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TILA-RESPA Integrated Disclosures Rule
Overview
Ryan L. BuckleyAccount Executive562.241.1141
Overview GoalBy the end of this overview, participants will
have a well-rounded understanding of the process of closing loans within the complex
of the new TRID regulations, from origination of the loan to the retention requirements for
all related records and actions.
Linear Title Company Overview
Company ProfileOwnership Privately Owned Title Agency
Inception 2005Corporate Offices Newport, RI
Employees 360Underwriters Fidelity, First American, Old Republic,
North American Title Insurance Company, Williston Financial Group
(WFG) National Title and Westcor Land Title
Fundings Per Month 4000 Capacity Per Month 10,000 funded transactions
Property Reports Per Month
30,000
Security Virtual Private NetworkSecurity & Technology SSAE 16 SOC 1
Data Transmission MPLS Private NetworkFootprint All 50 States
High Volume States CA,TX, PA, FLBBB Rating A+ Rating
History and Origin
General Specs
Loan Estimate Disclosures (LE)
Closing Disclosures (CD)
Other Disclosures
Recordkeeping
Latitude Loan Services
Presentation Overview
Origin
Dodd-Frank Act
Directs CFPB to integrate TILA and RESPA disclosures
Bureau finalized rule with new integrated disclosures
Integrated Mortgage Disclosures under the Real
Estate Settlement Procedures Act (Regulation X)
Truth in Lending Act (Regulation Z)
Revisions are found in:
CFPB’s Goals
Easier-to-use mortgage disclosure forms
Improve customer Understanding Aid Comparison shopping Prevent Surprises at closing table
Scope of Rule
Most closed-end consumer mortgage loans Establishes requirements for
timeshares/construction loans/loans to trusts for estate/tax purposes/25 acre+
NOT APPLICALBLE TO: HELOCs Reverse Mortgages Non land-attached mobile homes Loans by creditors with < 5 loans / year Certain no interest mortgages
Effective DateOctober 3rd, 2015
Applications Received Before October 3rd
GFE and initial TIL used
HUD-1 and final TIL still used regardless of close date
Applications Received On Or After October 3rd GFE and initial TIL
combined into new Loan Estimate
HUD-1/1A and final TIL combined into new Closing Disclosure
Results in OVERLAP of forms
Certain rules effected regardless of application reception. NO:
1) Imposed fees 2) Estimates without disclaimer 3) Required docsPRIOR TO LE DELIVERY
Liability
TILA Private right of action (individual or class
action) with attorney’s fees and costs
Statutory penalties of up to $4,000 for failures to properly provide certain disclosures (including finance charge and APR)
RESPA No private right of action for GFE and HUD-1
disclosures
Liability
Dodd-Frank §1055 CFPB enforcement of consumer financial laws
(TILA, RESPA included) $5,000/day per violation; $25,000/day for
reckless; $1M/day for knowing 3 year Right of Rescission with errors on any of
disclosures APR, Finance Charge, Payment Schedule, Section
32 of Loan Disclosure, Prepayment Penalties
General Overview Use of forms is mandatory for most
transactions and Only limited modifications are permitted
Facilitate comparison between loans during origination process
Structure driven by testing Key terms on first page
Interest rate and how it can change Monthly payment and how it can change Cash to close
Additional detail/itemization on subsequent pages
Other info on back
New Loan Estimate Form
Initial TIL Disclosure + Good Faith EstimateNew Loan Estimate Form
Currently borrowers receive the GFE and the initial TIL disclosure. On October 3rd, 2015 the creditor will instead use a combined Loan Estimate
form intended to replace the GFE and TIL. The new three-page Loan Estimate form must be provided to borrowers on a timetable similar to the
current GFE.
Loan Estimate: General
Good faith estimates of credit costs and transaction terms and must: Be made based on best info available Be in writing and contain info prescribed in S
1026.37 (Form H-24) Satisfy timing and method of delivery
requirements Revisions only in certain circumstances
Not technical errors, miscalculations or underestimations
Be provided by either broker or lender
Loan Estimate Who Provides?
