TRID Training Presentation

TRID Rule Overview
TILA-RESPA Integrated Disclosure Rule

Introduction
For more than 30 years, Federal law has required lenders
to provide two different disclosure forms to consumers
applying for a mortgage. The law also has generally
required two different forms at or shortly before closing on
the loan. Two different Federal agencies developed these
forms separately, under two different Federal statutes;
The Truth-in-Lending Act and the Real Estate Settlement
Procedures Act of 1974. The information on these forms
is overlapping and the language is inconsistent.
Consumers often find the forms confusing, and lenders
and settlement agents find the forms burdensome to
provide and explain.
Confidential – Castle & Cooke Mortgage, LLC Compliance Program 2

Overview
 Dodd-Frank Wall Street Reform and Consumer Protection
Act:
– Created the Consumer Financial Protection Bureau (“CFPB”);
– Mandated that the CFPB integrate mortgage disclosures;
 Truth-in-Lending Act (“TILA”);
 Real Estate Settlement Procedures Act of 1974 (“RESPA”).
– Currently there are four different disclosure forms;
 Two forms when a customer applies for a mortgage;
 Two forms when closing a loan.
– As of October 3, 2015, there will be two integrated disclosure
forms;
 Loan Estimate;
 Closing Disclosure.

Overview (cont.)
 TILA-RESPA Integrated Disclosure (“TRID”) Rule is far
more than a new set of disclosures.
 TRID ushers in new responsibilities for lenders, title
companies, and other settlement service providers that
might also bring new liability and enforcement risks.
 Challenges CCM faces:
– Major system changes;
– Business process changes;
– Training; and
– Monitoring.
 New forms must be embedded into technology and
business systems.

New Forms
 Loan Estimate (“LE”)
– Integrates Initial TILA disclosure and RESPA Good Faith Estimate
(“GFE”).
– Generally contains:
 First page: 1) identifying information describing the borrower and the loan;
2) loan terms, amount, payments, and rate; 3) particular loan features
such as prepayment penalties and balloon payments; 4) projected
payments showing any increases; and 5) estimated cash to close and
closing costs.
 Second page breaks down closing costs and includes details on pre-paid
and escrowed amounts and cash to close.
 Third page contains a series of additional disclosures regarding: total
payments of five years; APR; Total Interest Payment (“TIP”); appraisal
availability to borrower; whether assumable, requirement for homeowners
insurance; late payment policies; refinancing not guaranteed; and the
possibility of servicing transfer.

New Forms
 Closing Disclosure (“CD”)
– Merges and replaces the final Truth-in-Lending (“TIL”) statement and
the HUD-1 settlement statement.
– Generally contains:
 First page: Essentially the same as the first page of the LE and contains:
1) identifying information describing borrower and loan ; 2) loan terms,
amount, payments and rate; 3) particular loan features such as
prepayment penalties and balloon payments; 4) projected payments
showing any increases; and 5) estimated cash to close and closing costs.
 Second and third pages: Include closing cost details and a calculation of
cash to close and a summary of the real estate transaction.
 Fourth and fifth pages: Provide several disclosures, including whether
loan is assumable; whether loan has demand feature; late payment
policies; refinancing can’t be guaranteed; potential for servicing transfer;
appraisal availability to borrower; APR; finance charge; amount financed;
and Total Interest Percentage.

Applicability
 Effective for all loans with an application date on or after
October 3, 2015.
 Covers most closed-end consumer credit transactions
secured by real estate.
 Includes certain loans that are currently subject to TILA
but not RESPA (construction-only loans, loans secured by
vacant land or by 25 or more acres, and credit extended
to certain trusts for tax or estate planning purposes).
 No small creditor exemption under this rule.
 Higher priced mortgages are covered (with other
additional HPM rules).

Applicability (cont.)
 Does not apply to:
– Home Equity Lines of Credit (“HELOCs”);
– Reverse Mortgages;
– Mortgages secured by a mobile home, or a dwelling not attached
to land (e.g. house boat);
– Commercial / business loans;
– Loans made by a person or entity making five or fewer mortgages
in a calendar year and thus is not a creditor; and
– Partial exemption for certain transactions associated with housing
assistance loan programs for low- to moderate-income borrowers.
 Exempt from the requirement to provide the RESPA Settlement Cost
Booklet, RESPA GFE, RESPA settlement statement, application
servicing disclosure statement, the LE, the CD and the Special
Information Booklet.

