8/22/ ADDITIONAL HOUSEKEEPING INFORMATION. CFPB Update Presented by: Marvin Stone August 20, 2014

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1 Please put: CFPB Online Presentation in the subject line of your CFPB Update Presented by: Marvin Stone August 20, 2014 For Escrow Officer Credit please one time only the password, attendees names, and TDI License numbers (if you have one) to for certificates (please do this as soon as possible and make sure the correct spelling of the name(s) is included as to how it should appear on the certificate). For this webinar, please include CFPB in the subject line of your . Attorneys bar card number to the same for CLE credit. Send to your training administrator if applicable. 2 ADDITIONAL HOUSEKEEPING INFORMATION Because of recent opinions expressed by the Texas Insurance Department concerning rebates, legal credit is available only to attorneys who own title agencies which are Stewart Title Guaranty Agents, are employed by a title insurance agent licensed with Stewart Title Guaranty, or a Stewart entity. Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or entity may also obtain CLE credit. We welcome any other lawyers to listen, but cannot provide continuing education credit to you. If you are claiming legal credit for this web conference, please provide in your which category you are in. We regret any inconvenience but we must take reasonable steps to protect us and you from enforcement actions by the Texas Insurance Department. 3 1

2 CFPB Update Presented by: Marvin Stone August 20, 2014 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP History of Disclosures TruthinLending TruthinLending Act (TILA) of 1968 Implemented by Federal Reserve Board Promulgated Regulation Z Created TruthinLending Statement Discloses the following: Cost of credit Repayment terms of mortgage Annual percentage rate (APR) Loan rate Fees amortized over expected life of loan Discloses finance charges, amount financed, total number of payments, whether interest can change, whether loan can be refinanced 5 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP History of Disclosures RESPA Real Estate Settlement Procedures Act of 1974 RESPA was implemented by HUD Promulgated Regulation X Created Good Faith Estimate Standardized disclosures of closing costs Included costs associated with mortgages HUD1 and GFE modified in

3 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD The CFPB Timeline The market peaked in WRAPUP 7 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD The CFPB Timeline Officially dubbed Financial Collapse in 2008 WRAPUP 8 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP The CFPB Timeline The push for financial regulatory reform began in

4 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD The CFPB Timeline WRAPUP 10 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD About the CFPB WRAPUP CFPB formed with Richard Cordray as Director Supervisory authority over Banks and NonBanks. Enforcement authority over RESPA and TILA 11 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD The CFPB Timeline Proposed and finalized many rules in 2012 WRAPUP 12 4

5 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD The CFPB Timeline Released the Final on Integrated Disclosures November 20, 2013 at the CFPB Field Hearing in Boston as part of the Know Before You Owe initiative. WRAPUP Stewart s policy analyst talks with CFPB Director, Richard Cordray about Stewart s effort to provide education on the new disclosures. 13 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP CFPB Continues to Remedy Historic Closing Problems Have you ever experienced one or more of the following? Buyer and real estate professional have arrived at the title company for closing Buyer has no idea how much money they are responsible to bring Real estate professional is frustrated they have yet to receive a copy of the HUD1 Loan officer is saying the title company is responsible for the delay Title company is saying they just received the loan package When the consumer wins we all win! 14 Mortgage s ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP Service Providers Integrated Disclosures 15 5

6 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Service Provider flight to quality CFPB Bulletin to Banks and NonBanks stating they must use quality service providers. WRAPUP Service Providers 16 Regulator Requirements ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP CFPB Service Provider Bulletin FDIC ThirdParty Risk OCC Bulletin Fed guidelines State requirements 17 Regulator Requirements ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 18 6

7 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 1. Current Licenses Establish and maintain current License(s) as required to conduct the business of title insurance and settlement services. 2. Escrow Accounts Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation. 3. Privacy Program Adopt and maintain a written privacy and information security program to protect Nonpublic Personal Information as required by local, state and federal law. 4. Settlement Procedures & Policies Adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial Laws as applicable to the Settlement process. 5. Title Procedures & Policies Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance. 6. Insurance Coverage Maintain appropriate professional liability insurance and fidelity coverage. 7. Complaints Process Adopt and maintain written procedures for resolving consumer complaints. 19 Practice #2 Escrow Accounts ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 20 Practice #2 Escrow Accounts ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP Procedures to meet this best practice: 1. Escrow funds and operating accounts are separately maintained. a) Escrow funds or other funds the Company maintains under a fiduciary duty to another are not commingled with the Company s operating account or an employee or manager s personal account. 2. Escrow Trust Accounts are prepared with Trial Balances. a) On at least a monthly basis, Escrow Trust Accounts are prepared with Trial Balances ( ThreeWay Reconciliation ), listing all open escrow balances. 3. Escrow Trust Accounts are reconciled. a) On at least a daily basis, reconciliation of the receipts and disbursements of the Escrow Trust Account is performed b) On at least a monthly basis, a ThreeWay Reconciliation is performed reconciling the bank statement, check book and Trial Balances. c) Segregation of duties is in place to help ensure the reliability of the reconciliation and reconciliations are conducted by someone other than those with signing authority. d) Results of the reconciliation are reviewed by management and are accessible electronically by the Company s contracted underwriter(s). 4. Escrow Trust Accounts are properly identified. a) Accounts are identified as escrow or trust accounts. Appropriate identification appears on all accountrelated documentation including bank statements, bank agreements, disbursement checks and deposit tickets. 5. Outstanding file balances are documented. 6. Transactions are conducted by authorized employees only. a) Only those employees whose authority has been defined to authorize bank transactions may do so. Appropriate authorization levels are set by the Company and reviewed for updates annually. Former employees are immediately deleted as listed signatories on all bank accounts. 7. Unless directed by the beneficial owner, Escrow Trust Accounts are maintained in Federally Insured Financial Institutions. 8. Utilize Positive Pay or Reverse Positive Pay, Automated Clearing House blocks and international wire blocks, if available. a) Background Checks are completed in the hiring process. At least every three years, obtain Background Checks going back five years for all employees who have access to customer funds. 9. Ongoing training is conducted for employees in management of escrow funds and escrow accounting. 21 7

