CFPB
Part 1
Consumer Finance Protection Bureau
Partnerships Built on Trust
Realtor’s Guide to CFPB
Index
Realtor’s Guide to CFPB Overview
Loan Estimate
Total Interest Percentage (TIP) Examples
Closing Disclosure
Seller’s Settlement Statement
Texas Disclosure
Closing Disclosure Timeline
Disclosing the Title Premiums Under CFPB
TAR - Authorization to Furnish TILA-Respa Integrated Disclosures
Realtor’s Best Practices & Questions to Ask Lenders
Realtor FAQs
Why do I Need Title Insurance and What do I get for the Premium
Notes
updated 9/2/2015
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Partnerships Built on Trust
Realtor’s
Guide
to
CFPB
Supplemental Guide to Changes Including:
New Forms, Closing Disclosures, Timelines,
Rules, Regulations & FAQ’s
Page 1 of 24
Realtor’s Guide to CFPB Overview
Background and Purpose
►► “The CFPB was created under the Dodd-Frank Wall Street Reform and Consumer Protection
Act (Dodd-Frank Act). The purpose of the CFPB is to promote fairness and transparency for
mortgages, credit cards, and other consumer financial products and services.”
►► For Mortgages, this means the CFPB will:
►► Simplify the forms and process used for closing a loan
►► Implement rules the prevent surprises – “Know before you owe”
►► Find ways to encourage consumers to shop for loans
►► New disclosure timelines allow consumers more opportunity to ask questions and
understand their transaction
►► Penalties for non-compliance are heavy for lenders
►► Lenders will only work with properly vetted companies
►► Compliance is mandatory October 3rd, 2015 but lenders will start testing their systems and
implementing procedures sooner
CFPB rules apply to:
►► Most closed-end consumer mortgage loans (purchase and refinance)
CFPB rules do not apply to:
►► Cash transactions
►► Home Equity Lines of Credit Loans (HELOCs)
►► Reverse Mortgages
►► Manufactured Housing (MHU) Loans - unless the MHU is real property
►► Creditors making five or fewer loans a year
►► Other miscellaneous loans
CFPB Terms
►► Lender = “creditor”
►► Borrower = “consumer”
►► Closing = “consummation”
PConsummation is the time that a consumer becomes contractually obligated on a
credit transaction (signs the note) which could be different from the day the transaction
“closes” and funds
Loan Estimate
►► Good Faith Estimate (GFE) and Truth in Lending (TIL) replaced
►► Loan Estimate is the new form used to disclose loan terms
Page 2 of 24
Closing Disclosure
►►
►►
►►
►►
HUD1 Settlement Statement replaced with the Closing Disclosure (CD)
CD also replaces the final TIL and final GFE
CD also referred to as the TRID (TILA-RESPA Integrated Disclosure)
The Closing Disclosure (“CD”) can be provided to the consumer by the lender or settlement
agent
New Timelines
►► The loan estimate (“LE”) must be provided to the consumer (by the creditor) three (3)
business days after submission of the loan application
►► LE must be delivered or placed in the mail not later than the 7th day BEFORE consummation
►► If not provided in person, consumer is considered to have received the LE three (3) business
days after it is delivered or placed in the mail
►► The consumer must receive the CD three (3) business days before consummation
►► If not provided in person, the consumer is considered to have received the CD three (3)
business days after it is delivered or placed in the mail
►► The seller must receive the CD no later than the day of consummation
Who Produces the CD?
►► Either the creditor OR the settlement agent can disclose the CD to the consumer
►► The liability and penalties however will be on the lender for failure to provide so most
lenders will produce and disclose the CD
►► However, the Settlement Agent (Title Company) will produce and disclose the Seller’s
Closing Disclosure/Settlement Statement
What is a Business Day?
►► A “business day” for the initial LE disclosure is defined as a day on which the creditor’s offices
are open to the public to carry on substantially all functions.
►► A “business day” for the waiting period between the LE and CD is defined as all calendar days
except Sunday and federal holidays. For the CD disclosure Saturdays count as a business day.
►► The lender ultimately makes the determination of what days are counted as a business day
When will a last minute change require a new three (3) day disclosure?
►►
►►
►►
►►
If the APR increase above the tolerance amount
If there is a change in loan product
If there is an addition of prepayment penalty
Note that some changes may be corrected 1 day before consummation
Page 3 of 24
BEST BANK
Save this Loan Estimate to compare with your Closing Disclosure.
1801 Oakway Boulevard • Pleasant Town, TX 78112
Loan Estimate
DATE ISSUED
APPLICANTS
PROPERTY
SALE PRICE
LOAN TERM
PURPOSE
8/01/2015
Mark Buyer
1525 Summer Lane
Summertown, TX 78660
PRODUCT
LOAN TYPE
LOAN ID #
30 years
Purchase ce
Fixed Rate
x Conventional
136792468
FHA
VA _____________
RATE LOCK
NO
1501 Bat Avenue
Austin, TX 78701
$180,000.00
x YES,
until 08/16/2015 at 5:00 p.m. EDT
Before closing, your interest rate, points, and lender credits can
change unless you lock the interest rate. All other estimated
closing costs expire on 3/4/2013 at 5:00 p.m. EDT
Loan Terms
Can this amount increase after closing?
Loan Amount
$162,000
NO
Interest Rate
3.875%
NO
Monthly Principal & Interest
$761.78
NO
See Projected Payments below for your
Estimated Total Monthly Payment
Does the loan have these features?
Prepayment Penalty
YES
Balloon Payment
NO
• As high as $3,240 if you pay off the loan during the
first 2 years
Projected Payments
Payment Calculation
Years 1-7
Years 8-30
Principal & Interest
$761.78
$761.78
Mortgage Insurance
+
82
+
—
Estimated Escrow
+
206
+
206
Amount can increase over time
Estimated Total
Monthly Payment
Estimated Taxes, Insurance
& Assessments
Amount can increase over time
$1,050
$206
a month
$968
In escrow?
YES
YES
This estimate includes
x Property Taxes
x Homeowner’s Insurance
Other:
See Section G on page 2 for escrowed property costs. You must pay for other
property costs separately.
