12 TRID Tips, Traps and Tools
aka "The TRID Dirty Dozen“
aka “Deep Into the TRID Weeds”
12 TRID Tips, Traps and Tools aka"The TRID Dirty Dozen“
aka “Deep Into the TRID Weeds”
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#1 Expanded Coverage
#2 Pre-Qualification “Dos” and “Don’ts”
#3 Business Days
#4 Loan Type
#5 Loan Purpose
#6 CFPB new required calculation of simultaneous issue of owner and lender title policies
#7 Which bucket do which fees go in?
#8 Tolerance and Baseline Calculations
#9 APR Over Disclosure vs. Under Disclosure (the law vs the investor)
#10 Right of Rescission and “Material Disclosures”
#11 CFPB’s Required Disclosure of “Liability after foreclosure” in Texas
#12 Consent for Real Estate Agent to Receive TRID Disclosures
-Bonus: TRID-Obsolete Docs, Amended Docs and New Docs
-Other P&P TRID Tools
For PowerPoint see: http://www.ppdocs.com/TRID/
Fort Worth Mortgage Bankers Presentation
By Mike Patterson
9-9-2015
#1 Expanded Coverage
TRID is within Reg Z, but don’t forget basic Reg Z coverage
and exemptions (emphasis):
(c) Coverage. (1) In general, this part applies to each individual or business
that offers or extends credit, other than a person excluded from coverage
of this part by section 1029 of the Consumer Financial Protection Act of
2010, Title X of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Public Law 111–203, 124 Stat. 1376, when four conditions
are met:
(i) The credit is offered or extended to consumers;
(ii) The offering or extension of credit is done regularly;
(iii) The credit is subject to a finance charge or is payable by a written
agreement in more than four installments; and
(iv) The credit is primarily for personal, family, or household
purposes
By Michael Patterson
#1 Expanded Coverage
Non-owner-occupied rental property exception
(emphasis):
4. Non-owner-occupied rental property. Credit extended to acquire,
improve, or maintain rental property (regardless of the number of
housing units) that is not owner-occupied is deemed to be for business
purposes. This includes, for example, the acquisition of a warehouse that
will be leased or a single-family house that will be rented to another person
to live in. If the owner expects to occupy the property for more than 14
days during the coming year, the property cannot be considered nonowner-occupied and this special rule will not apply. For example, a beach
house that the owner will occupy for a month in the coming summer and
rent out the rest of the year is owner occupied and is not governed by this
special rule. ( See comment 3(a)–5, however, for rules relating to owneroccupied rental property.)
By Michael Patterson
#1 Expanded Coverage
Owner-occupied rental property exception (emphasis):
5. Owner-occupied rental property. If credit is extended to acquire,
improve, or maintain rental property that is or will be owner-occupied
within the coming year, different rules apply:
i. Credit extended to acquire the rental property is deemed to be for
business purposes if it contains more than 2 housing units.
ii. Credit extended to improve or maintain the rental property is
deemed to be for business purposes if it contains more than 4
housing units. Since the amended statute defines dwelling to include 1
to 4 housing units, this rule preserves the right of rescission for credit
extended for purposes other than acquisition. Neither of these rules
means that an extension of credit for property containing fewer than
the requisite number of units is necessarily consumer credit. In such
cases, the determination of whether it is business or consumer credit
should be made by considering the factors listed in comment 3(a)–3.
#1 Expanded Coverage
Remember…RESPA is property type driven. TILA/Reg Z is loan purpose driven.
TRID is a part of TILA/Reg Z not RESPA!!!!
Scenario: Borrower (individual) pledges a duplex, land or lot as collateral.
Covered by TRID…maybe!!!!
What is the loan purpose? Investment or send his kids to college?
This is not a new problem….but the penalty for guessing wrong is now much
higher!!!
P&P advice if not doing TRID disclosures: Loan purpose affidavit for all non-TRID
transactions containing at least the following:
Lender is making a loan to Borrower which will be secured by the above
referenced Property. Borrower acknowledges that Lender will have a
security interest in said Property. Borrower represents that the purpose of
this loan is either for business, commercial or agricultural purposes and as
such is exempt from the provisions of the Real Estate Settlement and
Procedures Act, Truth in Lending Act and their Regulations X and Z.
Borrower understands that Lender relies upon and accepts as true, the
representations made in this Affidavit.
#1 Expanded Coverage
TRID Coverage:
CFPB “The TILA-RESPA rule applies to most closed-end
consumer credit transactions secured by real property.