Creditor or broker, but LENDER is legally RESPONSIBLE
Broker provision: if broker receives a consumer’s application and provides LE, broker must comply with all relevant requirements
CREDITOR must ensure that all requirements are met
Broker provision satisfies creditor’s obligation
Loan Estimate When?
Deliver and place in mail within three business days after creditor receives application and seven business days before consummation
Application: 6 items: borrower name; income; SSN to obtain credit report; property address; estimate of property value; loan amount sought
Business day: two meanings Providing Loan Estimate Disclosures AND Re-
disclosures: 3 days on which creditors offices are open to
public and performing most all of its business functions after application is received
All Other Instances 7 calendar days except Sunday and legal
holidays before consummation (unless financial emergency)
Loan Estimate When?
Worksheets: any estimates of costs/terms cannot resemble LE and must state clearly:
Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.
Fees & Verifications: retains limitation on fees and requiring documentation until borrower gives “notice of intent to proceed” in manner specified by creditor
Must be documented Redisclosure: provide revised disclosure:
Within three “open for business days” of receiving sufficient info
On date rate is locked
Loan Estimate Fee Changes Tolerance
Estimates are required to be made in good faith and are determined as such by comparing to closing disclosure Category 1: Zero Tolerance
Disclosed amounts cannot increase Category 2: 10% Aggregate Tolerance
Aggregate disclosed amount for 3rd party services selected from List of Providers and recording fees cannot increase by more than 10%
Category 3: No Tolerance Disclosed amount must be based on best information
reasonably available at the time using reasonable due diligence but no limitation on increases
Category 1 Fee Tolerance
Zero Tolerance unless exception applies Creditor’s or broker’s charges for own services Charges for services provided by affiliate Charges for services for which consumer is not
permitted to shop Transfer taxes
Category 2 Fee Tolerance
10% Aggregate Tolerance 3rd party services selected from List of
Providers Recording Fees
Example LE original amount Re-discloses a higher amount <10% Closes with higher amount <10% above
redisclosed amount VIOLATION!
Category 3 Fee Tolerance
No tolerance Prepaid interest Property insurance premium Amounts placed in escrow or impound Charges paid to consumer-selected, third-party
service providers not on List of Providers Charges paid for third party services not
required by creditor even if paid to affiliate
Loss of Tolerance in Category 2
A discovery is revealed that qualifies as a “Changed Circumstance”
Results in cost increase <10% Creditor can re-disclose, but cost at
closing cannot exceed 10% of original LE
Loan Estimate: Timing for Revisions
Same timeline as original application New LE must be delivered or placed in mail
by third day after receiving information requiring revision
Must be received by consumer no later than 4 days before consummation
Cannot be delivered after CD
Loan Estimate: Permitted Revisions Circumstances May issue revisions to LE due to changed
circumstances that affect consumer eligibility: Extraordinary event Info specific to consumer or transaction was in
accurate or changed New info
May issue revisions to LE due to changed circumstances that affect settlement costs: Natural disaster Title insurer goes out of business New info related to property
May NOT issue revisions to LE because of later discovered technical errors, miscalculations, or underestimations of charges OR if charges increase within
tolerance level
Loan Estimate: Permitted Revisions Circumstances
1. Changed circumstance affecting eligibility or settlement charges
2. Consumer request causes increased charge3. Interest rate dependent charges. If rate is not
locked for original LE, new LE required when locked within 3 days
4. Expiration: consumer does not indicate intent to proceed within 10 “open for business” days after LE provided
5. New Construction: closing more than 60 days after initial LE; must be stated that it may revise
*When exception applies, provide new LE by third day after new information is obtained and wait at least 4 business days after receipt before consummation
Written List of Providers If consumer is permitted to shop for
settlement service, creditor must provide written list identifying at least one available provider for each service and stating that customer may choose different provider Must contain sufficient contact Provider must service consumer’s
area Must include RESPA affiliated business
disclosure if applicable May state non-endorsement
May provide list separate from LE but subject to same time requirements
New Closing Disclosure Form
Final TIL Disclosure + HUD1 SettlementNew Closing Disclosure Form
The Final Truth-In-Lending and HUD1 Settlement are combined into a single Closing Disclosure form. The New Closing Disclosure form is used
not only to disclose many terms and provisions of the loan, but also the financial details of the closing.