Applicability (cont.)
 The integrated disclosure forms may not be used prior to
October 3, 2015.
 The old forms must be used for all applications received
prior to October 3, 2015.
 The old law is in effect until October 3, 2015.

Loan Estimate
 Good faith estimate of credit costs and loan terms.
 Must follow 12 C.F.R. §1026.37 and use standard form H-24.
 Provides consumer with a good faith estimate of credit costs
and transaction items.
 Must be in writing.
 Satisfy timing and delivery requirements:
– Delivered or placed into the mail no later than three general business
days after the loan application;
– It is considered to be received three business days after being placed
in the mail;
– Must be delivered or placed into the mail no later than seven general
business days before “consummation;” and
– Delivery can be hand delivered, mailed or sent electronically.

Waivers
 No waiver of the three-day delivery requirement.
 Waiver of the seven-day requirement:
– Must have a bona-fide personal financial emergency;
– Must have a written statement from the consumer that describes
the bona-fide financial emergency; and
– The lender may not provide a pre-printed form defining the
“emergency.”

Definitions
 “Application” is considered to be made when the
consumer submits all of the following:
– Name;
– Income;
– Social security number (for requesting a credit report);
– Property address;
– Property value estimate; and
– Requested mortgage loan amount.
 An application can be written or electronic and can
include a written record of an oral application.

Definitions (cont.)
 “Business day” for delivering the Loan Estimate, a day on
which the creditor’s offices are open to the public for
carrying out substantially all of its business functions.
 “Business day” for other purposes, including delivery of
the Closing Disclosure, is all calendar days except
Sundays and legal public holidays.
 As defined in Regulation Z, “consummation” is when a
consumer becomes contractually obligated on a credit
transaction.

Loan Estimate: “Good Faith” Requirement
 Must estimate in good faith consistent with the best
information reasonably available to the creditor at the
time disclosed.
 General rule to determine “good faith:”
– Look at difference between actual charges and charges in the
Loan Estimate;
– If actual charges exceed charges listed in the Loan Estimate: Not
in good faith;
– If actual charges are equal to or less than charges listed in the
Loan Estimate: In good faith; and
– Good faith depends on the sum of all the charges in a particular
category.

Revisions and Corrections to Loan Estimates
 Creditors are bound by the LE and may not issue revisions because
they discover technical errors, miscalculations, or underestimations
of charges.
 Revised LEs only permitted in certain circumstances:
– Changed circumstances that exceeds tolerance;
– Changed circumstances that affects eligibility;
– Consumer-requested revisions;
– Interest rate locked and points of lender credits change;
– Consumer delay of more than 10 days to proceed; and
– New construction loan and settlement is delayed.
 When there is a changed circumstance after the LE has been
provided, the creditor can revise the LE within three business days.
 The revised LE generally can be provided NO LATER than seven
business days before consummation.

Definitions
 “Changed Circumstances” means:
– An extraordinary event;
– Information relied on turns out to be inaccurate, or it changed after
disclosures provided; or
– New information that creditor did not rely on.
 Examples:
– Natural disaster;
– New title insurer; and
– New and/or changed information discovered.

Loan Estimate - Timing
 Must be provided to the borrower within three business days of
receiving the application:
– In person;
– Electronically (via E-Sign Rules); and
– Placed in the mail in accordance with the “Mailbox Rule.”
 If the consumer withdraws within the three-day period, then
you do not have to provide the LE.
 If the creditor can’t approve the loan based on the terms
requested by the consumer, you don’t have to provide a LE.
 If the consumer amends the application, then you must provide
the LE within three days of receiving the amended application.

Loan Estimate – Timing (cont.)
 If the consumer withdraws the application or the creditor
determines that it cannot be approved on the terms
requested by the consumer within the three-business day
period, the creditor does not have to provide the LE.
– However, if the LE is not provided the creditor will not have
complied with the LE requirements under Regulation Z if it later
consummates the transaction on the terms originally applied for by
the consumer.
 The creditor must ensure that the consumer receives the
revised LE no later than four business days prior to
consummation.
 Cannot provide a revised LE in conjunction with or after
you provide the CD.

Using the Loan Estimate – Page 1
 Page 1 – General information
– Application data – property, loan, and rate lock status
– Loan terms
– Projected payments during the term of the loan
– Costs at closing including the total estimated closing costs and the
estimated cash to close

Using the Loan Estimate - Page 1 (cont.)
Confidential – Castle & Cooke Mortgage, LLC Compliance Program © 2015 Byte Software 20

Using the Loan Estimate - Page 1 (cont.)

