Know Before You Owe:
The real estate
professional’s guide
Disclaimer
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The Bureau issued the TILA-RESPA Integrated Disclosure final rule in November of
2013 to implement provisions under the Dodd Frank Wall Street Reform and
Consumer Protection Act.

The Bureau issued amendments to the TILA-RESPA Integrated Disclosure final rule
in January and July of 2015.

The Final Rule will take effect on October 3, 2015.

This presentation is current as of August, 2015. This presentation does not
represent legal interpretation, guidance, or advice of the Bureau. While efforts have
been made to ensure accuracy, this presentation is not a substitute for the rule. Only
the rule and its Official Interpretations can provide complete and definitive
information regarding requirements. This document does not bind the Bureau and
does not create any rights, benefits, or defenses, substantive or procedural, that are
enforceable by any party in any manner.
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The Know Before You Owe mortgage disclosure rule
primarily does two things:
1. It simplifies and consolidates some of the required
loan disclosures, and
2. It changes the timing of some activities in the
mortgage process.
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BEFORE
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AFTER
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BEFORE
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AFTER
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consumerfinance.gov/mortgage-closing
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 Preapprovals and prequalifications before an application
are unchanged by the rule.
 Creditors are able to review documents voluntarily
provided by a consumer.
 But creditors cannot require any written documentation
as a condition for providing a Loan Estimate.
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Lenders must provide Loan Estimates within 3 business
days after consumers have provided:
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their name
their income
their Social Security number (so the lender can check credit)
the address of the home they hope to purchase
an estimate of the home’s value (typically the sale price)
the amount they want to borrow.
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 Loan Estimates will be the most useful when the applicant
describes the specific loan program they are requesting.