Closing Disclosure: Basics Standard form for transactions covered by both
RESPA and TILA Model form for transactions covered only by TILA Lender is responsible for the preparation of the
Closing Disclosure Rule also allows lender to delegate the
preparation to their settlement agent Creditor remains responsible to ensure CD
complies Settlement agent responsible for providing CD to
seller and creditor
Closing Disclosure: Multiple Versions
Versions with borrower and seller and without seller
For borrower seller versions, separation of borrower and seller information permitted for versions provided to respective parties
Closing Disclosure: Timing Borrower must receive CD at least 3 business days
before consummation “business day” not “open for business day” Timeshare transactions: no later than consummation
Certain changes require new disclosure AND waiting period APR becomes inaccurate, loan product changes or
prepay penalty added All other changes require new disclosure but NOT
waiting period Borrower may inspect CD based on info known to
creditor one business day before consummation IF requested
Seller must receive CD at or before consummation
Closing Disclosure Timing
Delivery in person: receipt upon delivery Everything else, “mailing rule” applies
Deemed receipt the third business day after sent out by any method, including electronic
May rely on evidence of actual receipt, electronic or otherwise
*may waive 3 day waiting period upon personal financial
emergency
Closing Disclosure Timeline: Mailing
Tuesday
2
Wednesday
3
Thursday
4CD
Considered
Delivered
Friday
5
Saturday
6
Monday
1CD Sent Out for Delivery
Sunday
7
The 3-Day borrower review period begins the day of Closing Disclosure “Receipt”.
WITHOUT “hand delivery” or electronic confirmation of receipt the total delivery and review period results in six business days between the Closing Disclosure mailing to the actual settlement & loan signing.
1st Day Signin
g May Occur
Monday
8
Closing Disclosure 3-Day DELIVERY (a.k.a. Mailing
Rule) Closing Disclosure 3-Day REVIEW
(Sunday Excluded)
Closing Disclosure Timeline: Electronic
Tuesday
2
Wednesday
3
1st Day
Signing
May Occur
Thursday Friday
5
Saturday
6
Monday Sunday
7
The 3-Day borrower review period begins the day of Closing Disclosure “Receipt”.
WITH “hand delivery” or electronic confirmation of receipt the total delivery and review period results in 3 business days between the electronic Closing Disclosure receipt to the actual settlement & loan signing.
Monday
8
Closing Disclosure 3-Day REVIEW
4CD
Considered
Delivered
Closing Disclosure: Fee Disclosure Approach
Fee lines dedicated to certain specific items Other fees go in applicable section
alphabetically Fees specific to one service within section i.e.
