Uploaded byHometrust Mortgage Company
TILA-RESPA Integrated Disclosure Rule
The document summarizes changes to mortgage disclosure forms and regulations taking effect on October 1, 2015 under the TILA-RESPA Integrated Disclosure rule. Key points include: the Loan Estimate and Closing Disclosure forms will combine and replace existing forms, lenders must provide disclosures within 3 days of receiving an application, and certain fees are subject to zero variance between initial disclosure and closing. The purpose is to provide clearer and more consistent information to consumers.
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TILA-RESPA Integrated Disclosure Rule
- 1. PRESENTED BY Hometrust MortgageCompany 711 W. Bay Area Blvd. Suite 102 Webster, TX 77598 NMLS# 149932 TILA-RESPA INTEGRATED DISCLOSURE RULE EFFECTIVE OCTOBER 1, 2015
- 2. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 WHAT IS CHANGING??? • Definition of an application • GFE and intial TIL being combined and replaced with the new Loan Estimate form • HUD-1 and final TIL being combined and replaced with the new Closing Disclosure form • Addition of a 3 day Closing Disclosure review requirement • Appraisal fee is now subject to zero variance • Most lenders will now provide the Closing Disclosure that will be approved by title company
- 3. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 WHAT IS THE REASON FOR THE CHANGE? • “Know Before You Owe” rule • Information on the old forms is overlapping and language is inconsistent • Consumers find the forms confusing • Lenders and settlement agents find the forms burdensome to provide and explain • Loan Estimate and Closing Disclosure will look almost exactly the same making it much easier for consumers to compare • New forms were put to the test, and consumers preferred them over the old forms
- 4. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 WHAT TRANSACTIONS DOES THE RULE COVER? Applies • All loans for residential properties • Properties > 25 acres and vacant land • Construction loans • Lot loans Does not apply • HELOCs • Reverse mortgages • Mortgages secured by a mobile home or dwelling not attached to real property
- 5. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 DEFINITION OF AN APPLICATION: • We have an application when these 6 pieces of information are provided: – Name – Income – Social Security Number – The property address – Property value estimate – Loan amount sought • “any other information deemed necessary by the loan originator” has been removed from the definition • Sales contract not required for it to be considered an application • 3 day clock starts ticking as soon as a property address and sales price is provided
- 6. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 WEB APPLICATIONS • Cannot prevent borrowers from providing all six pieces of an application • Cannot remove an address once submitted • If a property address is inputted, then it can no longer be a pre- approval and the 3 day clock starts ticking
- 7. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 LOAN ESTIMATE • The new Loan Estimate form combines and replaces the old GFE and Initial Truth in Lending forms • Lender must provide within 3 business days of receipt of an “application” • Must also be delivered no later than the 7th business day before consummation • Borrower signed Loan Estimate does not equate intent to proceed
- 8. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 CLOSING DISCLOSURE • The new Closing Disclosure form combines and replaces the old HUD-1 and Final Truth in Lending forms • Lender must provide 3 DAYS prior to closing • Hometrust will provide to borrower and closing agent • Lender is responsible for tracking delivery and receipt
- 9. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 LOAN ESTIMATE VS. CLOSING DISCLOSURE
- 10. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 VARIANCE-ZERO TOLERANCE • Fees paid to creditor or mortgage banker (Lender fee) • Fees paid to an affiliate of the creditor or mortgage banker such as appraisal fee • Fees paid for services consumer not permitted to shop for such as credit report or tax service fee • Transfer taxes if applicable • Lender credits (cannot decrease without a rate change)
- 11. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 10% VARIANCE CATEGORY • Fees paid for unaffiliated third-party services consumer permitted to shop for such as surveys • Recording fees • Aggregate Increase Limited to 10% • Example – all charges in 10% category = $1,000 • $300 Settlement Agent Fee increases by $50. Since the $50 increase only raises total of category to $1,050 it is only a 5% increase and is allowable.
- 12. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 CHARGES THAT CAN CHANGE • Prepaid interest • Property insurance premiums • Amounts placed into escrow • Fees paid to third party service providers selected by consumer not on list provided by creditor • Fees paid for third party services not required by creditor, such as Home Warranty. These fees may be paid to affiliates
- 13. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 NEW DISCLOSURE ITEM TIP • Total Interest Percentage also know as TIP • Total amount of interest that would be paid over the life of the loan as a percentage of the loan amount • This assumes the loan is not paid off early • While this is towards the back of the LE and CD, it is a noticeable figure and questions may come from borrowers concerning the figures
- 14. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 CLOSING DISCLOSURE TIMELINE • Borrower must have 3 days to review the CD before loan ‘consummation’ can occur • If CD is in borrower’s hands on Monday, earliest close date is Thursday • If CD is mailed or emailed, have to allow for 3 days delivery before the 3 day review begins • If provided in person and signed, or sent by e- sign e-disclosures and opened the 3 day review begins
- 15. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 WHAT WILL RESTART 3 DAY CLOCK? • Only 3 changes will require a new 3 day review: – APR increases by more than .125% – A Prepayment Penalty is added – Loan product changes – Lenders have been required to provide a 3-day review for APR increases greater than .125% since 2009! – The Prepayment Penalty and Loan Product change are new to the rule but a very unlikely.
- 16. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 ESIGN - E-DISCLOSURES • All TRID related disclosures fall under the ESIGN laws • ESIGN laws govern how disclosures that are not provided face-to-face or via some type of physical mail delivery must be provided • Required to be able to show borrower consent and proof that the recipient has the ability to receive it • Encompass E-delivery has that capability
- 17. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 HOW DOES THIS AFFECT YOU AS THE REALTOR? • Be prepared for 30-35 days needed to close • Once contract is signed by all parties and delivered to lender our timeline begins • Avoid last minute contract changes or new addendums
- 18. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 KEYS TO SUCCESS! • Identify closing title company (the exact location) early in the process • Clearly define buyer’s and seller’s costs • Have all invoices for services (termite, survey, home warranty, etc) to your lender as soon as possible • Have all HOA costs clearly disclosed • Use USPS website to get correct address for contract • Give lender the listing agent’s info along with the contract • Communicate regularly with your lender and title company • Make sure name on contract matches the customer’s DL, or DD214 for VA customers
- 19. 711 W. BayArea Blvd. Suite 102, Webster, TX 77598 NMLS# 149932 CONTACT US! KIM BABINEAUX Sr. Loan Officer NMLS# 215867 Cell: (281) 455-0999 www.kimbabineaux.com JERI KNAPP Personal Mortgage Consultant NMLS# 218782 Cell: (281) 467-8355 www.jeriknapp.com SCOTT MEDSGER Sr Loan Officer NMLS# 216820 Cell: (281) 338-2200 www.scottmedsger.com ANDREA BRINEGAR Sr. Mortgage Banker NMLS# 213192 Cell: (409) 457-6767 abrinegar.hometrust.com JEFF WORTHAM Branch Manager NMLS# 218022 Cell: (713) 369-6555 jwortham.hometrust.com KEVIN MORTON Sr Loan Officer NMLS# 221116 Cell: (832) 818-1021 kmorton.hometrust.com