TILA-RESPA Integrated Disclosure (TRID) Rule a.k.a. Know Before You Owe with New Haven Middlesex Association of REALTORS July 16, 2015 Jeremy Potter, General Counsel and Chief Compliance Officer, Norcom Mortgage 1
What We ll Cover: Basics: Why We re Here Final Rule The New Forms Evaluating the Rule Challenges for banks and its attorneys Questions 2
CFPB Authority in our Industry Alternative Mortgage Transaction Parity Act Consumer Leasing Act of 1976 Electronic Fund Transfer Act* Equal Credit Opportunity Act Fair Credit Billing Act Fair Credit Reporting Act* Home Owners Protection Act of 1998 Fair Debt Collection Practices Act Federal Deposit Insurance Act* Gramm-Leach-Bliley Act* Home Mortgage Disclosure Act of 1975 Home Ownership and Equity Protection Act of 1994 Real Estate Settlement Procedures Act of 1974 S.A.F.E. Mortgage Licensing Act of 2008 Truth in Lending Act Truth in Savings Act Omnibus Appropriations Act of 2009* Interstate Land Sales Full Disclosure Act Mortgage Reform and Anti- Predatory Lending Act* *Indicates that portions of this Act transferred to the CFPB while other portions did not. 4
Basics: Applicable Loans o Final rule applies to most consumer mortgages, EXCEPT: Home-equity lines of credit Reverse mortgages Mortgages secured by a mobile home or dwelling not attached to land No-interest second mortgage made for down payment assistance, energy efficiency or foreclosure avoidance Lenders who make 5 or fewer loans in a year Consumer instead of Borrower Creditor instead of Lender Variances reference changes to fees Tolerances reference the thresholds on fees 5
The New Forms: Loan Estimate Closing Disclosure o 3 pages long o 5 pages long Combines early two-page TIL and three-page GFE Combines three-page HUD-1 and final two-page TIL o Who provides? o Who provides? o Two options: lender or mortgage broker When? Within three days of application o Two options: lender or combination of lender and settlement agent When? Three days before closing o Still subject to tolerances Exceptions 6
LOAN ESTIMATE The New Forms Must Be Used with Respect to Any Applications Received for a Covered Transaction on or after October 3, 2015 No change for the following: o Cannot Impose Lender Fees (except for credit report) before consumer Receives LE and indicates Intent to Proceed o Cannot Require Submission of Verification Documents prior to issuing the LE You Cannot Use New Forms Before Effective Date 7
LOAN ESTIMATE Timing Must Be Provided Within Three (3) Business Days (open for substantially all business) of Receiving an Application o Delivered o Or Placed in Mail That Delivery Date (or Date Placed in Mail) Must Also Be no Later Than Seventh (7 th ) Business Date Before Consummation Trigger Date is Date When Application Received o By Creditor o Or by Mortgage Broker 8
LOAN ESTIMATE - Loan Estimate Must be Completed in Good Faith o Based on Actual Information if Known Must Use Good Faith and Exercise Due Diligence to Try to Obtain Information o Estimate Must be Based on Best Information Reasonably Available Using Good Faith Due Diligence CFPB has not addressed the scope of due diligence o You Can Rely on Third Parties for Information Including Consumer 9
10
11
12
Consumer Shopping A creditor permits a borrower to shop for third party settlement services when they: o Inform borrowers on Loan Estimate o Provide them with a written list of settlement service providers The creditor may still impose reasonable qualifications for providers. o Example: Provider must be licensed Impact on closed list Creditor is not indemnifying the list 13
Summary of when new LE is possible The exceptions include situations when: 1) The consumer asks for a change; 2) The consumer chooses a service provider that was not identified by the creditor; 3) Information provided at application was inaccurate or becomes inaccurate; or 4) The LE expires. When an exception applies, the creditor generally must provide an updated LE form within 3 business days. 14
Closing Disclosure (CD) Required form used by lenders Three business days before closing Provided by: o Lender o Lender may rely on Settlement Agent, but Lender remains responsible for accuracy Contents covered by 1026.38 15
Closing Disclosure Page 1 1026.38(a)-(d) (a) General Information (b) Loan Terms (c) Projected Payments (d) Costs at Closing 16
Closing Disclosure Page 5 1026.38(o)-(q) (o) Loan Calculations (p) Other Disclosures (q) Questions Notice 17
Closing Disclosure Page Five (cont.) 1026.38(r)-(s) (r) Contact Information (Sale) Contact information for: 1. Lender 2. Mortgage Broker 3. Real Estate Broker (B) 4. Real Estate Broker (S) 5. Settlement Agent (r) Contact information (Refinance) Contact information for: 1. Lender 2. Mortgage Broker 3. Settlement Agent (s) Signature Statement 18
Sale Closing Date Delivery By Hand: SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 1 2 3 4 5 6 7 Hand Delivery = Disclosure Day 1 Receipt 8 9 10 11 12 13 14 Sunday doesn't count Disclosure Day 2 Delivery By Mail: Disclosure Day 3 - OK to close SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 1 2 3 4 5 6 7 Closing Disclosure MAILED Mail Day 1 Mail Day 2 Mail Day 3 = Receipt 8 9 10 11 12 13 14 Disclosure Day 1 Sunday doesn't count Disclosure Day 2 Disclosure Day 3 - OK to close 19