Using the Loan Estimate - Page 2
 Page 2 – Costs
– A good-faith itemization of the loan costs and other costs
associated with the loan.
 Loan costs - paid by the consumer to the creditor or third-party
provider.
 Other costs – taxes, governmental recording fees and certain other
payments involved in the closing process.
– A calculating cash to close table.
– Adjustable payment table.
– Adjustable interest rate table.
– Consumer must pay during the origination of the loan.

Using the Loan Estimate – Page 2 (cont.)

Using the Loan Estimate – Page 3
 Page 3 – Additional information about the loan.
– Contact information
– Comparisons table
– Other considerations table
– Signature statement

Tolerance and Variance Guidelines
 Creditor may charge the consumer more than the amount
disclosed in the LE in specific circumstances.
 What can change:
– Certain amounts can change under the rule;
– Others may change with certain tolerance thresholds; and
– Changed circumstances.

Zero Tolerance Fees
 Fees paid to creditor, mortgage broker, or an affiliate of
either.
 Fees paid to an unaffiliated third-party if the creditor did
not permit the consumer to shop.
 Transfer taxes.
 For charges subject to zero tolerance, any amount
charged beyond the amount disclosed on the LE must be
refunded to the consumer.

Definitions
 Affiliate – any company that controls, is controlled by, or
is under common control with another company, as set
forth in the Bank Holding Company Act of 1956.

10% Tolerance Fees
 Charges for third-party services and recording fees paid by or
imposed on the consumer are grouped together and subject to
a 10% cumulative tolerance.
 The creditor may charge the consumer more than the amount
disclosed on the LE for any of these charges so long as the
total sum of the charges added together does not exceed the
sum of all such charges disclosed on the LE by more than
10%. If it does, the difference must be refunded to the
consumer.
 These charges are:
– Recording fees; and
– Charges for third-party services:
 Not paid to the creditor or an affiliate of the creditor; and
 Consumer is permitted by the creditor to shop, and selects a service
provider from the creditor’s written list of service providers.

Cure Details

No Tolerance Fees
 Prepaid interest.
 Property insurance premiums.
 Amounts placed into escrow, impound, reserve, etc.
 For services required by the creditor if the creditor
permits the consumer to shop: charges paid to third-party
service providers not included on creditor’s written list.
 Charges paid to third-party service providers for services
not required by the creditor.
 Change circumstance applies.

Loan Estimate – When is a Consumer
Permitted to Shop for a Service?
 If the consumer is permitted to shop for a settlement service,
the creditor must provide the consumer with a written list of
services for which the consumer can shop.
 The written list is separate from the LE, but must be provided
within the same time frame – no later than three-business days
after the creditor receives the application.
 The list must identify at least one available settlement service
provider for each service.
 State that the consumer may choose a different provider of
that service.
 The service providers identified on the written list must
correspond to the settlement services for which the consumer
can shop as disclosed on the LE.

Written List of Providers

Loan Estimate: Exceptions
 When a creditor may charge the consumer more than the
amount disclosed in the LE:
– When certain variations are expressly permitted by the TILA –
RESPA Rule;
– The amount charged falls within explicit tolerance thresholds and
the estimate is not for a zero tolerance charge where variations
are never permitted; and
– Certain changed circumstances permit a revised LE or a CD that
permits the charge to be changed.

Closing Disclosures
 This form integrates and replaces the existing HUD-1 and
the Final TIL disclosure.
 For federally related mortgage loans form H-25 must be
used.
 The creditor is required to ensure the consumer receives
the CD no later than three-business days before
consummation.
 The CD generally must contain the actual terms and
costs of the transaction.
 Creditors provide the CD for to the consumer.
 Creditors may use settlement agents to provide the CD
as long as the creditor ensures compliance.

Closing Disclosure (cont.)
 In rescindable transactions, the CD must be given
separately to each consumer who has the right to rescind
under TILA.
 In transactions that are not rescindable, the CD may be
provided to any consumer with primary liability on the
obligation.

Closing Disclosure - Timing
 The CD must be received by the consumer at least three-
business days before consummation.
 The CD must be delivered or placed in the mail no later
than seven-business days before consummation.
– May be delivered “in person.”
– May be delivered via electronic delivery methods subject to
compliance with the consumer consent and other applicable
provisions of the Electronic Signatures in Global and National
Commerce Act (15 U.S.C.) [(§ 1026.19)(f)(1)(ii)(A)].
 Note: “Business day” for CD delivery purposes is all
calendar days except Sundays and legal public holidays.

