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. (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.

2 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: 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. Creation of a loan Estimate Form3. Creation of a Closing Disclosure Form4. Modifies Timing Requirements5.

3 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. 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.

4 A Good Faith Estimate (GFE) and an initial Truth in Lending disclosure (TIL). 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. 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.

5 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).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.

6 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.) - Must wait 7 specific business days before closing.

7 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. Settlement Agent is responsible for delivering the CD to the Closing CalendarSundayMondayTuesdayWednesdayThur sdayFriday SaturdayCD put in Mail12CD Received by Consumer: 3 Day Wait Period12CD Hand Delivered: 3 Day Wait Begins12 Earliest Closing DateWaiting continued (Sunday doesn t count)Earliest Closing DateCD Timeline Delivered through Mail is Shown in YellowCD Timeline Delivered by Hand is Indicated in GreenSupreme Lending will be handling the completion and delivery of the CD to the Variations for the loan EstimateZERO Tolerance These fees may NOT increase.

8 - Fees paid to the creditor Origination Charges Mortgage Brokers Affiliates of the Creditor or Broker Unaffiliated 3rd party if the creditor did not allow the consumer to shop for the service provider (credit reports, appraisals) Transfer Taxes Lender Credits Cannot DecreaseUnder the current rule, these items fall under the 10% aggregate tolerance levels. New Tolerances for the loan Estimate10% Aggregate Variance These fees and charges may exceed the amounts initially disclosed on the LE by an aggregate of 10%: - Fees paid to an unaffiliated 3rd party if the creditor permits the consumer to shop for the service, and the consumer selects a provider from the list provided by the creditor. Creditor must disclose on the list that the consumer may select a provider not included on the list. - Recording FeesPermitted Variations Fees and charges that can exceed the initial amounts disclosed on the loan Estimate (if they were consistent with the best and most reasonable information available at the time of the disclosure): - Prepaid interest - Property insurance premium - Amounts placed into an escrow account - Charges paid to 3rd party providers not included on the creditor s provided list - Charges paid for 3rd party services not required by the creditor (these charges may be paid to affiliates of the creditor)1235 Things to Know as a Real Estate Professional Effective Date October 3, 2015 Applications taken on or after October 3rd will be subject to the new TRID Timing of Closings are Impacted Remember the 3 business day rule!

9 Line Number Changes & License / Contact Information The HUD-1 numbering is gone. Fees & Charges are now in one of seven segmented areas (as mentioned previously): - Origination Charges - Services Borrowers Did Not Shop For - Taxes and other Government Fees - Pre-paids - Initial Escrow Payment at Closing - Other*Remember to provide to the lender your license & contact information for the Closing Disclosure455 Things to Know as a Real Estate ProfessionalLine Number Changes & License / Contact Information The HUD-1 numbering is gone. Fees & Charges are now in one of seven segmented areas (as mentioned previously): - Origination Charges - Services Borrowers Did Not Shop For - Taxes and other Government Fees - Pre-paids - Initial Escrow Payment at Closing - OtherLikelihood of Multiple Disclosures Your borrowers will likely receive: - A CD several days before closing.

10 - Possibly a CD a few days before a walk through of the property. - A new updated CD at the closing reflecting any changes that occurred between the initial disclosure and closing. - And then, if any changes occurred to financial disclosure numbers, the amount(s) must be re-disclosed, even to Explain the Differences How is the new loan Estimate different from the Closing Disclosure? How does it help the consumer?5 Things Consumers Should KnowThese changes were instituted to help give consumers more time to understand the commitments being made in obtaining a features of the form are meant to bring to attention certain warnings and/or highlight specific information that will be most important to consumers (such as total closing costs or pre-payment penalties).Taxes and insurance costs will be more defined - helping customers understand the full scope of their financial rule makes cost estimates more reliable for consumers - making sure there are no surprise fees during the new disclosures clarify language to help the consumers understand the loan obligations without being industry Integrated Disclosure GlossaryTRID: TILA-RESPA Integrated DisclosureCFPB: Consumer Financial Protection BureauBusiness Days General Business Day: Creditor s offices are open to the public for carrying on substantially of all its business functions (for Supreme Lending , this is Monday through Friday with the exception of legal public holidays).