TABLE OF CONTENTS... 1 CHAPTER 1 INTRODUCTION... 4 1.1 GOALS AND OBJECTIVES... 4 1.2 REQUIRED REVIEW... 4 1.3 APPLICABILITY... 4 CHAPTER 2 ACCOUNTABILITY AND MONITORING... 5 2.1 INTERNAL CONTROLS... 5 CHAPTER 3 STAFF AND TRAINING... 6 3.1 ONGOING TRAINING... 6 3.2 NEW HIRE TRAINING... 7 CHAPTER 4 INTEGRATED MORTGAGE DISCLOSURE RULE... 8 4.1 SUMMARY OF THE RULE... 8 4.1.1 2015 Initial Rule Requirements... 8 4.1.2 2017 TILA RESPA Rule Requirements... 9 4.1.3 2018 TILA RESPA Rule Requirements... 10 4.2 A WORD OF CAUTION... 10 4.3 SCOPE... 11 4.3.1 Timeshare Loans... 11 4.3.2 Construction Loans... 11 4.3.3 Cooperative Units... 12 4.3.4 Exemptions... 12 4.4 DEFINITIONS... 13 4.5 TILA VIOLATIONS... 16 4.6 PRE APPLICATION ESTIMATES OF TERMS OR COSTS... 17 4.7 SIMULTANEOUS SUBORDINATE LIENS... 17 4.8 FEE VARIANCE... 18 4.9 OTHER DISCLOSURES... 18 4.9.1 Your Home Loan Toolkit... 18 4.9.2 Written List of Service Providers... 19 4.9.3 Adjustable Rate/Variable Rate Mortgages... 19 4.9.4 Appraisal Disclosure and Initial Servicing Transfer Disclosure... 20 4.10 LIMITED ENGLISH PROFICIENCY... 20 4.11 MULTIPLE CREDITORS, CONSUMERS, PROPERTIES... 20 4.12 ANNUAL PERCENTAGE RATE... 21 this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ 1
4.13 DELIVERY OF DISCLOSURES... 21 4.14 CONSUMER S INTENT TO PROCEED... 22 4.15 DISCLOSURE OF NATIONAL MORTGAGE LICENSING SYSTEM AND REGISTRY ID... 22 CHAPTER 5 THE LOAN ESTIMATE... 24 5.1 FEES CHARGED PRIOR TO DISCLOSURE OR APPLICATION... 25 5.2 REQUESTS FOR VERIFYING INFORMATION BEFORE PROVIDING A LOAN ESTIMATE... 25 5.3 GOOD FAITH REQUIREMENT AND VARIANCE... 26 5.3.1 Variance Limitations... 26 5.4 WAIVER OF WAITING PERIOD... 27 5.5 REVISIONS AND CORRECTIONS TO LOAN ESTIMATES... 27 5.5.1 Timing for Revisions to Loan Estimate... 28 5.6 BREAKDOWN OF THE LOAN ESTIMATE... 28 5.6.1 Page 1 of the Loan Estimate... 28 5.6.2 Page 2 of the Loan Estimate... 29 5.6.3 Page 3 of the Loan Estimate... 30 CHAPTER 6 THE CLOSING DISCLOSURE... 32 6.1 PREPARATION OF THE CLOSING DISCLOSURE... 33 6.2 PREPARATION OF THE CLOSING DISCLOSURE FOR A SELLER... 33 6.3 DELIVERY OF THE CLOSING DISCLOSURE... 34 6.4 BREAKDOWN OF THE CLOSING DISCLOSURE... 35 6.4.1 Page 1 of the Closing Disclosure... 35 6.4.2 Page 2 of the Closing Disclosure... 35 6.4.3 Page 3 of the Closing Disclosure... 36 6.4.4 Page 4 of the Closing Disclosure... 36 6.4.5 Page 5 of the Closing Disclosure... 37 6.5 REVISED CLOSING DISCLOSURES... 38 CHAPTER 7 DISCLOSURES REQUIRED POST CONSUMMATION... 39 7.1 POST CONSUMMATION CORRECTION TO THE CLOSING DISCLOSURE.. 39 7.2 ESCROW ACCOUNT CANCELLATION NOTICE... 39 7.2.1 Timing Considerations... 41 7.3 PARTIAL PAYMENT POLICIES... 41 7.3.1 Notice Contents... 42 CHAPTER 8 RECORD RETENTION... 44 this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ 2
8.1 RECORD RETENTION REQUIREMENTS FOR TRANSFER OR SALE OF LOANS... 44 8.2 MAINTENANCE OF RECORDS... 44 CHAPTER 9 APPENDIX... 45 9.1 LOAN ESTIMATE SAMPLE*... 46 9.2 MODEL FORM WRITTEN LIST OF SETTLEMENT SERVICE PROVIDERS49 9.3 SAMPLE WRITTEN LIST OF PROVIDERS CONSUMERS CAN SHOP... 50 9.4 SAMPLE WRITTEN LIST OF PROVIDERS CONSUMERS CANNOT SHOP. 51 9.5 CLOSING DISCLOSURE SAMPLE... 52 9.6 CLOSING DISCLOSURE SAMPLE FOR A SELLER... 57 9.7 MODEL FORM ESCROW ACCOUNT CANCELLATION NOTICE... 59 this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ 3
Introduction Goals and Objectives Chapter 1 Introduction is committed to the highest standards of federal consumer compliance and requires all management, employees, and third party vendors to follow these policies and adhere to these standards. 1.1 Goals and Objectives The standards set out in this policy represent minimum requirements based on applicable legal and regulatory guidance and apply throughout s operations. These requirements are intended to prevent, its employees, and third party vendors from violating federal regulations related to mortgage banking and consumer compliance with respect to initial, subsequent, and closing disclosures required under the TILA RESPA Integrated Mortgage Disclosure Rule, now commonly referred to as the Know Before You Owe mortgage disclosure rules, in keeping with the Dodd Frank Wall Street Reform and Consumer Protection Act. 1.2 Required Review requires this policy be reviewed no less than annually. The review will include the compliance of this policy with current law, regulation or directive, the procedural implementation of this policy within the then current scope of business lines and operations, internal or external audit results received during the previous year, and then current industry trends or regulatory guidance. 1.3 Applicability The purpose of this policy is to implement consumer protection mechanisms as required by the United States statutes and related federal regulations administered by the Consumer Financial Protection Bureau (CFPB) and other prudential regulators as identified by the CFPB including the Board of Governors of the Federal Reserve System (FRS), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC). Wherever state or local regulations overlap and are stricter than the requirements set out in this policy, the more conservative approach will be applied. If any applicable laws or prudential regulator requirements conflict with this policy, must consult with the appropriate legal counsel to resolve the conflict and to set forth s policies and procedures for compliance. this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ 4