Closing Disclosure – Timing (cont.)
 Consumers may waive or modify the three-business day
waiting period when:
– The extension of credit is needed to meet a “bona fide personal
financial emergency.”
– The consumer has received the CD, and
– The consumer give the creditor a dated written statement that :
 Describes the emergency;
 Specifically modifies or waives the waiting period;
 Bears the signature of all consumers who are primarily liable on the
legal obligation; and
 Note: the creditor is prohibited from providing the consumer with a
pre-printed waiver form.

Using the Closing Disclosure
 Page 1 – General information (mirrors the LE)
– loan terms
– projected payments
– costs at closing

Using the Closing Disclosure – Page 1

Using the Closing Disclosure – Page 1 (cont.)

 Page 2 – Loan costs and other costs

 Page 3 – Calculating Cash to Close, Summaries of
Transactions

 Page 4 – Additional information about this loan
– Loan Disclosures Table
– Adjustable Payment Table
– Adjustable Interest Rate Table

 Page 5 - “other” tables
– Loan calculations
– Other disclosures
– Questions notice
– Contact information
– Confirm receipt

Closing Disclosure Revisions and Corrections
 General rule – Creditors must re-disclose terms or costs
on a CD if certain changes occur to the transaction after
the CD was first provided making it inaccurate.
 Three types of changes:
– Changes before consummation requiring a new three-business
day waiting period;
– Changes before consummation that do not require a new waiting
period; and
– Changes occurring after consummation.

Revisions and Corrections (cont.)
 Changes requiring new forms and waiting period:
– Disclosed APR becomes inaccurate;
– Changes in the loan product; and
– Adding a prepayment penalty.
 Changes requiring new forms but NO waiting period:
– Changes that do not affect the following:
 APR;
 Loan product; and
 Adding a prepayment penalty.

Closing Disclosure Tolerance Violations
 General rule – if a consumer paid more than disclosed on
his/her LE beyond the applicable tolerance:
– Creditor must refund the excess within 60 days; and
– Provide a corrected CD reflecting refund within 60 days.
 10% cumulative tolerance:
– If the total sum of charges exceeds the sum disclosed by more
than 10%, the difference must be refunded to the consumer; and
– A corrected CD would be needed.

Changes After Consummation
 A corrected CD is needed:
– When an event with settlement has made the disclosure
inaccurate and results in a change to the amount paid by the
consumer or seller within 30 days of consummation;
– To document refunds for tolerance violations; and
– To correct non-numerical clerical errors (errors that don’t effect
numbers or timing or other requirements).

Record Retention Requirements
 Creditor
– CD and related documents – five years.
– Post-consummation escrow cancellation notice and post-
consummation partial payment notice – two years.
– LE and all evidence of compliance with the integrated disclosure
requirements – three years.

RESPA – TILA Civil Liability
 RESPA Liability
– No private right of action for integrated disclosures under RESPA.
– Administrative enforcement only.
 TILA Liability
– Unlike RESPA, potential civil liability/private right of action (i.e.
borrower lawsuits).
– Potential assignee liability for investors.
– Rule relies heavily on TILA statutory authority.
– Does not state which statutory liability applies to different parts of
the rule (or the forms).
– Preamble includes description of the statutory authority used for
each provision, which provides sufficient guidance for industry,
consumers, and courts regarding liability.

CFPB Civil & Administrative Liability
 CFPB may bring two type of actions:
– Administrative enforcement proceedings; or
– Civil actions in Federal district court.
 No criminal enforcement authority.
 Can obtain legal or equitable relief in the form of:
– Rescission or reformation of contracts;
– Refund of money, return of real property, or restitution;
– Disgorgement of compensation for unjust enrichment;
– Payment notification regarding the violation;
– Limits on the activities or function of the person against whom the action is
brought; and
– Civil money penalties:
 Tier 1: Up to $5,000 / day.
 Tier 2: Reckless violations – up to $25,000 / day.
 Tier 3: Knowing violations – up to $1,000,000 / day.

