TILA-RESPA Integrated Disclosure

1 TILA-RESPA Integrated DisclosureGuide to the Loan Estimate and Closing Disclosure formsDecember 2017 Consumer FinancialProtection Bureau This guide is current as of the date set forth on the cover page. It has been updated to reflect the 2017 TILA-RESPA Rule. It has not been updated to reflect the 2018 TILA-RESPA Rule. An updated version will be posted when it is available. 2 TILA-RESPA Integrated Disclosure | VERSION Version logThe Bureau updates this guide on a periodic basis to reflect finalized clarifications to the rule which impacts guide content, as well as administrative updates. Below is a version log noting the history of this document and its updates: DateVersionRule ChangesDecember to incorporate the July 2017 final rule, including changes and clarifications on: The Loan Estimate in the General Requirements, General Information, Loan Terms, Projected Payments table, Costs at Closing, Loan Costs and Other Costs, Calculating Cash to Close table, Alternative Calculating Cash to Close table, Comparisons, and Confirm Receipt.

2 The Closing Disclosure in the General Requirements, General Information, Costs at Closing table, Other Costs, Calculating Cash to Close table, Summaries of Transactions, Borrower s Transaction, Seller s Transaction, Escrow Account, Loan Calculations, and Confirm Receipt. Coverage of closed-end credit transactions secured by a cooperative unit in various sections of the , includes changes to Revised Loan Estimate (Section ) and other miscellaneous administrative changes. October to incorporate guidance from existing webinars and guidance, including additional clarification on: The Loan Estimate in the General Information, Loan Terms, Projected Payments Table, Loan Costs, Other Costs, Adjustable Payment Table, Adjustable Interest Rate Table, Contact Information, and Other Considerations sections. The Closing Disclosure in the General Information, Projected Payments Table, Loan Costs, Other Costs, Loan disclosures , Escrow disclosures , and Other disclosures , miscellaneous administrative TILA-RESPA Integrated Disclosure | VERSION DateVersionRule ChangesJuly Changes to bring guide into alignment with Final Rule issued 7/21/2015 and other technical correctionsJanuary 20151.

3 2 Permits certain language related to construction loans for transactions involving new construction on the Loan Estimate (Section Other Considerations)September Updates to information on who to contact with questions on the rule (Section ) Clarification of description of time periods less than whole years (Section Loan Terms) Clarification of requirement relating to provision of appraisals for certain loan types. (Section Other disclosures )April Document4 TILA-RESPA Integrated Disclosure | WHAT S INSIDE What s insideVersion log ..21. Introduction .. What is the purpose of this Guide? .. Who should read this Guide? .. Where can I find additional resources that will help me understand the TILA-RESPA Rule?..102. Loan Estimate .. General Requirements .. Issuance and Delivery .. Revised Loan Estimate .. Use of Compliance Guide .. Rounding .. Consummation .. Loan Estimate (page 1) .. General Information .. Loan Terms .. Projected Payments.

4 Costs at Closing .. Loan Estimate (page 2) .. Loan Costs .. Other Costs ..425 TILA-RESPA Integrated Disclosure | WHAT S INSIDE Calculating Cash to Close .. Alternative Calculating Cash To Close Table for Transactions Without A Seller or For Simultaneous Subordinate Lien Loans .. Adjustable Payment (AP) Table .. Adjustable Interest Rate (AIR) Table .. Loan Estimate (page 3) .. Contact Information .. Comparisons .. Other Considerations .. Servicing .. Confirm Receipt ..653. Closing Disclosure .. General Requirements .. Issuance and Delivery .. Corrected Closing Disclosure .. Use of Compliance Guide .. Rounding .. Consummation .. Closing Disclosure (page 1) .. General Information .. Loan Terms .. Projected Payments .. Costs at Closing .. Closing Disclosure (page 2) .. Loan Costs .. Other Costs .. Closing Disclosure (page 3) ..836 TILA-RESPA Integrated Disclosure | WHAT S INSIDE Calculating Cash to Close.

5 Alternative Calculating Cash to Close Table For Transaction Without a Seller or for Simultaneous Subordinate Lien Loans .. Summaries of Transactions .. Borrower s Transaction .. Seller s Transactions .. Closing Disclosure (page 4) .. Loan disclosures .. Partial Payments .. Escrow Account .. Adjustable Payment (AP) Table .. Adjustable Interest Rate (AIR) Table .. Closing Disclosure (page 5) .. Loan Calculations .. Other disclosures .. Contact Information .. Confirm Receipt ..1124. Where can I find a copy of the TILA-RESPA Rule and get more information about it? ..1137 TILA-RESPA Integrated Disclosure | INTRODUCTION 1. IntroductionFor more than 30 years, Federal law required lenders to provide two different Disclosure forms to consumers applying for a mortgage. The law also generally required two different forms at or shortly before closing on the loan. Two different Federal agencies developed these forms separately, under two Federal statutes: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA).