Costs at Closing
Estimated Closing Costs
$9,168
Includes $5,388 in Loan Costs + $3,780 in Other Costs – $0
in Lender Credits. See page 2 for details.
Estimated Cash to Close
$29,168.00
Includes Closing Costs. See Calculating Cash to Close on page 2 for details.
Visit www.consumerfinance.gov/mortgage-estimate for general information and tools.
LOAN ESTIMATE
PAGE 1 OF 3 • LOAN ID # 11330172608
Page 4 of 24
Closing Cost Details
Loan Costs
A. Origination Charges
1 % of Loan Amount (Points)
Application Fee
Underwriting Fee
B. Services You Cannot Shop For
Appraisal Fee
Credit Report Fee
Flood Determination Fee
Flood Monitoring Fee
Tax Monitoring Fee
Tax Status Research Fee
C. Services You Can Shop For
Pest Inspection Fee
Survey Fee
Title – Courier Fee
Title – Lender’s Title Policy
Title – Settlement Agent Fee
Title - Tax Certificate
Other Costs
$2,670
$1,620
$150
$900
$667
$400
$30
$20
$32
$75
$110
$2,051
$125
$365
$45
$1,218
$250
$48
E. Taxes and Other Government Fees
Recording Fees and Other Taxes
F. Prepaids
Homeowner’s Insurance Premium ( 6 months)
Mortgage Insurance Premium ( months)
Prepaid Interest ( $37.19 per day for 15 days @ 4.25%)
Property Taxes ( months)
$1,095
$537
G. Initial Escrow Payment at Closing
Homeowner’s Insurance $89.50 per month for 2 mo.
Mortgage Insurance
$162.75 per month for 2 mo.
Property Taxes
$356.00 per month for 2 mo.
$1,217
$179
$326
$712
$1,318
$1,318
I. TOTAL OTHER COSTS (E + F + G + H)
$3,780
J. TOTAL CLOSING COSTS
$9,168
D+I
Lender Credits
$9,168
Calculating Cash to Close
$9,168
Closing Costs Financed (Paid from your Loan Amount)
Down Payment/Funds from Borrower
Deposit
LOAN ESTIMATE
$5,388
$558
H. Other
Title – Owner’s Title Policy (optional)
Total Closing Costs (J)
D. TOTAL LOAN COSTS (A + B + C)
$150
$150
$0
$18,000
– $2,000
Funds for Borrower
$0
Seller Credits
$0
Adjustments and Other Credits
$0
Estimated Cash to Close
$29,168
PAGE 2 OF 3 • LOAN ID # 11330172608
Page 5 of 24
Additional Information About This Loan
LENDER
NMLS/ LICENSE ID
LOAN
OFFICER
NMLS/__ LICENSE ID
EMAIL
PHONE
Best Bank
Joe West
1229062
joeswest@bestbank.com
940-456-7890
Comparisons
MORTGAGE BROKER
NMLS/__ LICENSE ID
LOAN
OFFICER
NMLS/__ LICENSE ID
EMAIL
PHONE
Use these measures to compare this loan with other loans.
In 5 Years
$112,294 Total you will have paid in principal, interest, mortgage insurance, and loan costs.
$28,956 Principal you will have paid off.
Annual Percentage Rate (APR)
4.713%
Your costs over the loan term expressed as a rate. This is not your interest rate.
Total Interest Percentage (TIP)
77.28%
The total amount of interest that you will pay over the loan term as a
percentage of your loan amount.
Other Considerations
Appraisal
We may order an appraisal to determine the property’s value and charge you for this
appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close.
You can pay for an additional appraisal for your own use at your own cost.
Assumption
If you sell or transfer this property to another person, we
will allow, under certain conditions, this person to assume this loan on the original terms.
x will not allow assumption of this loan on the original terms.
Homeowner’s
Insurance
This loan requires homeowner’s insurance on the property, which you may obtain from a
company of your choice that we find acceptable.
Late Payment
If your payment is more than 15 days late, we will charge a late fee of 5% of the monthly
principal and interest payment.
Refinance
Refinancing this loan will depend on your future financial situation, the property value, and
market conditions. You may not be able to refinance this loan.
Servicing
We intend
to service your loan. If so, you will make your payments to us.
x to transfer servicing of your loan.
Confirm Receipt
By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or
received this form.
Applicant Signature
LOAN ESTIMATE
Date
Co-Applicant Signature
Date
PAGE 3 OF 3 • LOAN ID #11330172608
Page 6 of 24
Total Interest Percentage (TIP) Examples
One of the new features of the Loan Estimate is the Comparisons section which includes a new term
called TIP (total interest percentage). The TIP is the total interest paid on the loan as a percentage of
the loan amount.
Below is the comparisons section for a 30 Year Fixed $200,000 loan amount at a variety of rates. The
TIP (total interest percentage) for a 30 year, $200,000 mortgage, jumps from 69.297% at 3.875% to
104.419% at 5.50%.
3.875%:
4.50%:
5.50%:
The TIP on a 15 year, $200,000 mortgage at 3.125% is 25.398%:
Page 7 of 24
This form is a statement of final loan terms and closing costs. Compare
this document with your Loan Estimate.
Closing Disclosure
Closing Information
Date Issued
Closing Date
Disbursement Date
Settlement Agent
File #
Property
Transaction Information
8/01/2015
8/03/2015
8/03/2015
Gracy Title, a stewart
company
GracyTest1
1501 Bat Ave.
Austin, TX 78701
$180,000.00
Borrower
Seller
Lender
Loan Information
Mark Buyer
1525 Summer Lane
Summertown, TX 78660
John Seller
1501 Bat Ave.
Austin, TX 78701
Loan Term 30 Years
Purpose
Purchase
Product
Fixed Rate
Best Bank
Loan ID #
MIC #
x Conventional
Loan Type
Sale Price
See attached page for additional information
FHA
VA
136792468
Can this amount increase after closing?
Loan Terms
Loan Amount
$162,000.00
NO
Interest Rate
3.875%
NO
Monthly Principal & Interest
See Projected Payments below for
your Estimated Total Monthly
Payment
$761.78
NO
Prepayment Penalty
Does the loan have these features?
