TILA / RESPA Integrated Disclosures Roll-Out. CUNA Lending Council November 4th, 2014

Transcription

1 TILA / RESPA Integrated Disclosures Roll-Out CUNA Lending Council November 4th, 2014

2 Presenter Jon Bundy Regulatory Compliance Manager LOANLINER Documents CUNA Mutual Group

3 Agenda Overview of Integrated Disclosure Rule People, Process and Technology (but not in that order) Action Steps

4 What is the Integrated Disclosure Rule? Combination of RESPA and TILA disclosures Purpose is to create disclosures that are easier to understand and use Effective date is August 1, 2015

5 Integrated Disclosures Loan Estimate Initial TIL Disclosure RESPA Good Faith Estimate Closing Disclosure Final TIL Disclosure HUD-1 / HUD-1A

6 Which loans require the new disclosures? Included: Closed-end consumer transactions Secured by real property (land) First and subordinate liens Includes Purchases, Refinances, Closed-end Home Equity, Vacation and Second Homes, Loans on 25 acres or more, Vacant lot loans, Construction-only loans Excluded: Home Equity Lines of Credit (HELOCs) Reverse Mortgages Loans secured by mobile homes or a dwelling not attached to real property

7 Dynamic Disclosures Technology Different disclosures for different loan programs No longer allowed to have non-applicable fields and disclosures New Calculations will require new programing and training.

8 Loan Estimate Page 1 Additional required disclosures and calculations if YES for this loan term Payment Calculations are very different from current TIL disclosure Payment columns vary by loan type and PMI Four column limit Disclose a range of payments for ARMs

9 Loan Estimate Required disclosures by loan type and payment type which are transaction specific Payment columns vary by loan type and how long PMI will be required Four column limit Disclose a range of payments for ARMs

10 Loan Estimate Page 2 Can only show the title of fees that will be charged Fees / services must list in alphabetical order Cash to Close table is new and varies for loans without a seller Adjustable Payment Table and/or Adjustable Interest Rate Table can only show if applicable

11 Loan Estimate Page 3 Disclosures under Other Considerations replace some existing documents New calculations Signature section is optional

12 Dynamic Disclosures A second challenge will be the treatment of closing costs.

13 Closing Disclosure Page 2

14 Closing Disclosure Page 2 - Loan Costs Three cost categories Tolerances New columns for Paid Before Closing & Paid by Others

15 Example of Calculating Tolerances Borrower picks pest inspector from the creditor s list of providers.

16 Completing the Closing Disclosure Loan Costs Moves to Section B and needs to be in alphabetical order

17 Example of Calculating Tolerances Recalculate the Loan Estimate Closing Costs Moved to B. Re-total

18 Process Changes Disclosure Timing Requirements Change to the Definition of Application New Closing Cost Tolerance Requirements Flip-the-switch Compliance Date

19 Timely Delivery of Disclosures Loan Estimate Delivered or placed in the mail 3 rd business day after application Closing Disclosure Received at least 3 business days before consummation Two definitions of business days Process for documenting delivery Application process Application - 6 pieces of information Consumer s name, income, SS# Property address and value Mortgage loan amount

20 New Application Definition Application process Application - 6 pieces of information Consumer s name, income, SS# Property address and value Mortgage loan amount

21 Zero Tolerance Fees to lender or affiliate New - Fees to third party provider if the member could not shop for service Transfer taxes 10% Aggregate Member can shop for third party service Give service provider list Member picks provider from list Recording fees Tolerance Changes No Tolerance Limit Means the cost can change For fees out of the creditor s control

22 Compliance Date What about the old disclosures? Beginning August 1, 2015, the old disclosures cannot be used for applications received on or after that date. There will be a crossover period when new and old disclosures may be used. The effect is to require maintenance of both disclosure regimes for a period after the compliance date

23 People External Partners Technology and compliance support Internal Support Training for your mortgage staff

24 Working with... System & Form Providers New fields and calculations Dynamic nature of disclosure Timeframe Service Providers Determine which services members can/cannot shop for Zero tolerance if cannot shop Examine current accuracy Determine info needed for LE Agreements on fees Provide list in member s area Contact information Settlement Agents CU is responsible for timely delivery of Closing Disclosure Mail Closing Disclosure a week in advance

25 Implementation Your team Who is on the team? Who is in charge? Impact to different departments Compliance resources Third-party partners who can help Timeframes Update products, policies and procedures Test system changes and documents Train staff on products, policies, procedures, systems and documents Do all of this while evaluating compliance with the first 6 mortgage rules, meeting mortgage lending goals and serving members!

26 Thank You Jonathan Bundy LOANLINER Compliance Manager CUNA Mutual Group ; CUNA Mutual Group, 2014 Reproduction, adaptation or distribution without permission of CUNA Mutual is prohibited.

27 What questions do you have? Integrated Disclosures