6 The information on these forms was overlapping and the language inconsistent. Not surprisingly, consumers often found the forms confusing. It is also not surprising that lenders and settlement agents found the forms burdensome to provide and Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directed the Consumer Financial Protection Bureau (Bureau) to integrate the mortgage loan disclosures under TILA and RESPA sections 4 and 5. Section 1032(f) of the Dodd-Frank Act mandated that the Bureau propose for public comment rules and model disclosures that integrate the TILA and RESPA disclosures by July 21, 2012. The Bureau satisfied this statutory mandate and issued proposed rules and forms on July 9, 2012. To accomplish this, the Bureau engaged in extensive consumer and industry research, analysis of public comment, and public outreach for more than a year. After issuing the proposal, the Bureau conducted a large-scale quantitative study of its Integrated disclosures with approximately 850 consumers, which concluded that the Bureau s Integrated disclosures had on average statistically significant better performance than the preexisting disclosures under TILA and RESPA.

7 On December 31, 2013, the Bureau published a final rule with new, Integrated disclosures Integrated Mortgage disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) ( TILA-RESPA Final Rule). On January 20, 2015 and July 21, 2015, the Bureau issued amendments to the TILA-RESPA Final Rule. Additionally, the Bureau published technical corrections on December 24, 2015, and a correction to supplementary information on February 10, 2016. On July 7, 2017, the Bureau issued further amendments to formalize guidance, and provide greater clarity and certainty regarding the TILA-RESPA Final Rule. These amendments were published in the 8 TILA-RESPA Integrated Disclosure | INTRODUCTION Federal Register on August 11, 2017. The TILA-RESPA Final Rule, the amendments, and corrections are collectively referred to as the TILA-RESPA Rule in this TILA-RESPA Rule provides a detailed explanation of how the forms should be filled out and used.

8 The first new form (Loan Estimate) is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying. The Loan Estimate must be provided to consumers no later than three business days after they submit a loan application. The second form (Closing Disclosure ) is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. Consumers must receive the Closing Disclosure no later than three business days before consummation of their loan. The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to compare the cost of different loan offers, including the cost of the loans over Loan Estimate and Closing Disclosure must be used for most closed-end consumer mortgages secured by real property or a cooperative unit.

9 Home equity lines of credit, reverse mortgages, and mortgages secured by a mobile home or by a dwelling (other than a cooperative unit) that is not attached to real property ( , land) must continue to use the preexisting disclosures under TILA and RESPA. The TILA-RESPA Rule generally1 does not apply to loans made by persons who are not considered creditors as defined in Regulation Z. ( (a)(17))Generally, the Loan Estimate and Closing Disclosure require the Disclosure of categories of information that will vary due to the type of loan, the payment schedule of the loan, the fees charged, the terms of the transaction, and State law provisions. The extent of these variations cannot be shown on a single, static example. This Guide includes most of the requirements concerning completing the Loan Estimate and Closing Disclosure . There is additional information about completing the Loan Estimate and Closing Disclosure , including specific information about how to complete these forms for construction loans, in the TILA-RESPA Integrated Disclosure Rule Small Entity Compliance Guide (Compliance Guide), which is available at However, these Guides may not illustrate all of the permutations of the information required or omitted from 1 Provisions of the TILA-RESPA Rule may apply, for example, to mortgage brokers and others who are not creditors as defined in Regulation Z.

10 See, for example, (e)(1)(ii).9 TILA-RESPA Integrated Disclosure | INTRODUCTION the Loan Estimate or Closing Disclosure for any particular transaction. Only the TILA-RESPA Rule and its Official Interpretations can provide complete and definitive information regarding its Compliance Guide includes more information on the TILA-RESPA Rule in What is the purpose of this Guide?The focus of this Guide is to provide the instructions for completing the Loan Estimate and Closing Disclosure . This Guide also highlights common situations that may arise when completing the Loan Estimate and Closing Guide - The Guide to Completing TILA-RESPA Integrated Disclosure Forms (Guide to Forms) - is designed as a companion to the Compliance Guide which addresses questions about the TILA-RESPA Rule in general. The Compliance Guide also discusses the good faith Disclosure of settlement costs, limitations on changes to those amounts at consummation, and other information concerning the process and requirements related to completing and delivering the Loan Estimate and the Closing Disclosure .