Credit extended to certain trusts for tax or estate planning
purposes is not exempt from the TILA-RESPA rule. However,
some specific categories of loans are excluded from the
rule. Specifically, the TILA-RESPA rule does not apply to
HELOCs, reverse mortgages or mortgages secured by a
mobile home or by a dwelling that is not attached to real
property (i.e., land).”
By Michael Patterson
#1 Expanded Coverage
Exemptions
-Open end aka HELOCS
-Non consumer e.g. loans to corporations and other entities…NOT
DBAs though
-Business, commercial or agricultural loans
-Reverse mortgages
-Unsecured loans
-Secured by personal property that is not a dwelling
-Secured by personal property that is a dwelling and is not also
secured by real property
-Creditor that makes five or fewer mortgage loans in one year
-Certain narrowly defined 2nd liens e.g. housing assistance 2nds
By Michael Patterson
#1 Expanded Coverage
Exemptions
1026.3 -- Exempt transactions.
(a) Business, commercial, agricultural, or organizational
credit.
(1) An extension of credit primarily for a business,
commercial or agricultural purpose.
(2) An extension of credit to other than a natural
person, including credit to government agencies or
instrumentalities.
By Michael Patterson
#1 Expanded Coverage
Exemptions
ii. Business-purpose examples. Examples of businesspurpose credit include:
A. A loan to expand a business, even if it is secured
by the borrower's residence or personal property.
B. A loan to improve a principal residence by putting
in a business office.
C. A business account used occasionally for
consumer purposes
By Michael Patterson
#1 Expanded Coverage
Exemptions
iii. Consumer-purpose examples. Examples of consumerpurpose credit include:
A. Credit extensions by a company to its employees
or agents if the loans are used for personal
purposes.
B. A loan secured by a mechanic's tools to pay a
child's tuition.
C. A personal account used occasionally for business
purposes.
By Michael Patterson
#1 Expanded Coverage
Exemptions
8. Agricultural purpose. An agricultural purpose includes
the planting, propagating, nurturing, harvesting,
catching, storing, exhibiting, marketing, transporting,
processing, or manufacturing of food, beverages
(including alcoholic beverages), flowers, trees, livestock,
poultry, bees, wildlife, fish, or shellfish by a natural
person engaged in farming, fishing, or growing crops,
flowers, trees, livestock, poultry, bees, or wildlife. The
exemption also applies to a transaction involving real
property that includes a dwelling (for example, the
purchase of a farm with a homestead) if the transaction
is primarily for agricultural purposes.
#1 Expanded Coverage
NOT Exemptions---NEW COVERAGE!!!
-Lot loans
-Land more than 25 acres
-Construction loans to individuals…and trusts
3 Requirements:
1)”consumer purpose”,
2)closed end, and
3)dirt as part of the collateral
Weird examples:
1)200 acres “hunting property” in Palo Pinto County. TRID? Require a
survey? Require survey deletion in title policy?
2)Pledge manufacturing company and property to secure personal
debt consolidation. TRID?
3) A loan to expand a business secured by the borrower's residence.
TRID?
#1 Expanded Coverage
POSSIBLE Exemptions
-Assumptions
This if from the CFPB’s Aug 24, 2015 Webcast:
By Michael Patterson
#1 Expanded Coverage
POSSIBLE Exemptions
-Assumptions
CFPB: ….The short answer is yes, assuming that when we’re
saying assumptions, we mean a post-consummation event
that is deemed a new closed-end credit transaction
according to an existing provision of Regulation Z …
Reg Z and RESPA: “Any assumption in which the lender's
permission is both required and obtained is covered by
RESPA and this part, whether or not the lender charges a
fee for the assumption.”
By Michael Patterson
#1 Expanded Coverage
POSSIBLE Exemptions
-Modifications…If NOT a Reg Z “Refinancing”
Reg. Z, Section 1026.20:
§ 1026.20—Disclosure requirements regarding post-consummation events.
(a) Refinancings. A refinancing occurs when an existing obligation that was subject
to this subpart is satisfied and replaced by a new obligation undertaken by the
same consumer. A refinancing is a new transaction requiring new disclosures to
the consumer. The new finance charge shall include any unearned portion of the old
finance charge that is not credited to the existing obligation. The following shall not
be treated as a refinancing:
(1) A renewal of a single payment obligation with no change in the original
terms.
(2) A reduction in the annual percentage rate with a corresponding change in
the payment schedule.
(3) An agreement involving a court proceeding.
