The Dodd Frank Act Rule Implementation of 2015 will bring another set of changes to the lending and escrow industries. Spoiler alert: The world will not end.

1. Dodd Frank Act
2015 Rule
Implementation
Will The World End?

2. Intro
• NY Times Article
• YouTube Video
• CFPB website
• Yes, we have new disclosures coming
• No, the world will not end
• David Stevens, President of MBA
• “CFPB has only one mission”

4. Why We Have Dodd Frank
• Dodd-Frank Wall Street Reform Act
• Signed by President Obama in 2010
• A reaction to subprime RMBS meltdown in the
summer of 2008 and predatory lending.
• Laws v. Rules
• Rules have been going into effect one at a
time.
• The Act created the CFPB
• Dodd-Frank is massive. Only three sections
target our industry: IX, X, and XIV.

5. Questions:
• As an industry, today, are we ready for this
change?
• Every industry hates regulation.
• Every industry wishes regulators would regulate
their competitors more often than their own
firms.
• We will always complain that we are not ready.
• We will always find a way to make the transition.

6. Dodd
Frank
IX
Creates Qualified Mortgages (2014)
Risk Retention Rule on Non-QMs (2014)
Ability to Repay (2014)
2
X
Creates the CFPB (2010)
XIV
Raises the bar on bank LOs (2014)
Attacks predatory lending “steering” (2011)
Section 1419
Consumer Disclosures (2015)

7. Questions:
• Are we explaining the benefits of Dodd Frank
Act to our Agents and Lenders?
• Dodd Frank is polarizing. People either love it or
hate it. And people who hate it are more vocal.
Our job is to just help them through the
transition. You’re like a counselor and your
patient won’t leave the bum.
• Avoid websites that spread hyperbole and fear

8. Questions:
• We are still finding Agents/Lenders that are not
aware of CFPB
• Realtors are almost 100% clueless.
• Lenders who are not aware are lenders who…
• Aren’t in a position of power
• Are new to the industry and not originating.
• Aren’t focused on compliance
• Are not loan originators

9. Questions:
•How will CFPB affect transactions that
do not involve a Lender:
• cash
• RESPA only applies to transactions that contain a
federally-related loan. Follow all other laws you
currently follow RE cash transactions.
• seller carry-backs
• YES There are some new rules re: seller financing.
• lease with option to purchase
• THIS IS THE MOST PROBABLY AREA FOR LEGAL ACTION

10. Seller Financing
• Seller financers that engage in a minimum number of
transactions are considered creditors under the Truth in
Lending Act (TILA). Specifically, seller financers would be
considered creditors if they extend credit secured by a
dwelling six or more times in the preceding calendar
year, or extend more than one high-cost mortgage in any
12-month period.
• Accordingly, such seller financers are excluded from the
definition of loan originators for purposes of the
compensation provisions unless they use table funding.
In addition, the rule contains two additional special
exclusions from the compensation, steering,
qualification, and identification provisions for certain
seller financers. These exceptions are:

11. Seller Financing
• ….exceptions:
• You are a natural person, estate, or trust and you
provide seller financing for only one property in
any 12-month period.
• You are any type of seller financing entity and you
finance the sales of three or fewer properties in
any 12-month period.

12. Considerations
• Focus on the positive: This will help consumers
understand loan programs and fees.
• You can be a resource for Realtors and consumers.
• Getting the docs in the hands of borrowers in advance of
consummation (signing documents) is great idea.
• This gives consumers a chance to ask questions in
advance.
• If the lender screws up? Then the transaction is delayed.
Lenders will not want to screw up. This will motivate
them to provide accurate and honest information on
their final disclosures
• We may see most lenders preparing the HUD I (Closing
Disclosure) because they are responsible for the content.

13. Who Provides the Closing
Disclosure:
• Under the final rule, the creditor is responsible
for delivering the Closing Disclosure form to the
consumer.
• A creditor may use settlement agents to provide
the disclosure, provided the settlement agent
complies with the requirements of the rule, and
the creditor must ensure that the Closing
Disclosure is provided in accordance with the
rule.

14. Total Interest Percentage:
P and I x by loan term
TOTAL PAYMENTS
Subtract from the total^ the principal amount of
loan
= all the interest.
Principal loan amount divided by interest = %
MUST add in the interim interest

15. Closing Disclosure Timing
• The creditor must provide the Closing Disclosure
to the consumer at least three business days
before the consumer closes on the loan.
• If there are changes to the Closing Disclosure
between the time it is issued and closing,
depending on the nature of the change, the
creditor must provide an updated Closing
Disclosure with another three-business-day
waiting period, or simply provide an updated
Closing Disclosure by closing.

16. Changes Requiring an Updated Closing
Disclosure & Additional 3 Day Wait:
(1) changes to the APR greater than 1/8 of a
percent (or 1/4 of a percent for loans with
irregular payments or periods),
(2) changes to the loan product, or
(3) the addition of a prepayment penalty.
Less-significant changes can be disclosed on an updated Closing
Disclosure without the need for an additional three-business-day
waiting period.

17. Definition of “Business Day”
• Consistent with the existing requirement to
provide final Truth in Lending Disclosures to a
consumer at least three business days before
closing, the final rule uses the special definition
of "business day," which is any day other than
Sundays and certain legal public holidays.

18. Rescission is extended….
• If the required rescission notice or material TILA
disclosures are not delivered or if they are
inaccurate, the consumer’s right to rescind may
be extended from three days after becoming
obligated on a loan to up to three years.

19. Rescissionrights after the three-business-day
rescissionperiod(closed-endcreditonly):
• The disclosed finance charge is considered accurate
if it does not vary from the actual finance charge by
more than one-half of 1 percent of the credit
extended or $100, whichever is greater.
• The disclosed finance charge is considered accurate
if it does not vary from the actual finance charge by
more than 1 percent of the credit extended for the
initial and subsequent refinancings of residential
mortgage transactions when the new loan is made
at a different financial institution. (This excludes
high-cost mortgage loans subject to section 1026.32,
transactions in which there are new advances, and
new consolidations.)

20. Guide to rescission
• http://files.consumerfinance.gov/f/201308_cfpb_tila-
narrative-exam-procedures.pdf
• Page 32

21. Rescission rights in foreclosure:
• The disclosed finance charge is considered
accurate if it does not vary from the actual
finance charge by more than $35.
• Overstatements are not considered violations.
• The consumer can rescind if a mortgage broker
fee that should have been included in the
finance charge was not included.

22. • Jillayne Schlicke
CE Forward, Inc. dba NAMF
206-931-2241
Jillayne@ceforward.com
ceforward.com