The TRID Process for Wholesale Lending

Transcription

1 The TRID Process for Wholesale Lending Michelle McLaughlin 2015 CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender, licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No , Loans made or arranged pursuant to a California Finance Lenders Law license No Offer of credit is subject to credit approval. For information about our company, please visit us at To verify our complete list of state licenses, please visit For more information on State licenses, please visit Not intended to serve as a business solicitation for residents in Massachusetts. For Wholesale Brokers and Select Partner Clients only.

2 Objectives After this training you will be able to: Loan Estimate Process Generate LE in Webtrac Identify CMG s preferred service providers Collect fees & Order appraisals COC & Redisclose the LE Generate CD in Webtrac Define the E-Delivery Process Resources 2

3 TILA RESPA Integrated Disclosures A rule created by the Consumer Finance Protection Bureau effective with applications dated on or after 10/3/2015 that consolidates four existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms: (1) a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer s application, and within 7 specific business days before consummation. (2) a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation. 3

4 Which loans are exempt from TRID? -Loans w/application dates before October 3, AIO -HELOCs -Reverse Mortgages -Mortgages secured by a mobile home or dwelling not attached to real property (i.e. land) These loan will use current GFE, HUD-1 and TIL Loans with application dates prior to October 3, 2015 will follow the current process regardless of when they close. 4

5 OBJECTIVE: Loan Estimate 5

6 Fees are now disclosed alphabetically What defines the Loan Estimate? GFE important dates section has been removed Increased itemization of settlement charges No disclosure of lender paid broker compensation New information, including enhanced projected payments table replaces payment schedule New Total Interest Percentage (TIP) is also disclosed on page 3 the total amount of interest the borrower will pay over the life of the loan as a percentage of the loan amount 6

7 Delivery of the Loan Estimate The LE must be delivered to the borrower in person, placed in the mail, or sent via electronic delivery: Within 3 General Business Days after the Broker/LO receives an application; and Within 7 Specific Business Days before consummation General Business Days: Monday-Friday, excluding Saturday and Sunday & specific federal holidays. Specific Business Days: Monday Saturday excluding Sunday and specific federal holidays. 7

8 Importance of LE Delivery & Receipt Date: Drives the ability to request the intent to proceed, impose fees and allows the collection of required documentation. CMG will the LE and disclosures to the borrowers and Broker/LO when provided a valid addresses. CMG will also place the LE and disclosures in the mail to all borrower s on the third day if the borrowers have not given e- consent to ensure that the LE is delivered in a compliant manner. Auto notifications will be ed the Broker/LO/Processor or any additional contacts when the LE is delivered, and opened by the borrower(s). These notes will also be placed inside of the loan in Webtrac. 8

9 Requirements for the Fee Worksheet If you choose to provide the borrower with a Fee Worksheet, it must include the following statement at the top of Page 1 in 12 point font Fee Worksheet Page 1 ***DISCLAIMER MUST READ:*** Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan The fee worksheet may NOT be made with headings, content, and format substantially similar to the LE. 9

10 When to request a Loan Estimate? 1. The consumer's name 2. The consumer's income 3. The consumer's Social Security number to obtain a credit report (or other unique identifier if the consumer has no Social Security number) 4. The property address 5. An estimate of the value of the property 6. Loan amount when all 6 pieces have been collected the loan application is complete. This also starts the Timeline for requesting disclosures 10

11 OBJECTIVE: How to Generate a Loan Estimate in Webtrac 11

12 Generate LE in Webtrac Visit: New Feature as of 10/3/2015! 12

13 Who are CMG s Preferred Service Providers? Mortgage Insurance Recording, Registration, Title, Escrow, Owners Policies Your CMG AMC fees will be quoted 13

14 OBJECTIVE: Collect Fees &Order Appraisal 14

15 Fee Policy No fees may be imposed on the borrower before the borrower has opened/received the Loan Estimate and indicated an Intent to Proceed. Exception: the borrower may be charged a bona fide and reasonable fee for obtaining the borrower s credit report. Signing or confirmed receipt of the LE does not indicate an intent to proceed. Brokers are to use their current Intent to Proceed document. Subsequent use of the credit card requires borrower s authorization. 15

16 Ordering Appraisal The AMC fees have been standardized to mitigate the excessive requests for upcharges. The AMC s fee model does allow for the appraisal fee to include the follow complex fee additions to the initial fee quote. CMG asks the questions on the LE request screen so that an appropriate appraisal fee is disclosed. Rush fee Property over 10 acres Properties over a $1M The Appraisal is now a Zero Tolerance Fee. Once the LE has been delivered, the Broker/LO will receive an from the registration team with the authorization code. This code must be entered when ordering the appraisal on CMG s etrac Appraisal Ordering Site. 16

17 Authorization Code The authorization code is a method of communication between CMG and the AMC as a way to manage the appraisal fee. The code will be entered in the appraisal ordering screen in etrac. The AMC will contact CMG to approve any change to the original appraisal quote. 17

18 OBJECTIVE: Change of Circumstance & Re-Disclosing the LE 18

19 Re-disclosure of the LE- the policy Creditors with a valid COC may only charge more than the amount disclosed when the original estimate, was based on the best information reasonably available at the time of the disclosure. CMG s policy for wholesale transactions will be to only send a revised LE if the rate is locked/extended, loan amount or program changes, or the fee increases above the tolerance bucket with a valid COC. 19