(4) A change in the payment schedule or a change in collateral requirements as
a result of the consumer's default or delinquency, unless the rate is increased,
or the new amount financed exceeds the unpaid balance plus earned finance
charge and premiums for continuation of insurance of the types described in
§1026.4(d).
(5) The renewal of optional insurance purchased by the consumer and added to
an existing transaction, if disclosures relating to the initial purchase were
provided as required by this subpart.
#1 Expanded Coverage
POSSIBLE Exemptions
-Modifications
Official Staff Commentary to Section 1026.20(a):
20(a) Refinancings
1. Definition. A refinancing is a new transaction requiring a complete new set of
disclosures. Whether a refinancing has occurred is determined by reference to
whether the original obligation has been satisfied or extinguished and replaced by a
new obligation, based on the parties' contract and applicable law. The refinancing
may involve the consolidation of several existing obligations, disbursement of new
money to the consumer or on the consumer's behalf, or the rescheduling of
payments under an existing obligation. In any form, the new obligation must
completely replace the prior one.
i. Changes in the terms of an existing obligation, such as the deferral of
individual installments, will not constitute a refinancing unless accomplished by
the cancellation of that obligation and the substitution of a new obligation.
ii. A substitution of agreements that meets the refinancing definition will
require new disclosures, even if the substitution does not substantially alter the
prior credit terms.
#2 Pre-Qualification “Dos” and “Don’ts”
The Rule and Official Staff Commentary
Effective October 3, the definition of “application” for
TRID purposes will be as follows:
Reg. Z, Section 1026.2(a)(3):
(3)
(i) Application means the submission of a consumer's financial
information for the purposes of obtaining an extension of credit.
(ii) For transactions subject to § 1026.19(e), (f), or (g) of this part, an
application consists of the submission of the consumer's name, the
consumer's income, the consumer's social security number to obtain
a credit report, the property address, an estimate of the value of the
property, and the mortgage loan amount sought.
#2 Pre-Qualification “Dos” and “Don’ts”
A “Don’t”:
(iii) Verification of information. The creditor or other
person shall not require a consumer to submit
documents verifying information related to the
consumer's application before providing the
disclosures required by paragraph (e)(1)(i) of this
section.
#2 Pre-Qualification “Dos” and “Don’ts”
It appears the CFPB intends for the prohibition against
requiring verifying information to also include the time
period before an “application” has been completed. The
rule, preamble, and CFPB’s recent webcast comments
clarify, however, that a creditor may collect any such
verifying information at any time, as long as it is provided
voluntarily by the consumer.
#2 Pre-Qualification “Dos” and “Don’ts”
Another “Don’t”:
-”Don’t” collect any fees other than for the credit report
prior to “Intent to Proceed”
-That prohibition includes holding checks or collecting a
credit card # to be used for anything other than the credit
report.
#2 Pre-Qualification “Dos” and “Don’ts”
Another “Don’t”:
“Application” means submission of: (1) the consumer’s
name; (2) the consumer’s income; (3) the consumer’s
social security number to obtain a credit report; (4) the
property address; (5) an estimate of the value of the
property; and (6) the loan amount sought. (§
1026.2(a)(3)).
No longer includes catch-all of “any other information
deemed necessary by the loan originator.”
#2 Pre-Qualification “Dos” and “Don’ts”
Any “Do’s”?
#2 Pre-Qualification “Dos” and “Don’ts”
Any “Do’s”?
-Can “prequalify” prior to getting all 6 pieces of information. However,
if a consumer is provided with a written estimate of terms or costs
before receiving the LE:
1)Top of the first page must contain a statement that “Your actual
rate, payment, and costs could be higher. Get an official Loan
Estimate before choosing a loan.”;
2)The estimate may not be made with headings, content, and
format substantially similar to the LE form and must be in no
smaller than 12-point font.
#3 Business Days
For purposes of providing the Loan Estimate, a business day is a day on
which the creditor’s offices are open to the public for carrying out
substantially all of its business functions.
However, the term business day is defined differently for other
purposes; including counting days to ensure the consumer receives the
Closing Disclosure on time. For these other purposes, business day
means all calendar days except Sundays and the legal public holidays
specified in 5 U.S.C. 6103(a), such as New Year’s Day, the Birthday of
Martin Luther King, Jr., Washington’s Birthday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day, and Christmas Day.
See-P&P Online Interactive Calendar: http://www.ppdocs.com/TRID/
Key in the applicable dates and the calendar will calculate the first
eligible date for closing.]