• As high as $3,240.00 if you pay off the
YES loan during the first 2 years
Balloon Payment
NO
Projected Payments
Payment Calculation
Principal & Interest
Years 1 - 7
Years 8 - 30
$761.78
$761.78
Mortgage Insurance
+
$82.35
+
$0.00
Estimated Escrow
Amount Can Increase Over Time
+
$206.13
+
$206.13
Estimated Total
Monthly Payment
Estimated Taxes, Insurance
& Assessments
Amount Can Increase Over
Time See Details on Page 4
$1,050.26
$356.13
Monthly
$967.91
This estimate includes
In escrow?
X Property Taxes
YES
X Homeowner’s Insurance
YES
x Other: HOA $150
NO
See Escrow Account on page 4 for details. You must pay for other
property costs separately
Costs at Closing
Closing Costs
$6,787.44
Includes $3,843.90 in Loan Costs + $2,943.54 in Other Costs –
$0.00 in Lender Credits. See page 2 for details.
Cash to Close
$21,402.81
Includes Closing Costs. See Calculating Cash to Close on page 3 for details.
CLOSING DISCLOSURE
PAGE 1 OF 5 • LOAN ID # 136792468
Page 8 of 24
Closing Cost Details
Loan Costs
A. Origination Charges
01 % of Loan Amount (Points)
02 Application Fee
to Best Bank
03 Loan Origination Fee
to Best Bank
04
05
06
07
08
B. Services Borrower Did Not Shop For
01 Appraisal
to Best Bank
02 Credit Report Fee
to Best Bank
03 Document Preparation Fee
to Best Bank
04 Tax Service
to Best Bank
05
06
07
08
09
C. Services Borrower Did Shop For
01 Title - Courier Fee
to Gracy Title, a stewart company
to Gracy Title, a stewart company
02 Title - Escrow Fee
03 Title - Tax Certificate Fee
to Tejas Tax Data
04 Title - Lender's Policy
to Gracy Title, a stewart company
05 Title – LP Endorsement - NYDP to Gracy Title, a stewart company
06 Title – LP Endorsement - T19
to Gracy Title, a stewart company
07 Title – LP Endorsement - T30
to Gracy Title, a stewart company
08 Title - LP Endorsement - T-36
to Gracy Title, a stewart company
D. TOTAL LOAN COSTS (Borrower-Paid)
Loan Costs Subtotals (A + B + C)
Borrower-Paid
At Closing Before Closing
$1,720.00
Seller-Paid
At Closing Before Closing
Paid by
Others
$100.00
$1,620.00
$500.00
$450.00
$35.00
$150.00
$15.00
$1,623.90
$45.00
$250.00
$1,218.00
$5.00
$60.90
$20.00
$25.00
$3,843.90
$3,843.90
$25.00
$250.00
$48.00
$0.00
Other Costs
E. Taxes and Other Government Fees
01 Recording Fees
Deed: $34.00
Mortgage: $102.00
02 e-Recording Fee
to Gracy Title, a stewart company
F. Prepaids
01 Homeowner’s Insurance Premium (12 mo.) to HOI
02 Mortgage Insurance Premium
( mo.)
m
03 Prepaid Interest ($11.34 per day from 8/03/15 to 9/01/15 )
04 Property Taxes
(o.)
mo.)
05
G. Initial Escrow Payment at Closing
01 Homeowner’s Insurance
$75.00 per month for 2 mo.
02 Mortgage Insurance
per month for mo.
03 Property Taxes
$193.00 per month for 6 mo.
04
05
06
07
08 Aggregate Adjustment
H. Other
to HOA
01 HOA - Resale Certificate Fee
02 HOA Transfer Fee
to HOA
03 Home Warranty Fee
to HWA
04 Real Estate Commission Buyer’s to Selling Broker
Broker
05
Real Estate Commission Seller's to Listing Broker
Broker
06
Title - Endorsement - A&B (optional) to Gracy Title
onal)
07
Title - Endorsement T19.1 (optional) to Gracy Title
onal)
08
Title - Owner's Policy (optional) to Gracy Title
I. TOTAL OTHER COSTS (Borrower-Paid)
Other Costs Subtotals (E + F + G + H)
J. TOTAL CLOSING COSTS (Borrower-Paid)
Closing Costs Subtotals (D + I)
Lender Credits
CLOSING DISCLOSURE
$140.00
$136.00
$4.00
$1,228.86
$900.00
$4.00
$328.86
$1,192.88
$150.00
$1,158.00
-$115.12
$381.80
$305.00
$100.00
$450.00
$5,400.00
$5,400.00
$50.00
$65.90
$65.90
$200.00
$2,943.54
$2,943.54
$0.00
$6,787.44
$6,787.44
$0.00
$12,132.00
$0.00
$0.00
PAGE 2 OF 5 • LOAN ID # 136792468
Page 9 of 24
Calculating Cash to Close
Use this table to see what has changed from your Loan Estimate
Loan Estimate
Total Closing Costs (J)
Closing Costs Paid Before Closing
Closing Costs Financed
(Paid from your Loan Amount)
Down Payment/Funds from Borrower
$9,168.00
Final
$6,787.44
Did this change?
• See Total Loan Costs (D) and Total Other Costs (I)
YES
$0.00
$0.00
NO
$0.00
$0.00
NO
$18,000.00
$18,000.00
NO
• You increased this payment. See details in Sections K and L.
• You decreased this payment. See details in Section L.
$2,000.00
$2,000.00
NO
Funds for Borrower
$0.00
$0.00
NO
Seller Credits
$0.00
$0.00
NO
• The amount the seller will pay for the loan costs has increased.
See details in Section L.
YES
• See details in Sections K and L
Deposit
$0.00
-$1,284.63
Cash to Close
$29,168.00
$21,402.81
Summaries of Transactions
Use this table to see a summary of your transaction.