20 Timing & COCs Reasons and Timing are not changing with TRID Revised Loan Estimates must be sent within three general business days of determining the valid Changed Circumstance. Review COC action item in Broker Portal MONDAY TUESDAY WEDNESDAY THURSDAY *General Business Days: Monday-Friday, excluding Saturday and Sunday & specific federal holidays. 20

21 OBJECTIVE: Request a Closing Disclosures 21

22 The New Closing Disclosure: WHO: CMG prepares the borrowers CD and provides to Title. Title will be responsible for sellers, if applicable. WHAT: New CD = Old HUD-1 + Final TIL WHEN: The CD must be received three specific business days* prior to consummation (note signing). Specific Business Days: Monday Saturday excluding Sunday and specific federal holidays. 22

23 Non-Rescindable Transactions vs. Rescindable For Non Rescindable Transactions: (Purchase, Refinance of Second Home or Investment Properties) CMG will the CD to ALL borrowers on the transaction. Only one of the primary borrowers must Open/Receive the CD to begin the three day waiting period in advance of consummation (note signing). For Rescindable Transactions: (Refinance of a Primary Residence) CMG will the CD to ALL individuals with ownership interest are ALL are required to Open/Receive the CD to begin the three day waiting period in advance of consummation (note signing). 23

24 Unlike the current HUD-1, the CD does not list fees by a line number. What defines the CD? Fee names must be consistent between the LE and the CD. Fees must be in alphabetical order. Hard-coded lines are the exception to this rule. The borrower must receive the CD at least 3 specific business days prior to closing. 24

25 Providing it too early could cause the inability to re-set the tolerance threshold for change of circumstances. What defines the CD? The CD must be re-disclosed and require a new 3 business day waiting period only if: The APR changes by more than.125% (fixed) or.250% (ARM) The loan product information on the CD changes A prepayment penalty is added CMG cannot share the CD with the Real Estate Agent or seller. Only borrower can share the CD with other parties. 25

26 COC and Revised CD There is much ambiguity around resetting of tolerance buckets once a Closing Disclosure has been sent. CMG s policy is to only allow the reset the variance threshold on a revised CD if: The rate is locked/extended. The loan amount changes. All other changes, valid or otherwise, will not reset the variance threshold and must be paid by the lender. 26

27 CD Milestones and Stages Broker Requests CD Once the UW has placed the "Approved" loan in CTC status, the broker will submit a Doc Request through the portal and the CD Request Date will autopopulate in Data Trac when the broker hits "submit". CMG Acknowledges CD Request Loan will be placed in "Docs Ordered" status by the Scheduler or designee once it has been assigned to a Doc Drawer to prepare. CD Sent to Title for Review Loan will be placed in "Docs Drawn" status by the Doc Drawer once the CD has been prepared and sent to title for review and approval. CD Sent to Recipient(s) for Review & Acknowledgement Copies of the delivery and broker and will be added to Notes by the Doc Drawer once the CD has been sent to the recipient(s). CD Acknowledged and Docs Sent to Title Loan will be placed in "Docs Out" status by the Doc Drawer once the closing pacakge has been delivered to title. Free 5 Day Lock Extension This will be available once the loan is in "Docs Out" status. 27

28 OBJECTIVE: Define E-Delivery 28

29 E-Delivery Process When creating an LE, we encourage the Broker/LO to provide an address for the borrower(s). CMG will deliver the LE and disclosure package to your borrower via an E-Sign Process. Below are screen prints to walk you through the borrower experience. Borrower(s) will receive an from referencing CMG Mortgage and your borrower s name. Step 1: The contains a secure link to access their documents. After clicking on the link, they enter their esign room and they will need to enter the information below and click Validate Data. Note: The second security question asks to verify the house number of your present address. For example, for 123 Dearborn Street, you would respond 123 or PO for a PO Box. 29

30 E-Delivery Process con t Step 2: The system will then validate the information. If it is correct the borrower will be directed to the Electronic Signature Disclosure & Consent Agreement. This is where they give consent to receive the documents electronically. As soon as the borrower clicks on the Agree and Continue link, CMG and the Broker/LO will receive notification that the documents have been received by the borrower(s) 30

31 E-Delivery Process cont d Tip: If there are multiple borrower on the loan sharing the same address, E-Sign will sometimes take them to another borrowers profile or E-Sign room. If this happens, please instruct the borrower to follow the link as shown below and choose their profile to move forward. If your borrower receives this profile which is another borrower on the transaction, they will need to choose the option Not Mark Example, this will then take them to the profiles available and they can then choose theirs and complete the process. 31

32 OBJECTIVE:Resources 32

33 Learn more about TRID with these resources CMG TRID Resource Page CFPB TILA-RESPA Integrated Disclosure Rule - CFPB Loan Estimate Form - CFPB Closing Disclosure Form - CFPB Your Home Loan Toolkit - Iowa Bankers Comparison of pre TRID Rules to TRID Rules in effect 10/3/ ins.com/userdocs/ibaprivate/comparison_of_pre- DFA_Mortgage_Disclosures_to_Integrate_Mortgage_Disclosures.pdf TRID Timeline Example

34 This is not meant to be legal advice. Please seek legal counsel as you implement TRID CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS #1820 in most, but not all states. CMG Mortgage, Inc. is an equal opportunity lender, licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No , Loans made or arranged pursuant to a California Finance Lenders Law license No Offer of credit is subject to credit approval. For information about our company, please visit us at To verify our complete list of state licenses, please visit For more information on State licenses, please visit Not intended to serve as a business solicitation for residents in Massachusetts. For Wholesale Brokers and Select Partner Clients only. 34