title list, “Title-” at beginning followed by fee
Closing Disclosures: Average Charges Average charges may be imposed under these
conditions: Average charges are no more than average amount paid
for service by all consumers/sellers in class of transaction Creditor/settlement service provider defines class of
transaction based on appropriate period of time, geographic area and loan type
Creditor/settlement service provider uses same average charge for every transaction within class
Creditor does not use charges for Any insurance Charge based on loan amount/property value
*Cannot be used to inflate costs in any way
Closing Disclosure: Changes LE may not be delivered after CD delivery
Deadline for final LE revisions is 4 business days before consummation
Necessary changes? Revised CD to be used to determine good faith
tolerances 3 types
Changes occurring before consummation requiring new review period
Changes occurring before consummation NOT requiring new review period
Changes post-consummation
Closing Disclosure Changes:
Prior to consummation Changes Requiring New Review Period, New
CD, New Terms Disclosed APR becomes inaccurate Loan product changes Prepayment Penalty Added
Changes Requiring New CD, New Terms, No Waiting Period Any other revisions including consumer
requested changes Consumer has right to inspect any new changes
the business day before consummation Must be requested by consumer
Closing Disclosure Changes: Post-Consummation: Borrower
Good Faith Standard Corrections: If borrower pays an amount that exceeds amount imposed under good faith standard, creditor must refund excess and provide corrected CD no later than 60 days after consummation
Event Corrections: If event that occurs within 30 days after consummation causes CD to be inaccurate and results in change in amount borrower paid, creditor must provide corrected CD no later than 30 days after receiving sufficient information to corroborate event
Clerical Corrections: For non-numeric clerical errors, creditor must provide borrower with corrected CD no later than 60 days after consummation.
Closing Disclosure Changes:
Post-Consummation: Seller
Event Corrections: If event occurs within 30 days after consummation causes CD to be inaccurate and results in change in amount paid by seller, SETTLEMENT AGENT must provide corrected CD no later than 30 days after receiving sufficient information to corroborate event
Special Information BookletRESPA Settlement Costs Booklet Must be given to consumer of any real-property
secured, first-lien mortgage loan Not refinances, subordinate liens, HELOCs, reverses
Same time frame as LE
Only one copy to all applicants
Broker must provide
Very limited allowance for changes to booklet
Post-Consummation Disclosures
Escrow Closing Notice Mortgage Servicing Transfer
Partial Payment Notices
Escrow Closing Notice Consumer Requested Closing:
Consumer must receive at least 3 business days prior to cancelling account
Any Other Reason for Closing: Consumer must receive at least 30 business days prior to
cancelling account Necessary when canceling any escrow account
that was established in connection with closed-end, first lien mortgages (excluding reverses)
Exceptions: Escrows established in connection with delinquency
or default on mortgage When mortgage is terminated:
Repayment, refinancing, rescission, foreclosure
Escrow Closing Notice: Required Information Date closing Alternative names: impound or trust account Reason for closing State consumer must pay all property costs
DIRECTLY, possibly in one or two large payments/year
Table titled, “cost to you,” Any fee imposed on consumer in connection with
closure of account labeled, “Escrow Closing Fee.” Include statement that fee is for closing account
Escrow Closing Notice: Required Information
“In the future” section referencing: Consequences of delinquency Phone number for more info on the
cancellation Option to keep open; with phone
number Cut-off date to keep open
Escrow Closing Notice: Other Requirements Conspicuous header Clear and
understandable language
10-point font minimum One-page document
substantially similar to form H-29
Mortgage Transfer Notice:Partial Payment Policy Disclosure
Required for all mortgages besides reverse mortgages
Required information regarding partial payment: If payments less than full amount due are accepted,
include a statement indicating the lender may apply the payments to the loan
If payments less than full amount due are accepted but NOT applied until borrower pays remainder of amount due, include a statement indicating the lender may hold payments in separate account until remainder of payment is fulfilled, then applied to loan
If payments less than full amount due are not accepted, include a statement indicating the lender does not accept them
Include a statement that if the loan is sold, the new lender may have a different policy
RecordkeepingRegulation Z: General two year record retention period, however for mortgage loans specifically: General Requirement:
3 year record retention from date of consummation, date disclosures required to be made, or date action required to be taken, whichever is latest.