#4 Loan Type
(11) Loan type. The type of loan, labeled “Loan Type,” offered to the
consumer using one of the following terms, as applicable:
(i) Conventional. If the loan is not guaranteed or insured by a
Federal or State government agency, the creditor shall disclose
that the loan is a “Conventional.”
(ii) FHA. If the loan is insured by the Federal Housing
Administration, the creditor shall disclose that the loan is an “FHA.”
(iii) VA. If the loan is guaranteed by the U.S. Department of Veterans
Affairs, the creditor shall disclose that the loan is a “VA.”
(iv) Other. For federally-insured or guaranteed loans other than
those described in paragraphs (a)(11)(ii) and (iii) of this section,
and for loans insured or guaranteed by a State agency, the creditor
shall disclose the loan type as “Other,” and provide a brief
description of the loan type.
By Michael Patterson
#4 Loan Type
Home equity loan=Conventional
Lot loan=Conventional
Initial construction loan=Conventional
Home improvement loan=Conventional
By Michael Patterson
#5 Loan Purpose
(9) Purpose. The consumer's intended use for the credit, labeled “Purpose,”
using one of the following terms:
(i) Purchase. If the credit is to finance the acquisition of the property
identified in paragraph (a)(6) of this section, the creditor shall disclose that
the loan is for a “Purchase.”
(ii) Refinance. If the credit is not for the purpose described in paragraph
(a)(9)(i) of this section, and if the credit will be used to refinance an existing
obligation, as defined in § 1026.20(a) (but without regard to whether the
creditor is the original creditor or a holder or servicer of the original
obligation), that is secured by the property identified in paragraph (a)(6) of
this section, the creditor shall disclose that the loan is for a “Refinance.”
(iii) Construction. If the credit is not for one of the purposes described in
paragraphs (a)(9)(i) or (ii) of this section and the credit will be used to
finance the initial construction of a dwelling on the property identified in
paragraph (a)(6) of this section, the creditor shall disclose that the loan is
for “Construction.”
(iv) Home equity loan. If the credit is not for one of the purposes described
in paragraphs (a)(9)(i) through (iii) of this section, the creditor shall disclose
that the loan is a “Home Equity Loan.”
#5 Loan Purpose
What will be the Loan Purpose for Construction Loans?
-”Purchase” if any of the funds go toward the lot purchase.
-If no funds go toward the lot purchase, then “Refinance” if
any of the funds go toward refinance.
-If no funds go toward the lot purchase and no funds go
toward refinance and the funds going toward construction
is for the initial construction of a dwelling on the property
the purpose is “Construction”
-If no funds go toward the lot purchase and no funds go
toward refinance and the funds going toward construction
is NOT for the initial construction of a dwelling on the
property the purpose is “Home Equity”
#5 Loan Purpose
What will be the Loan Purpose for Lot Loans?
-”Purchase” if any of the funds go toward the lot purchase.
-If no funds go toward the lot purchase, then “Refinance” if
any of the funds go toward refinance.
-If no funds go toward the lot purchase and no funds go
toward refinance the purpose is “Home Equity”
#6 CFPB New Required Calculation of Simultaneous
Issue of Owner and Lender Title Policies
TRID Requirement: Owner’s title insurance premium. In a
jurisdiction where simultaneous issuance title insurance
rates are permitted, any owner’s title insurance premium
disclosed under § 1026.38(g)(4) is calculated by using the
full owner’s title insurance premium, adding any
simultaneous issuance premium for issuance of lender’s
coverage, and then deducting the full premium for lender’s
coverage disclosed under § 1026.38(f)(2) or (f)(3).
By Michael Patterson
#6 CFPB New Required Calculation of Simultaneous
Issue of Owner and Lender Title Policies
TILA-RESPA Integrated Disclosures, Part 5: Implementation Challenges and Questions
Tuesday, May 26, 2015-Slides 20 and 21
From transcript: Minutes 34.18-36.12 (With emphasis)
Turning back to the question posed, concerning how the creditor shows the allocation of costs when
the seller has agreed to pay for the owner's title insurance cost as part of the purchase and sales
contract with the consumer. Because the final rule provides that the incremental cost of the owner's
title insurance is to be disclosed on the loan estimate and the closing disclosure, simply shifting the
incremental cost of the owner's title insurance to the seller on the closing disclosure may not
completely reflect the amounts that the seller has agreed to pay for the owner's title policy. If there is
an additional amount from the seller's credit, there are at least three ways in which the additional
credit between the seller and consumer may be disclosed on the closing disclosure.
