TILA-RESPA - Supreme Lending

1 TILA-RESPAINTEGRATEDMORTGAGE DISCLOSURES?HistoryTimingVariations/Tole rances5 Things to Know as a Real Estate ProfessionalPurposeCoverageChanges Definition of an Application Loan Estimate Closing DisclosureExplaining the New RuleCFPB & Dodd FrankThe TILA-RESPA Integrated Disclosure (TRID) rule is part of the Dodd Frank Reform & Consumer Protection Act. The result of this legislation clarifies the industry s definition of an application, overhauls closing documents, and institutes timelines for real estate settlement procedures.+=UnderstandingTimelinessEduc atedDecisionsClarifying disclosures for those who don t work within the mortgage industry.

2 (Making disclosures easily understood by using common diction).Providing customers with enough time to thoroughly review of understanding and time will enable customers to make responsible Purpose of TRID To help customers understand mortgage transactions through the use of clear language in disclosures and simplifying the technical nature of the disclosure documents. To ensure that customers receive adequate time to make informed and responsible decisions regarding their home loan. CoverageLoan Types Affected:Does NOT Apply To: Closed-end consumer mortgages secured by real property, including.

3 25-Acre Loans 1-4 Family Residential Properties Vacant Land Loans HELOCs Federally related mortgage loans extended by a person, not a creditor (Reg Z) Chattel-Dwelling Loans Reverse MortgagesCoverageCreditors originating reverse mortgages, HELOCs, chattel-dwelling loans or other transactions not covered by the TILA-RESPA Integrated Mortgage Disclosure rule must continue to use, as applicable, the GFE, HUD-1, and Truth in Lending disclosures required under current law. In these specific circumstances, timing requirements also do not change from the current law TRID Changes1. Provides a Clear Definition of the Term Application 2.

4 Creation of a Loan Estimate Form3. Creation of a Closing Disclosure Form4. Modifies Timing Requirements5. New VariationsWhat Constitutes a Completed Application?Current Definition6 elements define a mortgage application, plus a seventh catch all 1. Consumer Name 2. Income 3. Social Security Number 4. Property Address 5. Estimated Value 6. Loan Amount Requested 7. Any other information deemed necessary by the loan originator Disclosures must be issued within 3 business days of a completed DefinitionThe new rule eliminates the catch all 1. Consumer Name 2.

5 Income 3. Social Security Number 4. Property Address 5. Estimated Value 6. Loan Amount Requested 7. Any other information deemed necessary by the loan originator The 3 day disclosure requirement does NOT changeThe Impact of the New DefinitionCurrent DefinitionDue to the catch all, lenders can define when the application is completed, therefore controlling when disclosures are the 6 items are received, it s an official completed application and requires the necessary (and new) loan estimate disclosure within 3 business DefinitionThe new structure will still allow for lenders to request additional information, but the lender is prohibited from holding up on providing a loan estimate if the customer does not submit the additional Lending always operated under the 6 item rule -so this has no impact on our business Loan EstimateGFEI nitial TILLoan Estimate (LE)The Loan EstimateCurrently, borrowers receive two separate forms from their lender at the beginning of the process: a Good Faith Estimate (GFE) and an initial Truth in Lending disclosure (TIL).

6 Beginning October 3rd, these two documents will be consolidated into one, new three page loan estimate document. The new Loan Estimate (LE) still needs to be provided to borrowers on the same timeline as the GFE (three business days).A Look at the New Loan EstimateLoan TermsProjected PaymentsCosts at ClosingA Look at the New Loan EstimateCosts at Closing Detailed Break-OutNew Loan Estimate (cont.)Total Interest Percentage: the total interest paid over the term of the loan as a % of the loan Loan Estimate (cont.) As with the 2010 rule, interest rate dependent and non-interest rate dependent terms are separate and not related.

7 Non-interest rate costs must be offered until accepted but expire in 10 business days (general definition) after originally provided if consumer does not indicate an intent to proceed within that time frame. Re-disclosure required if interest rate dependent terms change. Estimated Cost to close will require knowing the tax information for the property-best information reasonably DisclosureHUD-1 Final TILC losing Disclosure (CD)A Look at the New Closing Disclosure: Page 1A Look at the New Closing Disclosure: Page 2 Everything is itemized - but line numbers have been removed. All fees & charges are placed in one of 7 areas (labeled A-H, excluding D).

8 A Look at the New Closing Disclosure: Page 3Pg. 3: Cash to Close:A Payoffs & Payments table is used for the Summaries of Transaction Look at the New Closing Disclosure: Page 4 Closing Costs Financed disclosure is Look at the New Closing Disclosure: Page 5 NEW Dodd Frank Disclosures (negative amortization and escrow account disclosure).A Look at the New Closing Disclosure: Page 6 Liability After Foreclosure requires creditor to select one of two options for borrower liability for Estate Broker information (license and contact information) is now required in the CD as well as Settlement Agent Look at the New Closing Disclosure If there is more than one consumer in the transaction, the first consumer signs as the applicant and each additional consumer signs as a co-applicant.

9 Must use the same fee name as used in the loan estimate. With refinances, the Closing Disclosure must be delivered to both obligators. On purchase transactions, the Closing Disclosure must be delivered to one Business Day General Business Day: A day on which the creditor s offices are open to the public for carrying on most all of its business functions. (For most intents & purposes: M-F)Specific Business Day: All calendar days except Sundays and legal public holidays. *If the post office is open, it counts as a specific business day when mailing the is considered mailing (therefore, apply specific business day definition), unless there is proof of s e-disclosure method cuts this timing by delivering and retaining proof of Estimate Timing Initial Loan Estimates: - Lenders have 3 business days for delivery of the LE from date of app (apply general definition if in person, and specific definition if mailed.)

10 - Must wait 7 specific business days before closing. Revised Loan Estimate: - Must be received by the consumer no later than 4 specific business days prior to Disclosure Timing Must be received by the borrower 3 specific business days prior to consummation (apply mailbox rule where necessary).Providing the Closing Disclosure Creditor is accountable for the on time delivery of an accurate Closing Disclosure to the consumer. Creditor and Settlement Agent may agree to share responsibilities in completing and delivering the Closing Disclosure.