Evidence of compliance with ALL required actions, not just copies of docs
Applies to mortgage brokers to extent applicable Closing Disclosure:
5 year record retention period following consummation If creditor sells or transfers loan and will not service it,
creditor must keep copy AND provide one to new owner or servicer who must also retain for remainder of period
Post-Consummation Disclosures: Escrow Closing and Mortgage Transfer with Partial Payment Policy 2 year record retention
Summary Liability
Creditor is ultimately responsible for broker and settlement agent Hefty penalties
Loan Estimate Timing: no more than 3 days after application, at least 7 days
before consummation Categories 1, Zero Tolerance; 2, 10% Tolerance; and 3, No
Tolerance List of providers in consumer’s area Change of circumstance
Closing Disclosure Timing: 3 day mailing period (or confirmed receipt,) 3 day
mandatory review period Limited times for redisclosing post-consummation
Recordkeeping 3 year retention for all actions and docs 5 year retention for latest CD
Latitude Loan Services SolutionAs a stand alone vendor management technology, Latitude Loan Services enables lenders to integrate multiple title & settlement companies into a single platform to manage allorder processing, GFE fee quotes, communication, closing, title & settlement document storage.
Latitude allows for multiple user access to facilitate the new October 3rd, 2015 CFPB
Closing Disclosure form with an electronic confirmation of
borrower receipt solution.
Electronic delivery andconfirmation of receipt
potentially saves 3 Days off the new Closing Disclosure
review period process.
Latitude Loan Services SolutionLatitude shared access allows both the lender and the settlement agent access to the Closing Disclosure form in a secure, privacy protected environment.
The Closing Disclosure form allows each user access only to their section of the CD form and tracks all changes with each CD form revision.
Upon final approval the Closing Disclosure form is electronically distributed to your borrowers and all authorized parties.
Lender
Agent
Electronic Confirmation of ReceiptLatitude’s “Consumer Portal” facilitates the October 3rd, 2015 CFPB requirement for the Borrower’s Closing Disclosure confirmation of receipt.
Electronic confirmation of receipt for the Closing Disclosure form will drastically shorten or eliminate the 3-day “mailing rule” delivery period.
The Consumer Portal is a highly visual, secured web portal for borrowers to access their title & settlement transaction status and documents 24/7.
The Consumer Portal will be branded with the lender’s contact information to be accessed by yourborrowers indefinitely.
Access to status changes and important docs provides vital
transparency to your borrowers.
Latitude Value PropositionThe Latitude portal provides a single platform for vendor management of multiple title & settlement companies in a centralized platform:• Latitude provides guaranteed fee quoting technology for your
current GFE disclosures and the new October 3rd, 2015 Loan Estimate form.
• Latitude allows for multiple user access enabling lenders and title agents to create, revise, approve, and electronically distribute the new Closing Disclosure form to your Borrowers and all authorized parties.
• The Consumer Portal provides your borrowers a safe and secure platform to access their loan documentation and check status of their loan file while providing a branding opportunity for your company.
• Electronic receipt confirmation of the borrower’s Closing Disclosure form via Latitude’s Consumer Portal potentially saves lenders up to 3 days off the new Closing Disclosure delivery process.
Saving up to 3 days off the Closing Disclosure delivery process provides substantial cost savings & operational
efficiencies to Latitude lenders.
Latitude Value Proposition for Wholesaler LendersOffers one transparent platform to manage all the files for which it is legally responsible by: Ensuring Compliance
Side-by-side comparison of disclosures; instant updates to file; complete and final broker oversight
Facilitating Communication Instantly send receive docs, notes and actions and
updates between all users Maintaining Audit Trail
Step-by-step history of actions Retaining Documents
Automatic e-storage of all documents
References http://
files.consumerfinance.gov/f/201409_cfpb_tila-respa-integrated-disclosure-guide-to-form.pdf PDF guide to LE/CD
http://files.consumerfinance.gov/f/201409_cfpb_tila-respa-integrated-disclosure-guide-to-form.pdf Dodd-Frank Act
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/res/respamor RESPA
https://www.fdic.gov/regulations/laws/rules/6500-200.html#fdic6500101#fdic6500101 TILA