First, the remaining credit could be applied toward any other title insurance costs including the
lender’s title insurance cost. See 1026.38(f)&(g),
Second, the remaining credit can be considered to be a general seller credit and disclosed as such in
the summaries of transactions table on page 3 of the closing disclosure. See 1026.38(k)(2)(vii).
Third, some in the industry have suggested providing a credit specifying the remaining amount for the
owner's title insurance cost-again in the summaries of transactions on page 3 of the closing
disclosure. See 1026.38(k)(2)(viii). Any one of these three methods to disclose the remaining amount
of seller credit for an owner title policy is permissible under the final role.
#6 CFPB New Required Calculation of Simultaneous
Issue of Owner and Lender Title Policies
#6 CFPB New Required Calculation of Simultaneous
Issue of Owner and Lender Title Policies
See P&P Online Owner Title Policy Simultaneous Calculator:
http://www.ppdocs.com/TRID/
In many states, a consumer is entitled to a discount on loan title insurance
policy when an owner’s policy will be simultaneously issued. When both a
loan and owner’s title insurance policies will be purchased (“simultaneous
issuance”), the Rule requires the lender or settlement agent to disclose the
title premiums on the Closing Disclosure in a way different than actually
charged.
#7 Which Bucket do Which Fees Go In?
FAQ: We have a prepaid finance charge list which shows
which fees affect the APR. We have a Texas home equity fee
sheet to determine which fees are counted toward the 3%
cap…So why don’t we have a list, chart matrix or other tool
to tell a lender which bucket (0% tolerance, 10% tolerance
or NO tolerance) a particular fee should go in??????
Our answer: For purposes of fee tolerances for the most
part, fees are not characterized by their name, but rather by
another set of criteria.
By Michael Patterson
#7 Which Bucket do Which Fees Go In?
0% Bucket:
-Fees paid to the creditor.
-Fees paid to a mortgage broker.
-Fees paid to an affiliate of the creditor or a mortgage
broker.
-Fees paid to an unaffiliated third party if the creditor
did not permit the consumer to shop for a third party
service provider for a settlement service.
-Named fee exception “Transfer taxes”.
-Lender credits…Specific and General…”No Cost Loan is
now a best guess estimate at time of Loan Estimate!!!
An underestimate results in a “cure” . An
overestimate will cause a “refund” 
#7 Which Bucket do Which Fees Go In?
10% Bucket:
Fee is for a third-party (not paid to the creditor or an
affiliate of the creditor) service or is a recording fee and the
creditor permitted the consumer to shop for the third-party
service and the consumer chose a third-party service ON
the creditor’s provider list.
By Michael Patterson
#7 Which Bucket do Which Fees Go In?
NO Tolerance Bucket:
Fee is for a third-party (not paid to the creditor or an
affiliate of the creditor) service, the creditor permitted the
consumer to shop for the third-party service and the
consumer chose a third-party service NOT ON the creditor’s
provider list.
Named fee exceptions:
-Prepaid interest
-Property insurance
-Escrow for impounds
By Michael Patterson
#7 Which Bucket do Which Fees Go In?
TRID Typical Fee Tolerances
Bold Fees=Treatment should not vary. Unbold Fees=Teatment can vary based upon if "Paid to Creditor or Creditor
Affiliate", "Required by Creditor", "Allowed to Shop" and "Chose from List" options.
Typical 0% Examples
Transfer taxes (per Reg)
Origination fee
Discount fee
Appraisal
Credit report
Flood determination fee
Flood monitoring fee
Tax monitoring fee
Tax status research fee
Attorney fee-Doc Prep
Application fee
Underwriter fee
Loan broker compensation
Mortgage insurance
FHA mortgage insurance
VA guaranty fee
Escrow waiver fee
Buydown
LLPs
Lender Credits-General and Specific
Any other Unbold Fees (if required by Creditor and NOT allowed to shop)
#7 Which Bucket do Which Fees Go In?
Typical 10% Examples
Recording fees (per Reg)
Title-Owner's Title Insurance (optional)(if required by Creditor, allowed to shop & chose from the list) (common refinance scenario)
Title-Lender's Title Insurance (if required by Creditor, allowed to shop & chose from the list)(common refinance scenario)
Any other title insurance required fees (List each as "Title-(fee name)" if itemized)(if required by Creditor, allowed to shop & chose from the list) (common refinance scenario)
Escrow fees (if required by Creditor, allowed to shop & chose from the list)(common refinance scenario)
Courier or express mail (if required by Creditor, allowed to shop & chose from the list)(common refinance scenario)
Survey (if required by Creditor, allowed to shop & chose from the list)
Pest inspection (if required by Creditor, allowed to shop & chose from the list)
Any other fee (if required by Creditor, allowed to shop & chose from the list)
By Michael Patterson
#7 Which Bucket do Which Fees Go In?