Adjustments and Other Credits
BORROWER’S TRANSACTION
K. Due from Borrower at Closing
01 Sale Price of Property
02 Sale Price of Any Personal Property Included in Sale
03 Closing Costs Paid at Closing (J)
04
Adjustments
05
06
07
Adjustments for Items Paid by Seller in Advance
08 City/Town Taxes
09 County Taxes
10 Assessments
11 HOA Dues
8/3/15 to 9/1/15
12
13
14
15
L. Paid Already by or on Behalf of Borrower at Closing
01 Deposit
02 Loan Amount
03 Existing Loan(s) Assumed or Taken Subject to
04
05
06 Seller Credit
Other Credits
07
08
Adjustments
09 Adjustment for Title Insurance Premium
10 Credit for Option Fee
11
12
Adjustments for Items Unpaid by Seller
13 City/Town Taxes
14 County Taxes
01/01/15 to 08/03/15
15 Assessments
16
17
SELLER’S TRANSACTION
$186,820.81
$180,000.00
$6,787.44
$33.37
$165,418.00
$2,000.00
$162,000.00
$1,318.00
$100.00
$3,377.10
CALCULATION
Total Due from Borrower at Closing (K)
Total Paid Already by or on Behalf of Borrower at Closing (L)
Cash to Close ☒ From ☐ To Borrower
CLOSING DISCLOSURE
M. Due to Seller at Closing
01 Sale Price of Property
02 Sale Price of Any Personal Property Included in Sale
03
04
05
06
07
08
Adjustments for Items Paid by Seller in Advance
09 City/Town Taxes
10 County Taxes
11 Assessments
12 HOA Dues
8/3/15 to 9/1/15
13
14
15
16
N. Due from Seller at Closing
01 Excess Deposit
02 Closing Costs Paid at Closing (J)
03 Existing Loan(s) Assumed or Taken Subject to
04 Payoff of First Mortgage Loan
05 Payoff of Second Mortgage Loan
06
07
08
09 Adjustment for Title Insurance Premium
10 Credit for Option Fee
11
12
13
14
Adjustments for Items Unpaid by Seller
15 City/Town Taxes
16 County Taxes
01/01/15 to 08/03/15
17 Assessments
18
19
$180,033.37
$180,000.00
$33.37
$113,550.00
$12,132.00
$100,000.00
$1,318.00
$100.00
$3,377.10
CALCULATION
$186,820.81
-$165,418.00
$21,402.81
Total Due to Seller at Closing (M)
Total Due from Seller at Closing (N)
Cash
☐ From ☒ To Seller
$180,033.37
-$113,550.00
$66,483.37
PAGE 3 OF 5 • LOAN ID # 136792468
Page 10 of 24
Additional Information About This Loan
Loan Disclosures
Assumption
If you sell or transfer this property to another person, your lender
will allow, under certain conditions, this person to assume this
loan on the original terms.
X will not allow assumption of this loan on the original terms.
Demand Feature
Your loan
has a demand feature, which permits your lender to require early
repayment of the loan. You should review your note for details.
X does not have a demand feature.
Late Payment
If your payment is more than 15 days late, your lender will charge a
late fee of 5% of the monthly principal and interest payment.
Negative Amortization (Increase in Loan Amount)
Under your loan terms, you
are scheduled to make monthly payments that do not pay all of
the interest due that month. As a result, your loan amount will
increase (negatively amortize), and your loan amount will likely
become larger than your original loan amount. Increases in your
loan amount lower the equity you have in this property.
may have monthly payments that do not pay all of the interest
due that month. If you do, your loan amount will increase
(negatively amortize), and, as a result, your loan amount may
become larger than your original loan amount. Increases in your
loan amount lower the equity you have in this property.
X do not have a negative amortization feature.
Partial Payments
Your lender
may accept payments that are less than the full amount due
(partial payments) and apply them to your loan.
may hold them in a separate account until you pay the rest of the
payment, and then apply the full payment to your loan.
X does not accept any partial payments.
If this loan is sold, your new lender may have a different policy.
Security Interest
You are granting a security interest in
1501 Bat Ave., Austin, TX 78701
Property Address
You may lose this property if you do not make your payments or
satisfy other obligations for this loan.
Adjustable Payment (AP) Table
CLOSING DISCLOSURE
Escrow Account
For now, your loan
X will have an escrow account (also called an “impound” or “trust”
account) to pay the property costs listed below. Without an escrow
account, you would pay them directly, possibly in one or two large
payments a year. Your lender may be liable for penalties and interest
for failing to make a payment.
Escrow
Escrowed
Property Costs
over Year 1
$2,473.56 Estimated total amount over year 1 for
your escrowed property costs:
Homeowner’s Insurance, Property Taxes
Non-Escrowed
Property Costs
over Year 1
$1,800.00 Estimated total amount over year 1 for
your non-escrowed property costs:
Initial Escrow
Payment
$1,192.88 A cushion for the escrow account you
pay at closing. See Section G on page 2.
HOA
You may have other property costs.
Monthly Escrow
Payment
$206.13 The amount included in your total
monthly payment.
will not have an escrow account because
you declined it
your
lender does not offer one. You must directly pay your property
costs, such as taxes and homeowner’s insurance. Contact your
lender to ask if your loan can have an escrow account.
No Escrow
Estimated
Property Costs
over Year 1
Estimated total amount over year 1. You
must pay these costs directly, possibly
in one or two large payments a year.
Escrow Waiver Fee
In the future,
Your property costs may change and, as a result, your escrow payment may change. You may be able to cancel your escrow account,
but if you do, you must pay your property costs directly. If you fail
to pay your property taxes, your state or local government may (1)
impose fines and penalties or (2) place a tax lien on this property. If
you fail to pay any of your property costs, your lender may (1) add
the amounts to your loan balance, (2) add an escrow account to your
loan, or (3) require you to pay for property insurance that the lender
buys on your behalf, which likely would cost more and provide fewer
benefits than what you could buy on your own.
Adjustable Interest Rate (AIR) Table
PAGE 4 OF 5 • LOAN ID # 136792468
Page 11 of 24
Loan Calculations
Other Disclosures
Total of Payments. Total you will have paid after
you make all payments of principal, interest,
mortgage insurance, and loan costs, as scheduled.
$285,803.36
Finance Charge. The dollar amount the loan will
cost you.
$118,830.27
Amount Financed. The loan amount available after
paying your upfront finance charge.
$162,000.00
Annual Percentage Rate (APR). Your costs over
the loan term expressed as a rate. This is not your
interest rate.
Total Interest Percentage (TIP). The total amount
of interest that you will pay over the loan term as a
percentage of your loan amount.
?
