Loan Estimate (LE) - Mortgage Bankers Association

1 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF loan Estimate (LE) TILA-RESPA integrated Disclosure (TRID) Rule Requirements 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF New Rule creates new definition of Covered loan loan Application Consummation (Closing) New Rule creates new work flow More documentation Tighter time lines New Rule creates new forms loan Estimate Closing Disclosure New Definitions; New Forms New Work Flow 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF No longer RESPA definition All TILA and Regulation Z loan to natural person (includes trusts) Proceeds for personal, family of household use Collateral is dwelling attached to land Includes 25 acres or more if above applies Covered loan 2015 First American Financial Corporation and/or its affiliates.

2 All rights reserved. NYSE: FAF loan Application Six pieces of information s name s monthly income s SSN address of property value amount sought 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Consummation The target date around which disclosure requirements revolve CFPB explains: Commonly occurs at closing or settlement Legally distinct event: Occurs when the consumer becomes contractually obligated to the creditor on the loan Lender will likely dictate the date of consummation 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Lender and Broker fees must be exact All other fees quoted Including Homeowner Association Dues if known (example) Must be in Good Faith Best information reasonably available to the creditor Obtained through due diligence Accuracy of disclosures 2015 First American Financial Corporation and/or its affiliates.

3 All rights reserved. NYSE: FAF loan Estimate (LE) Provision Provided to the consumer by: Creditor/Lender Mortgage broker Delivery 3 business days after application 7 business days before consummation If mailed add 3 days for receipt 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 16 17 18 19 Application Received Can be either creditor or broker 6 specific items 20 Customer can withdraw/Lender can reject Application 21 Customer can withdraw/Lender can reject Application 22 Lender is not open for customer facing business so Saturday does not count for loan Estimate preparation 23 Sunday doesn t count 24 loan Estimate must be mailed or hand delivered If in hand= LE Delivery Date 25 LE Mail Day 1 Earliest Day Closing Disclosure can be mailed or delivered in hand If in hand= CD Delivery Date 26 LE Mail Day 2 CD Mail Day 1 CD In hand Disclosure Day 1 27 LE Mail Day 3= Delivery Date (presumed) CD Mail Day 2 CD In hand Disclosure Day 2 28 CD Mail Day 3= Delivery Date (presumed)

4 CD in hand Disclosure Day 3 1 CD Mail Disclosure Day 1 2 Sunday doesn t count 3 CD Mail Disclosure Day 2 4 CD Mail Disclosure Day 3= okay to close Earliest day for closing assuming LE mailed or delivered on 24th 5 6 7 8 LE expires Application Timeline 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Page One 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF General 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF loan Terms & Projected Payments 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Refinance transaction Includes check boxes From and To Borrower Costs at Closing 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Page Two 2015 First American Financial Corporation and/or its affiliates.

5 All rights reserved. NYSE: FAF loan Costs 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Other Costs 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Calculating Cash to Close 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Adjustable Payment (AP) Table 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Adjustable Interest Rate (AIR) Table 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Page Three 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Contact Information 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Other Considerations & Receipt 2015 First American Financial Corporation and/or its affiliates.

6 All rights reserved. NYSE: FAF Shopping Service Providers Can Shop For a settlement service, subject to reasonable requirements It s NOT shopping for a provider when Consumer is required to choose from a written list of providers OR If consumer voluntarily chooses from a written list of providers 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Revised loan Estimate (LE) Six different types of changes circumstances affecting settlement charges circumstances affecting eligibility requested by consumer rate dependent changes Estimate expires settlement date on a construction loan 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF If a Changed Circumstance/ Tolerance exceeded However cannot be piece-meal Must be provided to consumer within three business days of receiving information sufficient to establish the changed circumstance.

7 Consumer must receive the revision no later than 4 days before closing May not issue after Closing Disclosure Revised Disclosure- loan Estimate 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF New Tolerances Rule Expands zero tolerance group: Amounts disclosed on the loan Estimate for the following services cannot increase (Zero Tolerance): Taxes paid to the creditor or broker paid to an affiliate of the creditor or broker paid for services for which the lender or broker does not permit the consumer to shop 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Tolerances The 10% group: Amounts disclosed on the loan Estimate for the following services cannot increase by more than 10 percent (aggregate): Party Fees for services: Required by the Lender The Lender provides a written list Where the Consumer may shop for the service provider, (not on the list) and The Consumer selects a provider from the Lender s written list of provider's Fees 2015 First American Financial Corporation and/or its affiliates.

8 All rights reserved. NYSE: FAF Tolerances Unlimited Tolerance Amounts disclosed on the loan Estimate for the following services may increase: Interest Insurance Premiums in Escrow Party Fees for services: Required by the Lender Where the Consumer may shop for the service provider, and The Consumer selects a provider not on the Lender s written list of provider's Party Fees for services Not required by the Lender Even if paid to an affiliate The creditor may still impose reasonable qualifications for providers. Example: Provider must be licensed 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Tolerances- summary Paid to the lender or Mortgage broker If required by the lender Paid to a third party required to be used by the lender Paid to a third party NOT required to be used by the lender, BUT on the lender s list The consumer selects a provider from the lender s list The consumer does not select a provider so the lender chooses AND If NOT required by the lender Unlimited Tolerance The consumer selects a provider NOT on the lenders list Zero Tolerance 10% Tolerance AND 2015 First American Financial Corporation and/or its affiliates.

9 All rights reserved. NYSE: FAF TILA Private right of action for violations (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) RES PA No private right of action for GFE and HUD-1 disclosures Dodd-Frank CFPB enforcement of consumer financial laws (incl. TILA and RESPA) $5,000 per day per violation; $25,000 per day for reckless violations; $1M per day for knowing violations Liability 2015 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF Thank you! Questions?