Typical "No Limit/None" Examples
Prepaid interest (per Reg)
Property insurance (per Reg)
Escrows (per Reg)
Property taxes
Real estate commissions
Property inspection
HOA certificate
HOA other type fees
Title-Owner's Title Insurance (optional)(if required by Creditor, allowed to shop & NOT chose from the list; or NOT required by
Creditor)(common purchase scenario)
Title-Lender's Title Insurance (if required by Creditor, allowed to shop & NOT chose from the list; or NOT required by Creditor)(common
purchase scenario)
Any other title insurance required fees (List each as "Title-(fee name)" if itemized)(if required by Creditor, allowed to shop & NOT chose from
the list; or NOT required by Creditor)(common purchase scenario)
Escrow fees (if required by Creditor, allowed to shop & NOT chose from the list; or NOT
required by Creditor)(common purchase scenario)
Courier or express mail (if required by Creditor, allowed to shop & NOT chose from the list; or NOT required by
Creditor)(common purchase scenario)
Survey (if required by Creditor, allowed to shop & NOT chose from the list; or NOT required by Creditor)
Pest inspection (if required by Creditor, allowed to shop & NOT chose from the list; or NOT required by
Creditor)
Any other fee (if required by Creditor, allowed to shop & NOT chose from the list; or NOT required by Creditor)
#7 Which Bucket do Which Fees Go In?
Decision Tree Matrix
Specified Treatment Per Reg
Required Svc
Paid to
Creditor
Paid to
Broker or
Borrow
Affiliate
er
of
Chose
Creditor
From
or Broker Can Shop List
Tolerance
Y-Transfer taxes (per Reg)
0
Y-Recording fees (per Reg)
10
Y-Title-Owner's Title Insurance (optional) (per Reg)
Y
Y
10
Y-Title-Owner's Title Insurance (optional) (per Reg)
Y
N
none
Y-Prepaid interest (per Reg)
none
Y-Property ins premium (per Reg)
none
Y-Escrow/Impound/Reserve acct (per Reg)
none
N
Y
Y
0
N
Y
N
Y
N
N
N
N
Y
N
N
Y
Y
10
N
Y
N
N
Y
N
none
N
N
N
N
Y
none
N
N
N
N
N
none
N
N
Y
N
N
Y
0
0
0
Y
none
By Michael Patterson
#8 Tolerance and Baseline Calculations
TILA-RESPA Integrated Disclosures, Part 5: Implementation Challenges and QuestionsTuesday, May 26, 2015
From transcript (Emphasis added):
FAQ:…where the creditor’s estimate of closing costs changes, but the prior
estimate remains “in good faith”…, is the creditor prohibited from providing the
consumer with a revised disclosure?
CFPB: No, …the rule does not prohibit the creditor from issuing revised disclosures
for informational purposes. …The loan estimate alone will not indicate whether
estimates are in good faith. To determine whether estimates are in good faith, the
creditor must perform the analysis under section …. However, keep in mind in that
case, the updated disclosure would not impact the good faith analysis …and that
the creditor must have a mechanism for tracking which disclosure controls for
purposes of determining good faith.. The creditor is responsible for tracking
charges “off sheet” to ensure that the amounts disclosed on the loan estimate
were made in good faith and that the charges at closing do not exceed the
applicable tolerances. …
#8 Tolerance and Baseline Calculations
Sample investor requirement:
Fee Tolerances-[Name of investor] expects all clients to review and closely
monitor all applicable fee tolerance thresholds, similar to the monitoring required
under the current RESPA rules to ensure compliance with the new rule. Although a
specific form will not be required as evidence ,[Name of investor] recommends
that clients provide any applicable worksheets utilized for this that may facilitate
the review of their loans submitted for purchase.
[See P&P-Online Baseline Calculator and Certificate Generator-This calculator will help
you track changed circumstances to alert you when you can "reset" your 10% baseline.]
#9 APR Over Disclosure vs. Under Disclosure
(the law vs the investor)
The general rule for redisclosure under Reg. Z, Section 1026.22 is that you have
to redisclose if the APR becomes inaccurate either way (i.e. either goes up or
down by 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable
loans). For mortgages, however, if the APR results from the disclosed finance
charge, and the finance charge was overstated, then the APR is still considered
accurate and you do not need to redisclose.
