CFPB STC Finalized Rule on Integrated Disclosures

1

Understandingthe CFPB Final Rule on Integrated Disclosures

Presented by: Noah BlantonJanuary, 2014

- About the CFPB

- Effective Date

- Loan Estimate

- Closing Disclosure

- Delivery Alternatives

- Three-Day Rule

- All-In APR

- Electronic Storage

- Proposals Not

Adopted

Today’s Topics

History of Disclosures

About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR

- Integrated Disclosures

Final Rule

Loan Estimate

- Refinance

Closing Disclosure

- Purchase – Buyer

- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A

2© Copyright Stewart 2014

Disclaimer

The information in this presentation, event and/or printed material is provided for informational purposes only. None of the materials or opinions is offered, or should be construed, as legal advice. Communication of information by or through these means and your receipt or use of such information is not to be construed as legal advice or to constitute an attorney-client relationship.

You should not act or rely upon information contained in these materials without specifically seeking professional legal advice. Additional resources that may be referenced in the following presentation or materials are offered merely as a convenience to participants with no guarantees made as to the applicability or validity of the third-party content. We do not take any responsibility for the content, accuracy or timeliness of referenced websites, articles, books, events, etc.; nor do we endorse any commercial products that may be advertised or available on those sites.

Stewart endeavors to comply with all applicable legal and ethical requirements when providing information to industry participants.

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


History of Disclosures – Truth-in-Lending

� Truth-in-Lending Act (TILA) of 1968

� Implemented by Federal Reserve Board

� Promulgated Regulation Z

� Created Truth-in-Lending Statement

� Discloses the following:

� Cost of credit

� Repayment terms of mortgage

� Annual percentage rate (APR)

� Loan rate

� Fees amortized over expected life of loan

� Discloses finance charges, amount financed, total

number of payments, whether interest can change,

whether loan can be refinanced

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


History of Disclosures - RESPA

� Real Estate Settlement Procedures Act of 1974

� RESPA was implemented by HUD

� Promulgated Regulation X

� Created Good Faith Estimate

� Standardized disclosures of closing costs

� Included costs associated with mortgages

� HUD-1 and GFE modified in 2010

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


The market peaked in 2007….

The CFPB Timeline

2007 2008 2009 2010 2011 2012 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Officially dubbed “Financial Collapse” in 2008

The CFPB Timeline

2007 2008 2009 2010 2011 2012 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


The CFPB Timeline

The push for financial regulatory reform began in 2009

2007 2008 2009 2010 2011 2012 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


The CFPB Timeline

2007 2008 2009 2010 2011 2012 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


About the CFPB

� CFPB formed with Richard Cordray as Director

� Supervisory authority over Banks and Non-Banks.

� Enforcement authority over RESPA and TILA

-

2007 2008 2009 2010 2011 2012 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


The CFPB Timeline

Proposed and finalized many rules in 2012

2007 2008 2009 2010 2011 2012 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


The CFPB Timeline

Released the Final Rule on Integrated Disclosures -November 20, 2013 at the CFPB Field Hearing in Boston as part of the “Know Before You Owe” initiative.

Stewart’s policy analyst talks with CFPB Director, Richard

Cordray about Stewart’s effort to provide education on the new

disclosures.

2007 2008 2009 2010 2011 2012 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


CFPB Continues to Remedy Historic Closing Problems

Have you ever experienced one or more of the following?

� Buyer and real estate professional have arrived at the title company

for closing

� Buyer has no idea how much money they are responsible to bring

� Real estate professional is frustrated they have yet to receive a copy

of the HUD-1

� Loan officer is saying the title company is responsible for the delay

� Title company is saying they just received the loan package

When the consumer wins… we all win!

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Preview of things to come in 2014

“So as part of our “Know Before You Owe” initiative, we are making a commitment to work with industry to improve the mortgage closing experience for consumers through technology. We believe that “eClosings” could represent a positive development along these lines, and we want to know more about how we can foster innovation in this area.