8 CFPB Finalizes on Integrated Disclosures ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP Better Disclosures Integrated Disclosures 22 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD CFPB Goals in Redesigning Forms Help consumers by making all forms look similar Help consumers shop for best loan Help consumers guard against hikes in charges at closing Help consumers understand future obligations Good Faith Estimate Truth in Lending HUD1 WRAPUP 23 Detailed Summary of the Final ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP Detailed Summary 7 pages Scope Loan Estimate Closing Disclosure Limits on Cost Increases Three Day Delivery Options Proposals Not Adopted Effective Date *Final 1,888 pages 24 8

9 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP Detailed Summary of the Final 1 Scope 2 Loan Estimate 3 Closing Disclosure 4 Limits on Increases a) Applications on or after 8/1/2015 fall under new rules b) Closed end loans only No home equity lines c) No reverse mortgages d) No mobile home loans a) Replaces Good Faith Est. / Early Truth in Lending b) Mortgage Broker may provide / Lender is still responsible c) Delivery must be within 3 Business Days of application d) Limitation on up front fees with exception for credit reports e) Disclaimer on early estimates used before Loan Estimate a) Replaces HUD 1 and Final Truth in Lending b) Consumer must receive at least 3 business days before signing c) APR changes over 1/8% require re disclosure/ 3 Bus. Day wait d) Escrow may prepare and/or deliver* a) Items that generally cannot increase: a) Creditor s or broker s charges for its own services b) Charges for services provided by an affiliate c) Charges where consumer is not permitted to shop b) Other services can generally increase by 10% or less 4a Exceptions a) Consumer requests the change b) Consumer chooses their own service provider c) Information at application is/becomes inaccurate d) Loan Estimate expires 5 Not Adopted a) Re defined All In APR b) Storage in standard, electronic machine readable format c) Disclosure of Approximate Cost of Funds 25 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Loan Estimate for Refinance Page 1 Transaction Information Loan Terms Projected Payments Costs at Closing WRAPUP 26 Loan Estimate for Refinance Page 1 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 27 9

10 Loan Estimate for Refinance Page 1 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 28 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Loan Estimate for Refinance Page 2 Loan Costs Other Costs Calculating CashtoClose WRAPUP 29 Loan Estimate for Refinance Page 2 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 30 10

11 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Loan Estimate for Refinance Page 3 Loan Calculations Other Disclosures Questions Contact Information Confirmation of Receipt WRAPUP 31 Loan Estimate for Refinance Page 3 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 32 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Closing Disclosure for Purchase Page 1 Closing Information Transaction Information Loan Information Loan Terms Projected Payments Costs at Closing WRAPUP 33 11

12 Closing Disclosure for Purchase Page 1 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 34 Closing Disclosure for Purchase Page 1 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 35 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Closing Disclosure for Purchase Page 2 Loan Costs Other Costs Total Costs WRAPUP 36 12

13 Closing Disclosure for Purchase Page 2 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 37 Closing Disclosure for Purchase Page 2 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 38 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Closing Disclosure for Purchase Page 3 CashtoClose Calculations Transaction Summaries WRAPUP 39 13

14 Closing Disclosure for Purchase Page 3 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 40 Closing Disclosure for Purchase Page 3 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 41 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Closing Disclosure for Purchase Page 4 Loan Disclosures Escrow Account WRAPUP 42 14

15 Closing Disclosure for Purchase Page 4 Detail ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 43 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Closing Disclosure for Purchase Page 5 Loan Calculations Other Disclosures Questions Contact Information Confirmation of Receipt WRAPUP 44 Closing Disclosure for Purchase Page 5 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 45 15

16 Closing Disclosure for Purchase Page 5 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP 46 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Closing Disclosure for Seller Only Page 1 Closing Information Transaction Information Summaries of Transactions Contact Information WRAPUP 47 ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD Closing Disclosure for Seller Only Page 2 Closing Cost Details Loan Costs Other Costs WRAPUP 48 16

17 In The News ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP Fee accuracy is a top priority Lenders want integration Universal Property ID (HMDA) Uniform Closing Dataset (UCD) Universal Agency ID eagentvalidation standard The Phone Book 49 Questions? ThreeDay AllIn APR CFPB Electronic DISCLOSURES Storage Proposals Loan Estimate Not Adopted MBA MISMO UCD WRAPUP Q&A 50 THANK YOU! For Escrow Officer Credit, please the password, attendees names, and TDI License number (if you have one) to CECertificate@stewart.com for the certificate (please do this as soon as possible and make sure the includes the name(s) as it should appear on the certificate). Please be aware that due to TDI's strict policies on issuing credit, you must pay close attention to the password given at the end of the webinar as we are unable to give it out once the presentation has been terminated off of Webex. For this webinar, please include CFPB in the subject line of your . Please make sure your request is submitted one time only. Submitting the same request multiple times and to multiple addresses will only delay the processing of your certificate. Attorneys bar card number to CECertificate@stewart.com for CLE credit. Next Texas TIPS Online September 18, 2014, Bankruptcy by Charlie Craig. Questions/Comments? john.rothermel@stewart.com Certificates will be ed out within 5 business days of your request. Should you not receive your certificate by the end of the 5 th business day, feel free to contact us at that time. The presentation materials will be available at within 5 business days of the webinar