The CFPB’s recent Fact Sheet re “Will the new mortgage disclosures delay my
closing?” is consistent with our interpretation:
The APR (annual percentage rate) increases by more than 1/8 of a percent
for fixed-rate loans or 1/4 of a percent for adjustable loans. A decrease in
APR will not require a new 3-day review if it is based on changes to interest
rate or other fees.
Remember though that some investors may take a more conservative position
and fall back on the “general rule” of APR going up or down, even though for
mortgages the standard is different.
#9 APR Over Disclosure vs. Under Disclosure
(the law vs the investor)
Per the CFPB’s “Closing fact sheet”:
Only THREE changes require a new 3–day review:
1)The APR (annual percentage rate) increases by more than 1/8 of a
percent for fixed-rate loans or 1/4 of a percent for adjustable loans.*
A decrease in APR will not require a new 3-day review if it is based on
changes to interest rate or other fees.
2)A prepayment penalty is added, making it expensive to refinance or
sell.
3)The basic loan product changes, such as a switch from fixed rate to
adjustable interest rate or to a loan with interest-only payments.
*Lenders have been required to provide a 3-day review for these changes
in APR since 2009.
#9 APR Over Disclosure vs. Under Disclosure
(the law vs the investor)
Per the CFPB’s “Closing fact sheet”:
NO OTHER changes require a new 3–day review:
There has been much misinformation and mistaken commentary around
this point. Any other changes in the days leading up to closing do not
require a new 3-day review, although the lender will still have to provide an
updated disclosure.
For example, the following circumstances do not require a new 3-day
review:
1)Unexpected discoveries on a walk-through such as a broken
refrigerator or a missing stove, even if they require seller credits to the
buyer.
2)Most changes to payments made at closing, including the amount
of the real estate commission, taxes and utilities proration, and the
amount paid into escrow.
3)Typos found at the closing table.
#10 Right of Rescission and “Material Disclosures”
1026.23—Right of rescission.
Official Interpretation
(a) Consumer's right to rescind.
(3)
(i) The consumer may exercise the right to rescind until midnight of the third business day
following consummation, delivery of the notice required by paragraph (b) of this section, or
delivery of all material disclosures, whichever occurs last. If the required notice or material
disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon
transfer of all of the consumer's interest in the property, or upon sale of the property, whichever
occurs first. In the case of certain administrative proceedings, the rescission period shall be
extended in accordance with section 125(f) of the Act.
(ii) For purposes of this paragraph (a)(3), the term "material disclosures" means the required
disclosures of the annual percentage rate, the finance charge, the amount financed, the total of
payments, the payment schedule, and the disclosures and limitations referred to in
§§ 1026.32(c) and (d) and 1026.43(g).
#11 CFPB’s Required Disclosure of “Liability
after foreclosure” in Texas
For refinances, the new Integrated Disclosure requirements require a lender to
choose one of the two options on page 5 of the new Closing Disclosure:
Liability after Foreclosure
If your lender forecloses on this property and the foreclosure does not
cover the amount of unpaid balance on this loan,
[__] 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.
By Michael Patterson
#11 CFPB’s Required Disclosure of “Liability
after foreclosure” in Texas
CFPB Guidance On November 18, 2014 the CFPB answered the following
questions re this required disclosure (emphasis):
Moderator: Thanks, Andy. And, we've also been asked whether state laws
that limit how much a creditor may collect in an anti-deficiency judgment
are considered anti-deficiency protections for purposes of this disclosure?
CFPB: Generally the answer to that question is going to be yes. State laws
that limit the amount of deficiency that a creditor may collect in an antideficiency judgment are considered anti-deficiency laws for purposes of
this disclosure. These state law anti-deficiency protections may limit the
amount of the deficiency that a creditor may collect, based on factors such
as, for example, the difference between the outstanding debt and the fair
market value of the property at the time of the foreclosure.
By Michael Patterson
#11 CFPB’s Required Disclosure of “Liability after
foreclosure” in Texas
1) Texas Property Code Sec. 51.003. DEFICIENCY JUDGMENT. (Foreclosure Via NonJudicial Deed of Trust)
(c) If the court determines that the fair market value is greater than the sale price
of the real property at the foreclosure sale, the persons against whom recovery of
the deficiency is sought are entitled to an offset against the deficiency in the
amount by which the fair market value, less the amount of any claim,
indebtedness, or obligation of any kind that is secured by a lien or encumbrance on
the real property that was not extinguished by the foreclosure, exceeds the sale
price.