4.174%
69.46%
Questions? If you have questions about the
loan terms or costs on this form, use the contact
information below. To get more information
or make a complaint, contact the Consumer
Financial Protection Bureau at
www.consumerfinance.gov/mortgage-closing
Appraisal
If the property was appraised for your loan, your lender is required to
give you a copy at no additional cost at least 3 days before closing.
If you have not yet received it, please contact your lender at the
information listed below.
Contract Details
See your note and security instrument for information about
• what happens if you fail to make your payments,
• what is a default on the loan,
• situations in which your lender can require early repayment of the
loan, and
• the rules for making payments before they are due.
Liability after Foreclosure
If your lender forecloses on this property and the foreclosure does not
cover the amount of unpaid balance on this loan,
X state law may protect you from liability for the unpaid balance. If you
refinance or take on any additional debt on this property, you may
lose this protection and have to pay any debt remaining even after
foreclosure. You may want to consult a lawyer for more information.
state law does not protect you from liability for the unpaid balance.
Refinance
Refinancing this loan will depend on your future financial situation,
the property value, and market conditions. You may not be able to
refinance this loan.
Tax Deductions
If you borrow more than this property is worth, the interest on the
loan amount above this property’s fair market value is not deductible
from your federal income taxes. You should consult a tax advisor for
more information.
Contact Information
Lender
Mortgage Broker
Real Estate Broker
(B)
Real Estate Broker
(S)
Settlement Agent
Name
Best Bank
Alpha Real Estate Broker Omega Real Estate
Company
Broker, Inc
Address
1801 Oakway Blvd.
Pleasant Town, TX
78112
246 West Avenue
Austin, TX 78645
135 S Main Street
Austin, TX 78701
100 Congress Ave
Austin, TX 78701
Contact
Joe West
Michael Smith
Fred Jones
Jane Closer
Contact NMLS ID
13598
A78626
P13415
Z151884699
msmith@alpha.biz
fred@omegare.biz
closer@gracytitle.com
512-555-1369
512-555-7643
Gracy Title, a stewart
company
NMLS ID
TX License ID
Contact
TX License ID
Email
joewest@bestbank.fake
Phone
940-456-7890
512-555-4268
Confirm Receipt
By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received
this form.
Applicant Signature
CLOSING DISCLOSURE
Date
Co-Applicant Signature
Date
PAGE 5 OF 5 • LOAN ID # 136792468
Page 12 of 24
File Number: Gracytest1
SELLER’S SETTLEMENT STATEMENT
Closing Information
Transaction Information
Date Issued
Buyer/Borrower
Closing Date
Disbursement Date
File #
8/03/2015
8/03/2015
Gracytest1
Seller
Property Location
1501 Bat Ave.
Austin, TX 78701
Mark Buyer
1525 Summer Lane
Summertown, TX 78660
John Seller
1501 Bat Ave.
Austin, TX 78701
Gracy Title
901 S Mopac, Building III, Suite 100, Austin, TX 78746
Debit
Credit
Sales Price
Sales Price of Property
$180,000.00
Payoffs
$100,000.00
Payoff of First Mortgage Loan to First Mortgage
New Loan Charges – Services Borrower Did Not Shop For
Document Preparation Fee to Best Bank
$150.00
Taxes and Other Government Fees
e-Recording Fee to Gracy Title
$4.00
Other
HOA - Resale Certificate to Hoa
$305.00
HOA Transfer Fee to HOA
$100.00
Home Warranty Fee to HWA
$450.00
Real Estate Commission Buyer’s Broker $5,400.00 to Selling Broker
$5,400.00
Real Estate Commission Seller's Broker $5,400.00 to Lising Broker
$5,400.00
Title Charges
Title - Courier Fee to Gracy Title
$25.00
Title - Escrow Fee to Gracy Title
$250.00
Title - Tax Certificate Fee to Gracy Title
$48.00
Title Insurance Premiums and Endorsement Fees
The title insurance premiums represent the rates filed with the Texas Department of Insurance. The title insurance premiums shown on the Closing
Disclosure were calculated and disclosed in the manner required by Federal regulation. Despite the difference in the breakdown of premiums disclosed, the
total combined premiums are equal to the total combined premiums shown on the Closing Disclosure.
Title - Owner's Policy (optional) $180,000.00 Premium - $1,318.00 to Gracy Title
A B OTP RESIDENTIAL $65.90
$1,383.90
Title Premium Total:
Underwriter Remittance
Title Agent: Gracy Title
Underwriter: Stewart Title Guaranty Company
Of this total amount: $323.96 (or 20%) will be paid to the Underwriter; $1,295.84 (or
80%) will be retained by the Title Agent
Adjustments for Items Paid By Seller In Advance
HOA Dues 8/3/2015 to 9/1/2015
$33.37
Adjustments for Items Unpaid By Seller
County Taxes 1/1/2015 to 8/3/2015
$3,377.10
Subtotal:
Balance due to Seller:
Totals:
$116,893.00
$180,033.37
$63,140.37
$180,033.37
$180,033.37
Page 13 of 24
Texas Disclosure
This form provides additional disclosures and
acknowledgements required in Texas. It is used with the
federal Closing Disclosure form.
Form T-64
Closing Information
Transaction Information
Closing Disclosure Issued
Date: 8/01/2015
Closing Date: 8/03/2015
GF #: GracyTest1
Sales Price: $180,000.00
Loan Amount: $162,000.00
Lender: Best Bank
Address: 1801 Oakway Blvd.
Pleasant Town, TX 78112
Property Address: 1501 Bat Ave., Austin, TX 78701
Borrower(s): Mark Buyer
Address(es): 1525 Summer Lane, Summertown, TX 78660
Seller(s): John Seller
Address(es): 1501 Bat Ave., Austin, Texas 78701
Lender and Settlement Agent
Settlement Agent: Gracy Title, a stewart company
Address: 901 S. MoPac, Bldg III, Suite 100
Austin, TX 78746
Title Insurance Premiums
If you are buying both an owner’s policy and a loan policy, the title insurance premiums on this form might be
different than the premiums on the Closing Disclosure. The owner’s policy premium listed on the Closing
Disclosure will probably be lower than on this form, and the loan policy premium will probably be higher. If you
add the two policies’ premiums on the Closing Disclosure together, however, the total should be the same as the
total of the two premiums on this form.
