CFPB Integrated Mortgage Disclosure Final Rule

Transcription

1 CFPB Integrated Mortgage Disclosure Final Rule Current Status of the New Rule Mary Schuster Chief Product Officer - RamQuest

2 The Regulatory Reform Ecosystem

3 Meet the CFPB Mission Statement o To make markets for consumer financial products and services work for Americans by promoting transparency and consumer choice and preventing abusive and deceptive financial practices. What that Means o Conduct rule-making, supervision, and enforcement for Federal consumer financial protection laws; o Restrict unfair, deceptive, or abusive acts or practices; o Create a center to take consumer complaints; o Promote financial education; o Research consumer behavior; o Monitor financial markets for new risks to consumers; and o Enforce laws that outlaw discrimination and other unfair treatment in consumer finance

4 Meet the CFPB continued Departments Areas of Focus o Supervision and Enforcement o Consumer Engagement and Education o Research, Markets, and Regulations o External Affairs o General Counsel o Chief Operating Officer Sources of Funding o The CFPB is funded by authorized transfers from the Federal Reserve System, subject to limits established in the Dodd-Frank Act. The CFPB is also authorized to request up to $200 million in discretionary appropriations if the amount transferred by the Federal Reserve System is not sufficient.

5 Enforcement Powers of CFPB (Title X, Subtitle E) Investigations and administrative discovery Hearings and adjudication proceedings Litigation authority Referrals for criminal proceedings

6 Relief Available (Sec 1055) Rescission or reformation of contracts Refund of monies or return of real property Disgorgement or compensation for unjust enrichment Payment of damages Public notification of violation Limits on activities or functions Civil penalties: o Up to $5,000/day o If reckless, up to $25,000/day o If knowingly, up to $1,000,000/day

7 RESPA-TILA Rule Basics Early GFE and other early disclosures replaced by single Loan Estimate Form o Due to consumer within 3 days of loan app HUD-1 and Final TIL replaced by single Closing Disclosure Form o Due to consumer 3 days prior to closing

8 New Forms Apply To Covers most closed-end mortgages except: o Reverse mortgages o HELOC o Mobile home o Creditors making 5 or fewer loans per year o Commercial purpose loans

9 Effective Dates Applies to loans whose applications received by creditor or mortgage broker on and after 10/03/15 (a Saturday for systems conversions over the weekend) We are in full countdown and preparation mode.

10 The New Terminology Retrain Your Brain HUD-1 is now the Closing Disclosure Lender is now Creditor Borrower is now Consumer Closing/Settlement is now Consummation TILA and GFE are now the Loan Estimate

11 Positives of New CDF Return to full itemization of fees Agent/Underwriter premium split is gone Key Information on Page 1 Summary o Monthly Payment o Interest Rate o Cash needed to Close Consumers have time to review and ask questions Line Numbering (believe it or not this is a win) CFPB says only items anticipated as charges to buyer should appear in buyer s column * (common practice or contract) o Transfer Tax o Title Premium ***

12 3 Day Review Period (f)(1)(ii) Initial concern in Proposed Rule: o 3 business days* prior to consummation** with re-disclosure if any changes occur Final Rule determination: o CDF must be delivered to the consumer (borrower) 3 business days in advance with limited re-disclosure requirements *business day for CD purposes: all days except Sunday and 10 federal holidays **consummation is defined as the time that a consumer becomes contractually obligated on a credit transaction. 12 CFR (a)(13)

13 Re-disclosure Requirements (f)2(ii) Requiring additional 3-day review period o Inaccurate APR o Change in loan product o Prepayment penalty added

14 Seller Closing Disclosure Seller provided Closing Disclosure by settlement agent at consummation (f)(4)(i) Nothing prohibits settlement agent from creating a separate form for seller purposes only Meet the ALTA Settlement Statement o Allows disclosure of all fees to buyer and seller (and their agents) o Accurately discloses all fees to all payees o Allows for signature a date by buyer(s), seller(s) and settlement agent

15 Waiver (f)(1)(iv) Consumer may waive waiting period if they have a bona fide personal financial emergency. No waiver afforded for Seller s financial emergency. Purposely narrow definition by example: an imminent sale of consumer s home at foreclosure. Bureau chose not to expand definition.

16 A Look at the New Forms Loan Estimate 3 Pages o Replaces GFE and TIL Closing Disclosure 5 Pages 10 variations o Replaces HUD-1 Se Habla Espanol? 10 variations o Spanish Versions

17 Loan Estimate Form Page One

18 Loan Estimate Form Page Two

19 Loan Estimate Form Page Three

20 Closing Disclosure Form Page One

21 Closing Disclosure Form Page Two

22 Closing Disclosure Form Page Three

23 Closing Disclosure Form Page Four

24 Closing Disclosure Form Page Five

25 Things to Keep an Eye On Some topics continue to evolve. You need to keep alert and educated on the following topics..

26 Regulated Formula for Title Premiums Title Fee Estimates (f)(2)-4 Title insurance premium for a lender s title policy: o Based on the full premium rate (basic)* (f)(2) or (f)(3) Owner s title premium calculation = incremental difference o Full owner s title insurance premium + add lender s simultaneous issuance premium subtract the full premium for lender s coverage (g)(4)(2)(ii) *unless enhanced is specified in sales agreement

27 ALTA Settlement Stmt Page 1

28 ALTA Settlement Stmt Page 2

29 ALTA Settlement Stmt Page 3

30 Zero Tolerance Category (e)(3)(i) Current Rule: o Fees to Creditor o Fees to Mortgage Broker o Fees for unshoppable services o Transfer Taxes New Rule: o Affiliate fees (e)(3)(i) of lender required services

31 Change of Circumstance (e)(iv)(ii) Information provided by consumer inaccurate Extraordinary event Discovery of new info specific to consumer or transaction Revision requested by consumer On day of locking rate After 10-day expiration *Disclosure required within 3 days of knowledge but not on same day as Closing Disclosure

32 Delivery Defined (f)(1) Hand delivery: immediate (deliver on Monday, close on Thursday) US Mail: assumed receipt 3 days after placed in mail with receipt confirmed by consumer after approval to use method of delivery (if not, assumed 3 days to open ) Overnight Delivery: with consumer confirmed receipt

33 Post Closing Changes (f)(2)(ii)(c) If CD becomes inaccurate during 30 days post consummation and results in change to money actually paid by consumer creditor must deliver or mail corrected CD within 30 days of knowledge. Tolerance cures must be mailed within 60 days of consummation (f)(2)(v)(i). Seller changes- Closing agent responsible to redisclose within 30 days of knowledge (f)(2)(iii)

34 Resources and References Nationally - NAR, MBA, ABA & ALTA Industry Publications 3. RESPA-TILA-TALK.com CFPB.gov o o o o 5 page Executive Summary Small Business Compliance Guide great 89 pages What it Means for Service Providers summary Sign up for s

35 What Should I Do Now? Download & Print the New LE and CDF forms for your office At A Glance Guide available from PRIA Become familiar and conversant Begin refining your processes Watch for news on evolving issues Attend multiple education sessions Understand your needs and what your software provider is doing to meet them