2) Texas Property Code Sec. 51.004. JUDICIAL FORECLOSURE--DEFICIENCY. (Foreclosure
Via Judicial Sell)
(c) If the finder of fact determines that the fair market value is greater than the
sale price of the real property at the foreclosure sale, the persons obligated on the
indebtedness, including guarantors, are entitled to an offset against the deficiency
in the amount by which the fair market value, less the amount of any claim,
indebtedness, or obligation of any kind that is secured by a lien or encumbrance on
the real property that was not extinguished by the foreclosure, exceeds the sale
price.
#11 CFPB’s Required Disclosure of “Liability after
foreclosure” in Texas
3) Texas Home Equity Loans-Texas Administrative Code-RULE §153.4:
An equity loan must be without recourse for personal liability against
each owner and the spouse of each owner, unless the owner or spouse
obtained the extension of credit by actual fraud.
#11 CFPB’s Required Disclosure of “Liability
after foreclosure” in Texas
Summary: All Texas Loans:
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
#12 Consent for Real Estate Agent to Receive
TRID Disclosures
#12 Consent for Real Estate Agent to Receive
TRID Disclosures
Here is the consent we will imbed in our lender to borrower email
communication:
I/We hereby consent to my/our Loan Estimate, Closing Disclosure,
any revisions thereof, any information therein and any related
documentation to be shared with my/our real estate agents,
attorneys, lenders, settlement agents and any other necessary
parties to process and close my/our loan transaction. I/We further
consent to those parties and their successors and/or assigns to
share that information as is necessary to close and service
my/our loan transaction.
Summary: TRID-Obsolete Docs, Amended Docs and
New Docs
If you are selling disclosures by the pound like we do —here are the results!!!
Obsolete:
-Good Faith Estimate (GFE)
-Settlement Statement (HUD 1)
-Servicing Transfer Notice (Reg X Appendix MS-1)
-Itemization of Amount Financed (Reg Z)
Amended:
-Intent to Proceed
-Closing Instructions
-Business Purpose Affidavit
New:
-Loan Estimate (LE)
-Settlement Servicers Providers List (SSPL)
-Interest Rate Lock/Float Agreement
-Closing Disclosure (CD)
-Acknowledgement re Loan Estimate and Closing Disclosure Receipt
-Real Estate Agent Consent
-Re-Baseline Certification/Affidavit
-Texas Disclosure (Title Co generated form)
-Escrow Closing Notice (a post closing form)
-Partial Payment Disclosure (a post closing form)
Net GAIN=+5….if you are counting 
Other P&P TRID Tools
-TRID Share-Enables a lender to share information electronically with title closing agents.
Other P&P TRID Tools
Other P&P TRID Tools
TRIDShare™
What is TRIDShare™?
TRIDShare™ is a unique and simple online tool that can help lenders collaborate with
settlement agents and other business partners involved in the closing of a TILA-RESPA
Integrated Disclosure Rule ("TRID") covered residential mortgage loan. The TRID rule
fundamentally changes the closing process work flow. Most lenders will prepare the
Closing Disclosure, instead of the settlement agent. TRIDShare™ was designed to bridge
that gap by allowing each party to share and work together.
What makes TRIDShare™ unique?
TRIDShare™ is completely platform independent! It will work with any LOS and any
settlement agent system. It is a flexible webbased application hosted in the cloud.
TRIDShare™ makes sharing loan information easy. The architecture accommodates both
the largest and smallest lender and settlement agent.
Is it secure?
YES! All internet traffic is encrypted using TLS 1.2 and 256-bit AES Encryption. Minimal
loan information is stored online, just the fees. We do not keep any other information.
TRIDShare™ runs on Amazon’s state of the art cloud computing platform known as
AWS.
Other P&P TRID Tools
Are other TRID Tools included?
YES! A simultaneous issue of owner and lender title policy calculator that calculates the
disclosure and adjustments for title policies per new CFPB requirements, a construction
loan reserve CFPB holdback calculator, and a filing fee collaborating calculator.
What does it cost?
TRIDShare™ users are billed by transaction on a monthly basis….$5 per file. Each
transaction can have unlimited invitees and unlimited iterations of collaboration. Only
the person that started the share is billed. No long term contracts. No set up fees. No
minimum usage.
How do I get started?
Registration is quick, easy, and free. Call Dallas Rivera for details.
Other P&P TRID Tools