The premiums are different on the two forms because the Closing Disclosure is governed by federal law, while this
form is governed by Texas law. The owner’s policy and loan policy premiums are set by the Texas commissioner of
insurance. When you buy both an owner’s policy and a loan policy in the same transaction, you are charged the full
premium for the owner’s policy but receive a discount on the loan policy premium. Federal and Texas law differ on
where the discount is shown. Texas law requires the discount to be reflected in the loan policy premium, while
federal law requires the discount to be reflected in the owner’s policy premium.
Title Agent: Gracy Title, a stewart company
Underwriter: Stewart Title Guaranty Company
Owner’s Policy Premium
Loan Policy Premium
Endorsements
Other
TOTAL
$200
$1218
$242.70
$
$1,660.70
Of this total amount: $249.11 (or 15%) will be paid to the Underwriter; the Title Agent will retain
$1,411.59 (or 85%); and the remainder of the premium will be paid to other parties as follows:
Amount ($ or %)
To Whom
For Services
Fees Paid to Settlement Agent
Fees Paid to Settlement Agent on the Closing Disclosure include:
Title - Courier Fee
Title - Tax Certificate Fee
GF #
$70.00
$48.00
Page 1 of 2
Page 14 of 24
Texas Disclosure
This form provides additional disclosures and
acknowledgements required in Texas. It is used with the
federal Closing Disclosure form.
Form T-64
Real Estate Commission Disbursement
Portions of the Real Estate Commissions disclosed on the Closing Disclosure will be disbursed to:
Michael Smith
Fred Jones
Other Disclosures
Although not required, this section may be used to disclose individual recording charges included on Line 01 of
Section E of the Closing Disclosure, or to disclose a breakdown of other charges that were combined on the Closing
Disclosure:
Document Name
Power of Attorney
Recording Fee
$37.00
Closing Disclosure Charge Name
Document Name
Recording Fee
Included in Closing Disclosure Charge
The Closing Disclosure was assembled from the best information available from other sources. The Settlement
Agent cannot guarantee the accuracy of that information.
Tax and insurance prorations and reserves were based on figures for the preceding year or supplied by others, or are
estimates for current year. If there is any change for the current year, all necessary adjustments must be made
directly between Seller and Borrower, if applicable.
I (We) acknowledge receiving this Texas Disclosure and the Closing Disclosure. I (We) authorize the Settlement
Agent to make the expenditures and disbursements on the Closing Disclosure and I (we) approve those payments. If
I am (we are) the Borrower(s), I (we) acknowledge receiving the Loan Funds, if applicable, in the amount on the
Closing Disclosure.
________________________________________
Borrower:
________________________________________
Borrower:
________________________________________
Seller:
________________________________________
Seller:
Settlement Agent:
By: _________________________________
Escrow Officer
GF # GracyTest1
Page 2 of 2
2
9
16
1
8
15
Sunday
Monday
17
10
3
4
Wednesday
5
Thursday
6
18
11
19
12
20
13
Four-days to prepare the Closing Disclosure
Tuesday
Friday
21
14
7
Saturday
Page 15 of 24
Page 16 of 24
Disclosing the Title Premiums Under CFPB Rule: We are required to disclose the full cost of the lender’s title policy as a charge to the buyer. EXAMPLE: You have a sales price of $180,000 and a loan amount of $162,000. The buyer wants A&B and T19.1. The lender requires T‐36, T‐19 and full tax deletion. How It Looks On Page 2: Borrower Paid Seller Paid Paid by Others At Closing Before Closing At Closing Before Closing C. Services Borrower Did Shop For Title – Lender’s Title Insurance Title – Lender’s Title Insurance Endorsements H. Other Title – Owners Title Insurance (optional) Title – Owners Title Insurance Endorsements $1218.00 Per lender $200.00 Per Buyer The total premium collected is $1418. *Mathematical Breakdown: OTP cost $1318 LP cost ($1218) Difference: $100 Plus: $100 (simultaneous issue cost) Total $200 additional required from buyer under “Other” In order to follow the contract terms, we will still have an adjustment from the seller to the buyer for their OTP amount. Page 3: Paid Already by or on Behalf of Borrower at Closing Adjustments: Adjustment for Title Insurance $1318.00** Premium Due from Seller at Closing Adjustments: Adjustment for Title Insurance Premium $1318.00 Page 17 of 24
AUTHORIZATION TO FURNISH
TILA-RESPA INTEGRATED DISCLOSURES
USE OF THIS FORM BY PERSONS WHO ARE NOT MEMBERS OF THE TEXAS ASSOCIATION OF REALTORS® IS NOT AUTHORIZED.
©Texas Association of REALTORS®, Inc. 2015
To: Lender, Title Company, Escrow Agent, and/or their representatives
RE: ___________________________________________________________________________ (Property)
I,

Seller 
Buyer, have entered into
an exclusive listing/representation agreement with the following Broker:
Name of Broker:
TREC License Number:
Address:
City, State, Zip:
Phone:
Fax:
E-Mail:
Name of Broker’s authorized agent, if applicable:
TREC License Number of Broker’s authorized agent, if applicable:
_____
_____
_____
I hereby authorize you to disclose and furnish a copy of any and all loan estimates, closing disclosures or other
settlement statements provided in relation to the closing of the real estate transaction involving the Property, to
the above-named Broker or Broker’s authorized agent.
Signature of Client
Date
Signature of Client
Date
(TAR-2516) 06-15-15
!"#$%&##!
"%'&
()
Page 1 of 1
$
Page 18 of 24
Realtor Best Practices
•
Knowing the Closing Disclosure (CD) must be disclosed at a minimum of three (3) business
days prior to closing and also that many lender require all figures to them 10 -14 days prior
to the CD disclosure, realtors need to think about their processes for the following preclosing matters:
o
Broker’s Disbursement Authorization (DA) must be delivered to title at a minimum
two weeks prior to closing;
o
Home warranty programs need to be selected by the buyer early on in the
transaction;
o
The buyer can no longer wait to shop for their hazard insurance policy. This must
also be done early on in the transaction.