CFPB Resources
 Webinars provided by the CFPB
 Archives with recordings are available at:
– http://www.consumerfinance.gov/regulatory-
implementation/tilarespa/CFPB
 Rule overview: 06/17/2014
 FAQ: 08/26/2014
 Loan Estimate contents: 10/02/2014
 Closing disclosure contents: 11/18/2014

CFPB Resources (cont.)
 CFPB Regulatory Implementation Website:
– http://www.consumerfinance.gov/regulatory-
implementation/tilarespa/
 Small Entity Compliance Guide
 Guide to Forms
 Sample and Annotated Forms
 Links to Webinars
 Disclosure Timeline Illustration
 Additional Guidance Materials
 eRegulations Tool: http;//www.consumerfinance.gov/eregulations

Quiz

Test Your TRID Knowledge
 The Loan Estimate disclosure form replaces which two
forms currently in use?
A. HUD-1 and GFE
B. TIP and Initial TILA
C. CD and GFE
D. Initial TILA and GFE

 Can you use the new Closing Disclosure form on an
application taken July 15, 2015?
A. True
B. False
 The lender must provide the borrower a Loan Estimate
within three-business days of receiving the borrower’s
application…:
A. In person
B. Electronically (via E-Sign Rules)
C. By placing it in the mail
D. Any of the above

 Does the TRID Rule apply to HELOCs?
A. True
B. False
 The TRID Rule does not apply to Reverse Mortgages.
A. True
B. False
 The Loan Estimate can be hand delivered, mailed or
emailed.
A. True
B. False

 In order to have a waiver of the seven-day requirement:
A. Must have a bona-fide personal financial emergency.
B. Must have a written statement from the consumer that describes
the bona-fide financial emergency.
C. The lender may not provide a pre-printed form defining the
“emergency.”
D. All of the above.

 An application is considered to be made when the
consumer submits all of the following:
– Name
– Income
– Social Security Number
– Mother’s maiden name
– Property Address
– Requested mortgage loan amount
A. True
B. False

 What is the correct definition of “business day” relative to
the delivery of Loan Estimates?
A. A day on which the creditor’s offices are open to the public for
carrying out substantially all of its business functions.
B. All calendar days except Sundays and legal public holidays.
 If the consumer withdraws his/her loan application within
the three-day period, the lender must still provide a Loan
Estimate.
A. True
B. False

 What is the general rule to determine “good faith?”
A. If actual charges exceed charges listed in the Loan Estimate.
B. If actual charges are equal to or less than charges listed in the
Loan Estimate.
 Creditors may not issue revisions to the Loan Estimate
solely because they discover technical errors,
miscalculations, or underestimations of charges.
A. True
B. False

 When there is a changed circumstance after the Loan
Estimate has been provided, the creditor can revise the
Loan Estimate within three-business days.
A. True
B. False
 Which of the following are “changed circumstances?”
A. An extraordinary event
B. Information relied on turns out to be inaccurate
C. New information the creditor did not rely on
D. All of the above

 If the consumer withdraws his/her application within the
three-day period, you do not have to provide the Loan
Estimate.
A. True
B. False
 As defined in Regulation Z, “consummation” is when a
consumer becomes contractually obligated on a credit
transaction.
A. True
B. False

 If amounts paid by the consumer at closing exceed the
amounts disclosed on the Loan Estimate beyond the
applicable tolerance threshold, the creditor must refund the
excess to the consumer no later than 60 calendar days after
consummation.
A. True
B. False
 Which of the examples listed below are “zero tolerance fees?”
A. Fees paid to a creditor, mortgage broker, or an affiliate of either
B. Fees paid to the County Assessor’s Office
C. Fees paid to the home owners association

 When can a creditor charge the consumer more than the
amount disclosed in the Loan Estimate?
A. When certain variations are expressly permitted by the TILA-
RESPA Rule.
B. The amount charged falls within explicit tolerance thresholds
and the estimate is not for a zero tolerance charge where
variations are never permitted.
C. Changed circumstances permit a revised Loan Estimate or a
Closing Disclosure that permits the charge to be changed.
D. A and C
E. A, B, and C

 The Closing Disclosure integrates and replaces which of
the following?
A. Form H-25 and the GFE
B. Initial TILA and the GFE
C. HUD-1 and the final TILA
D. None of the above
 The creditor is required to ensure the consumer receives
the Closing Disclosure not later than three-business days
before consummation.
A. True
B. False

 A corrected Closing Disclosure is needed when an event
with settlement has made the disclosure inaccurate and
results in a change to the amount paid by the consumer
or seller within 30 days of consummation.
A. True
B. False
 A corrected Closing Disclosure is needed to document
refunds for tolerance violations.
A. True
B. False

 A creditor must retain a Closing Disclosure and related
documents for:
A. Three years
B. Five years
C. Two years
D. Seven years from the date of consummation

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