CFPB Director Richard CordrayBoston Field Hearing,November 20, 2013

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Mortgage Rules

Service Providers

Qualified Mortgages

Integrated Disclosures

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Service Provider “flight to quality”

CFPB Bulletin to Banks and Non-Banks stating they must use quality service providers.

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Qualified Mortgage / Ability-to-Repay

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


CFPB Finalizes Rule on Integrated Disclosures

Better Disclosures

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Detailed Summary of the Final Rule

Detailed Summary – 7 pages

� Scope

� Loan Estimate

� Closing Disclosure

� Limits on Cost Increases

� Proposals Not Adopted

� Effective Date

*Final Rule – 1,888 pages

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Detailed Summary of the Final Rule

1 Scope

a) Applications on or after 8/1/2015 fall under new rules

b) Closed-end loans only - No home equity lines

c) No reverse mortgages

d) No mobile home loans

2 Loan Estimate

a) Replaces Good Faith Est. / Early Truth-in-Lending

b) Mortgage Broker may provide / Lender is still responsible

c) Delivery must be within 3 Business Days of ‘application’

d) Limitation on up-front fees with exception for credit reports

e) Disclaimer on early estimates used before Loan Estimate

3 Closing Disclosure

a) Replaces HUD-1 and Final Truth-in-Lending

b) Consumer must receive at least 3 business days before signing

c) APR changes over 1/8% require re-disclosure/ 3 Bus. Day wait

d) Escrow may prepare and/or deliver*

4 Limits on Increases

a) Items that generally cannot increase:

a) Creditor’s or broker’s charges for its own services

b) Charges for services provided by an affiliate

c) Charges where consumer is not permitted to shop

b) Other services can generally increase by 10% or less

4a Exceptions

a) Consumer requests the change

b) Consumer chooses their own service provider

c) Information at application is/becomes inaccurate

d) Loan Estimate expires

5 Not Adopteda) Re-defined “All In” APR

b) Storage in standard, electronic machine-readable format

c) Disclosure of Approximate Cost of Funds

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


� Help consumers by making all forms look similar

� Help consumers shop for best loan

� Help consumers guard against hikes in charges at closing

� Help consumers understand future obligations

CFPB Goals in Redesigning Forms

HUD-1Good Faith Estimate Truth in Lending

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Introducing the Forms

Today’s look at the samples provided by the Bureau in the final rule announced November 20, 2013.

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


How important are the new disclosures??

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Closing Disclosure for Purchase – Page 1

� Closing Information

� Transaction Information

� Loan Information

� Loan Terms

� Projected Payments

� Costs at Closing

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Closing Disclosure for Purchase – Page 1 - Detail

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



� Loan Costs

� Other Costs

� Total Costs

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



� Cash-to-Close Calculations

� Transaction Summaries

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



� Loan Disclosures

� Escrow Account

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



� Loan Calculations

� Other Disclosures

� Questions

� Contact Information

� Confirmation of Receipt

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Closing Disclosure for Seller Only – Page 1

� Closing Information

� Transaction Information

� Summaries of Transactions

� Contact Information

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Closing Disclosure for Seller Only – Page 1 - Detail

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Closing Disclosure for Seller Only – Page 2

� Closing Cost Details

� Loan Costs

� Other Costs

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A



- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Resources

stewart.com/cfpb

� Service Provider Memo

� ALTA Best Practices

� QM / ATR

� Integrated Disclosures� Loan Estimate

� Closing Disclosure

� Realtor info

� Lender info

� Homebuyer education

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Takeaways

� Be Proactive

�Discuss the issues

� Identify process changes

� Plan for the 3-Day Rule

� Print the new forms from stewart.com/cfpb

� Practice with your team

� Invite your compliance officer to join us

� Partner with Stewart

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


What lies ahead?

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Questions?

Q&A

- About the CFPB

- Effective Date

- Loan Estimate



- Three-Day Rule

- All-In APR


- Proposals Not

Adopted

Today’s Topics


About the CFPB

Mortgage Rules

- Service Providers

- QM / ATR


Final Rule

Loan Estimate

- Refinance

Closing Disclosure


- Purchase - Seller

Resources

Takeaways

What Lies Ahead?

Q & A


Thank You!