•
Realtors need to be sure that all contract amendments (whether they are changing figures,
dates, names or anything else) need to be communicated to the title company and the
lender as soon as they are signed;
•
Buyer’s agents should consider coordinating two walk-throughs. Realtors may want to do
one walk-through prior to closing and a final walk-through the day of closing to cover any
move-out damages or potential last minute changes.
•
Listing agents should encourage their sellers to complete all repairs as soon as possible.
Last minute changes caused by failure to complete repairs may cause the closing to be
delayed.
•
Selling Agent concerns: When presenting offers with 3rd Party Financing, can the Lender
perform by contract close date?
•
Listing Agent concerns: When considering offers with 3rd Party Financing, how do you
advise sellers regarding “time-off-the-market” caused by lender’s processing timelines.
•
Impact of a pre-approved buyer when considering an offer or multiple offers.
Questions to ask Lenders
•
Will you be preparing the Closing Disclosure?
•
Will you use an in-person method to deliver the Closing Disclosure to the Borrower?
•
What are the delivery methods you can use for an “in-person” delivery?
•
How many days prior to closing do you need fees?
•
Will you send the Closing Disclosure to the title company to approve before sending it to the
consumer to be sure all fees are final?
•
Will you communicate with the Realtor once the Closing Disclosure has been sent?
•
How will you handle contract amendments to add seller’s credit for unfinished repairs the
day before closing?
•
How confident are you that you can hit the disclosure timeline?
Page 19 of 24
Realtor’s Guide to Understanding CFPB
FAQ
Q:
What is changing?
A:
There are lots of things changing. Buyers, Seller, Realtors, Lenders and Title Companies will all see new forms, new
terminology and new timelines for closing.
Q;
Where are these changes coming from and why are things changing?
A:
The changes coming soon originated from the Dodd-Frank Wall Street Reform and Consumer Protection Act that was
created in 2010. From this Act the Consumer Finance Protection Bureau was created (herein after known as “CFPB).
The CFPB made the changes discussed below to help consumers understand their mortgages and the pre-closing
disclosures to help them better shop their loan options. These rules and new forms also help prevent surprises at closing
and should serve to have more informed buyers at the closing table.
Q:
When do these changes go into effect?
A:
The rules change for all loan applications that are taken on October 1, 2015 and after.
Q:
What lender forms are changing?
A:
Under today’s loan application process each potential lender provides the buyer with a Good Faith Estimate and a Truthin-Lending disclosure. A borrower is expected to (1) understand these forms and (2) be able to comparison shop
between each lender. Since your average buyer does not purchase property very often these forms can be confusing for
them. Each lender uses different terminology for the fees that are charged and these forms often make reference to
industry specific concepts that a borrower may not be familiar with. An example of this would be a Good Faith Estimate
that refers to the payment as PITI instead of specifying to the buyer that they mean the payment includes principal,
interest, taxes and insurance.
The Good Faith Estimate and Truth-in-Lending are being replaced with the Loan Estimate. The Loan Estimate must be
provided within 3 days of application and will itemize the loan terms, cash-to-close, closing fees and loan characteristics
using a plain-language explanation.
Q:
What closing forms are changing?
A:
When a buyer goes to closing today they are presented with a Settlement Statement (HUD-1), Final Good Faith Estimate
and Final Truth-in-Lending form. These three forms are being replaced by the Closing Disclosure. This disclosure
includes all loan terms, the fees associated with closing and also a list of the loan features.
Q:
Who will prepare these forms?
A:
Under the rules either the lender or the closing agent may prepare these forms. The lender, however, is responsible and
liable for any mistakes in the disclosures so for that reason most lenders are choosing to prepare both the Loan Estimate
and the Closing Disclosure. These same lenders are also taking responsibility for delivering the Closing Disclosure to
the buyer.
Q:
What about the sellers? What forms will they see?
A:
The sellers will receive a separate closing statement. Production and delivery of their statement is not mandated by
CFPB and the seller may receive their documents up until the day of closing. These forms will be sent to the seller from
the title company.
Q:
What timelines are changing?
A:
The law now imposes a mandatory waiting period to permit the buyer time to review their final loan terms prior to closing.
A distinction is made with respect to the timeline on the delivery of the Closing Disclosure. If the Closing Disclosure is
Page 20 of 24
provided “in-person” to the consumer then there is a three day waiting period between disclosure and closing. If the
Closing Disclosure is not provided “in-person” then the client is deemed to have received the Closing Disclosure three
days from it being sent and then the three day waiting period starts.
Q:
Does the closing date count as part of the three days?
A:
No. The day of closing does not count as part of the three days. For example if your file is to close on Friday the Closing
Disclosure must be sent by the Tuesday before closing. The three day review period would include Tuesday,
Wednesday and Thursday to review and then the closing could occur on Friday. Note that this is the rule for an “inperson” delivery. If the Closing Disclosure was not delivered via an “in-person” method then the Closing Disclosure is
received three days from it being sent and then the three day waiting period starts. Under this example if closing was
Friday the Closing Disclosure would need to be sent the previous Friday. In this example the Closing Disclosure is sent
on Friday and received by the customer Tuesday to start the three day review period.
Q:
How are the days counted?
A:
For the Closing Disclosure, business days are counted as all days except Sundays and Federal holidays.
Q:
What happens if something changes in the transaction after the Closing Disclosure has been sent?
A:
Not all changes to the Closing Disclosure will require a new three-day waiting period. Changes that will require another
mandatory waiting period are: (1) a change to the annual percentage rate of 0.125% or more (can be 0.25% on smaller
loans); (2) a change in the loan product, or (3) the addition of a pre-payment to the loan. Other changes will have to be
reviewed by the lender and the lender will decide if another waiting period is necessary.
Q:
What if my client went under contract in September for an October closing but decides to switch lenders after
st
October 1 ?
A:
The new lender would be subject to all requirements under CFPB for forms and timelines.
Q:
Are there any transactions that do not fall under these new rules?
A:
Yes. Cash transactions are not subject to CFPB. Also CFPB does not apply to home equity line of credit loans, reverse
mortgages, manufactured home loans, and loans given by lenders that issue five or fewer loans per year.
Q:
If the lender is sending the Closing Disclosure who is handling the closing now?