Integrated Mortgage Disclosure Rule Summary of the Rule Chapter 4 Integrated Mortgage Disclosure Rule 4.1 Summary of the Rule On November 20, 2013, the CFPB released the TILA RESPA Integrated Mortgage Disclosure Rule. This was part of a consumer and industry outreach campaign titled, the Know Before You Owe project. The TILA RESPA Integrated Mortgage Disclosure Rule consolidated six existing disclosures required under TILA and RESPA for most closed end transactions secured by real property into two forms, the Loan Estimate (LE) and the Closing Disclosure (CD). The intended purpose of the combined/revised disclosures was to allow consumers to more easily shop for a mortgage loan that makes sense to the consumer and provide consumers additional opportunity to better understand the terms of the mortgage loan being offered. The final rule, amended July 20, 2015, became effective for mortgage loan applications received on and after October 3, 2015. The Loan Estimate is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying. will provide this form to consumers within three business days after it receives a complete mortgage loan application, either directly or through an approved third party service provider (a mortgage broker), as applicable. The Closing Disclosure is designed to provide disclosures that will be helpful to consumers in understanding the costs and terms of the transaction. will ensure receipt of this disclosure by consumers at least three business days before consummation of the loan. The CFPB also combined other mandated disclosures, such as the appraisal notice under the TILA 129H(c) and (d) or 701(e)(5) of the Equal Credit Opportunity Act and the initial servicing transfer disclosure under RESPA. The TILA RESPA Integrated Mortgage Disclosure Rule provides very detailed instructions on how these new forms are to be completed and used. 4.1.1 2015 Initial Rule Requirements The rule includes some restrictions on certain activities prior to a consumer s receipt of the Loan Estimate. These restrictions became effective on October 3, 2015, regardless of whether an application was received on that date. These activities include the following: this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ 8
The Loan Estimate Disclosure of National Mortgage Licensing System and Registry ID Chapter 5 The Loan Estimate For closed end credit transactions secured by real property, other than exempt transactions, [ Client] is required to provide the consumer an initial disclosure to enable understanding of basic terminology of a loan and its costs immediately and over time. This disclosure is called the Loan Estimate or LE. The Loan Estimate must contain a good faith estimate of credit costs and transaction terms.; and o be in writing and contain the information prescribed in 12 CFR 1026.37. Delivery of the Loan Estimate to the consumer must satisfy the timing and method of delivery requirements. may only use revised or corrected Loan Estimates when specific requirements are met. In certain situations, mortgage brokers may provide a Loan Estimate. The Loan Estimate replaced and combined into one form the previous Good Faith Estimate and initial Truth in Lending Statement. The Loan Estimate disclosure is three pages long and may require the use of an addendum if there is more required information than a section of the form can accommodate. is responsible for delivering the initial Loan Estimate or placing it in the mail no later than the third general business day after receiving the six items which define an application. If [ Client] determines within the three general business day period that the consumer s application will not or cannot be approved and issues an adverse action notice to the consumer, or if the consumer withdraws the application, does not have to provide the Loan Estimate. However, if does not provide the Loan Estimate or does not provide it within the appropriate time frame, it will be in violation of the Loan Estimate requirements under TILA if later declines or consummates the transaction. A mortgage broker may issue the Loan Estimate, but the accuracy of all information presented on the form is the responsibility of (the creditor named on the disclosure). The Loan Estimate also incorporates other disclosures that are required under RESPA and TILA and no longer need to be provided as a separate disclosure. In addition, it also incorporates new disclosures required by the Dodd Frank Act: The Total Interest Percentage (TIP) required under TILA, as amended by the Dodd Frank Act; page three Comparisons this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ 24
Appendix Maintenance of Records Chapter 9 Appendix Review these sample model forms for meeting disclosure requirements under the rule on the following pages: 9.1 Loan Estimate 9.2 Model Form Written List of Settlement Service Providers 9.3 Written List of Providers Consumers Can Shop 9.4 Written List of Providers Consumers Cannot Shop 9.5 Closing Disclosure 9.6 Closing Disclosure for a Seller 9.7 Model Form Escrow Cancellation Notice For additional variations, including Spanish language versions and various versions for specific types of transactions, please refer to the TILA RESPA Integrated Disclosure Rule implementation web page located at http://www.consumerfinance.gov/policy compliance/guidance/implementationguidance/tila respa disclosure rule/. this work may be used, reproduced or transmitted in any form or by any means, by or to any party outside of [ 45