E.g. 30-yr FHA with 3.5% down payment
vs. 30-yr conventional with 5% down payment.
 By comparing the same kind of loan across different lenders,
clients are more likely to find their best deal.
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 Loan Estimates must be available to consumers without any
written documentation required—this makes comparison
shopping easier.
 Issuing a Loan Estimate does not mean that the lender has
approved or denied the loan.
 Lenders are not required to issue Loan Estimates with locked
interest rate commitments. If the interest rate isn’t locked, the
rate and any rate-related fees or credits can change.
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• Creditors can define the steps required for the intent to
proceed to be effective.
• Loan Estimates expire after ten business days without
an active intent to proceed from the borrower.
• After a Loan Estimate expires, creditors are no longer
required to honor the terms offered.
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consumerfinance.gov/know-before-you-owe/real-estate-professionals
 A creditor cannot collect fee payment information (e.g., credit
card information, post-dated check) from a consumer prior to:
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the creditor delivering (or placing in the mail) a Loan
Estimate;
and
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the applicant actively expressing that they intend to
proceed with the mortgage application connected with the
Loan Estimate.
 The only exception is a reasonable fee for the credit report.
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• If credit card information is collected to pay for a credit
report, it must be re-submitted to be used for other fees
(e.g. application fee, appraisal fee).
• Lenders may require payment before beginning the
appraisal, processing, verification or underwriting
processes.
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• Loan Estimates must be accurate based upon the best
information available.
• However, if the information about your client, the
proposed loan, or the property was incorrect or changes,
a revised Loan Estimate may be issued. This can be
referred to as a changed circumstance.
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Common reasons why a Loan Estimate may be revised include:
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Your client decided to change loan programs or the amount of the
down payment.
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The appraisal on the home came in higher or lower than expected.
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Your client’s credit status changed, perhaps owing to a new loan or a
missed payment.
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The lender could not document overtime, bonus or other income
provided on your client’s application.
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 A creditor is responsible for ensuring that the consumer
receives the Closing Disclosure no later than three
business days before closing.
 If the creditor does not have evidence that the
consumer actually received the Closing Disclosure
(in person or by other means), the creditor may
presume that the consumer received the Closing
Disclosure three business days after it was
delivered or placed in the mail.
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If changes occur, creditors must redisclose terms or costs on the
Closing Disclosure.
But, only three changes require a new 3-business-day review:
1. The APR (annual percentage rate) increases by more than 1/8 of a
percent for regular loans (most fixed-rate loans) or 1/4 of a percent
for irregular loans (most adjustable loans).
2. A prepayment penalty is added.
3. The basic loan product changes, such as a switch from fixed rate to
adjustable rate or to a loan with interest-only payments.
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• Make sure your clients feel comfortable they can
afford the home and feel confident in their ability to
receive a mortgage loan approval for the required
amount.
• Encourage prospective homebuyers to review their
credit reports early in the process. They can find and
correct errors, potentially raising their score and
reducing their cost of borrowing.
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• Loan Estimates no longer require written documentation
so encourage your clients to compare offers from several
lenders.
• Clients who understand market rates are more likely to
feel confident about their choices and work proactively
and collaboratively with their lender.
• This will avoid second guessing whether they got the best
deal.
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• Lenders have different policies about what your clients
need to do to successfully move an application forward
from the Loan Estimate stage into active processing.
• Talk to lenders serving your area to learn about these
policies and discuss lender requires with your clients to
be confident that your clients have an active mortgage
application underway.
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• Open lines of communication help prevent needless
confusion and delays.
• Make sure your clients have detailed information they
can share with their lender about property taxes,
homeowner’s association fees, condominium
association fees, and the estimated cost for
homeowner’s insurance.
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• If anything about the transaction changes,
communicate those changes promptly to everyone and
confirm the information has been received.
• Confirm the lender and the closing company have the
buyer’s and the seller’s real estate broker information.
Because this information appears on the Closing
Disclosure, they both need correct and complete
information.
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• Previously HUD-1 Settlement Statements were most
often provided by a settlement agent, attorney or
closing company. This may not be the case for the
Closing Disclosure. Lenders may choose to prepare
and deliver the Closing Disclosure to your client
directly. They may deliver it through the mail, inperson, or electronically.
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• Find out who will be preparing and providing the
Closing Disclosure, when and how your client can
expect to receive it, and how any last minute changes
are handled.
• Find out if the lender or the closing company has a
required timeframe for any change requests. Keep in
mind that no matter who prepares or provides the
Closing Disclosure, the lender is accountable for its
accuracy and approves the final version.
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Your home loan toolkit: a step-by-step guide
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Your home loan toolkit: a step-by-step guide
 The Toolkit is designed to help consumers more effectively shop for
a mortgage.
 Creditors are required to provide to mortgage applicants within 3
days of receiving an application.
 All market participants are encouraged to provide copies to
consumers, preferably as early in the home or mortgage shopping
process as possible.
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Share CFPB Materials with your Clients
 consumerfinance.gov/learnmore/#respa
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Examining two scenarios for RESPA compliance
Scenario 1 does comply with RESPA.
Scenario 2 does not comply with RESPA.
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CFR § 1024.14(g)(vi)
Section 8 of RESPA permits:
“Normal promotional and educational activities
that are not conditioned on the referral of business
and that do not involve the defraying of expenses
that otherwise would be incurred by persons in a
position to refer settlement services or business
incident thereto.”
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Scenario 1 does comply with RESPA
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Scenario 1: A title company prints copies of the Toolkit with the title
company’s logo. The title company provides multiple copies to real estate
professionals without cost to the real estate professionals, without the
provision of the copies being conditioned upon the referral of business, and
without any control over whether or how the copies will be further
distributed.
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Section 8 of RESPA permits title companies to provide the Toolkit to real
estate professionals under §1024.14(g)(vi) as described in scenario 1: The
provision of multiple copies of the Toolkit with the title company’s logo is a
part of the title company’s “normal promotional and educational
activities.” Neither the title company nor the real estate professional are
defraying expenses that otherwise would be incurred by the other.
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Scenario 2 does not comply with RESPA
 Scenario 2: A title company prints and provides
multiple copies of the Toolkit to a real estate
professional with the real estate professional’s logo
on the cover at no cost to the real estate
professional.
 Scenario 2 does not fit within §1024.14(g)(vi):
Promoting the real estate agent is not a “normal
promotional and educational activity” of the title
company. The title company is defraying expense
that otherwise would be incurred by the real estate
professional.
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Know Before You Owe:
The real estate
professional’s guide