A:
Your title company is still handling the actual closing. The title company still opens escrow for the earnest money
contract and processes your transaction through funding and title policy production. The title company will still be
working up the figures in their systems since they have to do the actual disbursements of all funds through the
transaction.
Q:
Since the lenders are now completing the Closing Disclosure how will they know what non-loan fees to use for
closing?
A:
The title company will be supplying all non-loan fee information to the lender for completion of the Closing Disclosure.
The title company will supply the lender with the figures for the title premiums, tax and homeowners’ association
prorations, realtor commissions, third-party fees and seller payoffs. Many lenders are stating they will require final
figures from the title company 10 days to two weeks prior to closing.
Q:
What are the things I can do to help my closings go smoothly?
A:
To avoid a delay in your closings it will be important that you have everything ready for closing no less than 15 days prior
to closing. The title company will have to provide all transaction details to the lender 10-14 days prior to closing. Things
to consider would be disbursement authorizations, home warranty selections, all amendments, and any figures that affect
closing.
Also, when the law first goes into effect consider adding a cushion to the closing date. In the beginning if you’re typically
writing 30 day contracts you may want to consider 45 days unless you are confident your buyer’s lender can hit the
closing timeline.
Page 21 of 24
Why
do I Need Title Insurance,
?
and What do I Get for the Premium
Title insurance is vital in protecting your home purchase, since for the vast majority of people, a house is the largest
purchase they will ever make. There is some confusion in the real estate community about title insurance and the cost
of the associated premiums. What is title insurance necessary, and what do the premiums pay for?
How is title insurance different than other kinds of insurance?
Imagine you walked into a car insurance company and told them you were interested in an auto policy, and they gave
you a price and said that single fee would cover your insurance for as long as you owned the car, and would also continue
to cover the car if you left it to an heir in your will. Sounds like a great deal, doesn’t it? Title insurance works just this way;
unlike many other forms of insurance (home, fire, flood, etc.) which require regular payments to maintain coverage, title
insurance is a single, one-time fee which covers the property until it’s sold to a new owner. And no matter how much
time passes before that, the policy never expires. In fact, even after you sell your home, your title policy continues to
protect the warranty the seller provides in their deed.
How does title insurance protect my home?
The title policy protects owners from most claims and attacks on title for any reason not excepted from the
policy’s indemnity. Even though the title company researches every transaction as thoroughly as possible,
there will always be risks that cannot be found in a title search. Some of the most common claims relate to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Unpaid property taxes
Supplemental taxes assessed after closing
Mistakes in the interpretation of wills or other legal documents
Impersonation of the owner
Forged deeds, mortgage releases, etc.
Instruments executed under fabricated or expired powers of attorney
Deeds delivered after death of seller or buyer
Wills not probated
Deeds or mortgages by those mentally incompetent or of minor age (or with an incorrect marital status)
Other lack of competency, capacity or legal authority of a party
Undisclosed or missing heirs, including birth or adoption of children after date of will
Mistakes in the public records
Legal confusion from name similarities
Transfer of title through foreclosure sale when requirements of foreclosure statute has not been strictly met
Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner)
Undisclosed (but recorded) prior mortgage or lien
Undisclosed (but recorded) easement, right of access, or use restriction
Erroneous or inadequate legal descriptions
Deed not properly recorded
Off-record matters, such as claims for adverse possession or prescriptive easement
Deed to land with buildings encroaching on land of another
Incorrect survey
Silent (off-record) liens (such as mechanics or estate tax liens)
Pre-existing violations of CC&R’s.
Post-policy forgery
Location and dimensions of insured land
Page 22 of 24
And this list is far from exhaustive—many unseen risks can threaten homeowners’ claims to their property, and title
insurance is the best protection against those risks. When you are issued a title policy, you can be comfortable that
you have the title policy coverage that was disclosed to you in your title commitment during the closing process. The
title commitment is discussed below.
What does the title company do?
Title Review, Problem Recognition and Problem Solving
Our system of land ownership is far from simple and often poses difficulties when it’s time to transfer title. Title agents
research each property carefully, assess potential risk in the title chain, and suggest ways to eliminate that risk.
Title Commitments
After an in-depth review of the status of the title, the title company prepares a title commitment that sets out the
applicable restrictions, easements, taxes, and other matters affecting title found to be of record. This information,
together with the survey, provides the buyer with a description the property. Further, the commitment gives the
parties a road map for everything that will be required to convey the title of the property.
Closing the Transaction
Title agents conduct and orchestrate closings. This means they collect funds, record documents, and disburse funds,
all the while following the instructions of parties and any lender involved. This process can be very complex; think of
all that might be involved – lenders (both new and previous), taxes, surveys, insurance, home warranties, real estate
agent commissions, down payments, earnest money, and the seller’s proceeds, all must be received and disbursed by
the title company. And it all must happen on time with balanced books. Closing the transaction in accordance with
the wishes and instruction of the parties and the assumption of the escrow risk (much greater than most are aware)
is a large part of what your premium pays for.
How often do claims arise?
Even though title claims are rare, they are paid daily in the industry. Nationwide, in the fiscal year 2011, title insurance
companies paid 1.02 billion dollars in claims and that number has increased every year thereafter. In the fiscal year 2014,
Stewart Title paid 44 million in claims and expenses related to claims.
Who is in charge of regulation?
The insurance industry in Texas, including title insurance, is regulated by the Texas Department of Insurance. Title insurance companies are required to meet certain minimum fiscal standards and are regularly scrutinized by state auditors. TDI
maintains a Guaranty Fund that insures the holders of Texas title policies from the fiscal failure of a title agency, meaning
your title insurance is guaranteed by the state no matter what. Moreover, policy premiums, forms and regulations are
uniform throughout Texas, bringing clarity to the system. Government oversight and the benefit of the guarantee fund
gives you peace of mind that your policy will protect your home.
Partnerships Built on Trust
Page 23 of 24
NOTES
Page 24 of 24
Avoid potential blunders in the real estate process by preparing for the upcoming industry changes. Check out the Legal Blog on gracytitle.com to get CFPB
News Updates and how they relate to your business and the closing process.
www.gracytitle.com/blog/legal
Partnerships Built on Trust