How to ensure discount points are “bona fide”

under the rule Resource: Chapters 1, 2 & 3 of the CFPB Deskbook Key Loan Originator Compensation Issues and Enforcement Actions Aired: Apr 23, 2015 Recording Now Available Navigating the Loan Originator Compensation rules is like walking a tight rope. Lean an inch too far one way and you risk examiner criticism or even an enforcement action. Lean an inch too far the other way and your originators may leave for a competitor. This recording walks you through the issues you need to understand how to win this balancing act. Learn how to: Ensure compliant written compensation plans

and policies Avoid tripping over the ban on point banks Avoid proxy payments Adjust prices without running afoul of the rule Ensure compensation when a loan originator must

be penalized Resource: Chapter 4 of the CFPB Deskbook

TILA-RESPA Disclosures—Are You Ready? Aired: May 28, 2015 Recording Now Available The new mortgage disclosure rule goes live August 1, 2015. This briefing will help you navigate the rule’s strict nuances and hard issues as you prepare. Learn how to: Solve the trickiest disclosure issues Avoid exceeding tolerances under

different scenarios Identify when an “application” starts the clock BuckleySandler LLP Presenters: Joseph J. Reilly, Partner Benjamin K. Olson, Partner Jonathan W. Cannon, Counsel Melissa Klimkiewicz, Counsel Jay S. Laifman, Counsel Sherry-Maria Safchuk, Associate Brandy A. Hood, Associate American Bankers Association Moderator Rod Alba, Senior Vice President, Real Estate

Finance and Senior Regulatory Counsel, American Bankers Association

Who Should Attend? Chief Lending Officers Mortgage Lenders Mortgage Loan

Managers Risk Managers and

Auditors

Chief Operating Officers

Settlement Professionals and Attorneys

CRCMs, CPAs Registration Fee PER Briefing Purchased* ABA/ICB Member/Service Member: $235

Non-Member: $365 *These ABA Briefings/Webinars includes streaming audio over the Internet, where an unlimited number of listeners can participate at one location. Audio over the telephone can be provided as an alternative. Any transmission, retransmission or publishing of these briefings is strictly prohibited. BONUS! Live briefing includes 7-day complimentary streaming access to the recording. Two Easy Ways to Register Register online at www.aba.com/briefings or call 1-800-BANKERS (1-800-226-5377).

Need Continuing Education Credits? The Institute of Certified Bankers (ICB) has reviewed and approved these programs for 2.0 CRCM credits each. In addition, the LIVE programs have been approved for 1.5 CPE credits for CPAs in various fields of study. Recordings are NOT eligible for CPE credits for CPAs.

American Bankers Association is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional educational on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: learningmarket.org.

Questions? Contact Linda Shepard at [email protected]. Or, call 1-800-BANKERS (1-800-226-5377).

You are receiving this fax communication because of your established business relationship with the American Bankers Association. Our objective is to provide you with the most relevant information, opportunities and issues impacting the financial services industry. If you would like to change your communication preferences, unsubscribe or receive additional information please contact 1-800-BANKERS or email your request to [email protected]. Your request will be processed within 30 days of receipt, as required by law.

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aba.com l 1-800-BANKERS

Mortgage loans are a core product for most banks. Despite the slew of new regulations, customers continue to buy and re� nance homes. They expect that just like deposit accounts, their bank will provide them a variety of mortgage options to meet their needs.

Industry experts predict a 37% increase in new home and a 7.4% increase in existing home sales in 2015*. That demand is why lenders of different sizes plan to expand their sales forces. And the CFPB’s recently proposed relief measures will ease some of the regulatory burden, and make it easier to make “quali� ed mortgages”.

The NEW Residential Mortgage Lender Certi� cate provides a solid understanding of banking, credit analysis, and legal principles that support the mortgage process. In keeping with evolving customer preferences, the certi� cate underscores relationship sales skills in addition to the mechanics of a mortgage loan, thereby preparing loan of� cers to be successful in growing their book of business and helping their bank acquire a deeper share of wallet.

The certi� cate is designed for aspiring mortgage lenders and those individuals new to the mortgage area of the bank, including mortgage loan clerks, loan processors, and closers.

ABA Residential Mortgage Lender Certi� cate

American Bankers Association

140years

■ Banking Today■ Appraisal Procedures**■ Basics of Mortgage Processing**■ Completing the HUD-1**■ Discovering FHA Programs■ Effective Client Referrals■ Elements of Title Insurance**■ Essentials of Mortgage Lending■ Ethical Issues for Bankers

■ Explaining Loan Modi� cations**■ Gathering the Facts on Mortgage Fraud**■ Mortgage Customer Counseling and Prequali� cation■ Personal Tax Return Analysis■ Processing and Underwriting Credit**■ Processing Income and Assets**■ Reviewing the Appraisal Report**

*Source: National Association of Realtors: Housing Expectations for 2015

**These courses are offered through a partnership with AllRegs, a leader in

residential mortgage lending.

ABA FRONTLINE COMPLIANCE TRAINING Smart banks choose Frontline Compliance Training from the American Bankers Association—the � rst and

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Developed by our experts, ABA Frontline Compliance Training is your assurance of the latest content on

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our streamlined process enables you to easily assign, track and report on training. Your bank saves training

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Visit aba.com/frontline or call 1-800-BANKERS to learn more.

First and Best

Documents

TILA-RESPA—Are You Ready?content.aba.com/briefings/3012166.pdf · Please call 1- 800-BANKERS if you have any questions about this resource or ABA membership