A Realtor’s Guide to…
What you need to know before
10.03.2015
CFPB
Challenged to combine FOUR familiar disclosures.
What does the CFPB regulate?
• Credit Cards
• Mortgages
• Bank Accounts & Services
• Credit Reporting
• Money Transfers
• Debt Collection
• And More
Protecting Consumers…
Relief Available (Sec 1055)
 Rescission or reformation of contracts
 Refund of monies or return of real property
 Disgorgement or compensation for unjust enrichment
 Payment of damages
 Public notification of violation
 Limits on activities or functions
 Civil penalties against businesses or individuals not complying with
the law:
 Up to $5,000/day
 If reckless, up to $25,000/day
 If knowingly, up to $1,000,000/day
Protecting Consumers cont’d…
Notable fines include:
 Ally Bank $80 Million
 JP Morgan Chase $309 Million
 American Express $59 Million
Remember that the CFPB oversees RESPA. It is possible for
the CFPB to reach outside of the banking and lending
environment for fines and penalties.
Lending Ecosystem
What you need to know by
10.03.2015
TILA/RESPA Integrated Disclosures (TRID)
 1888 Page Rule
 Governed by the Truth-in-lending Act (TILA) and Real Estate Settlement Procedures
Act (RESPA)
 TILA provides different accuracy expectations and enforcement provisions than
RESPA, as well as some differences in definitions, with associated risks and
penalties for the lender that are much more severe than RESPA.
 The new forms put all loan information onto a level playing field for “easy reading”
for the consumer.
 Eliminate costs and risks buried in the fine print.
 Elimination of confusing points and fees.
 Elimination of last-minute closing shocks.
 The creditor is responsible for delivering the Closing Disclosure to the consumer.
 Creditors may use settlement agents to provide the Closing Disclosure, provided
they comply with the final rule.
What you need to know by
10.03.2015
TRID continued…
 Loan Estimate (LE)
 Replaces GFE and Initial TIL
 3 Pages long
 Delivery to Consumer within 3 days of Loan Application
 Closing Disclosure Form (CD or CDF)
 Replaces HUD-1 and Final TIL
 5 Pages long
 Delivery to consumer 3 days prior to closing
 Lender must receive both the buyer and seller sides
 Realtors and Sellers will not be provided a copy of the buyers’ CDF unless by
buyer due to NPI associated with the loan terms
 ALTA is creating a “Settlement Statement or Disbursement Authorization” form
template for Settlement Agents to prepare as one combined form with a
statement signed by Seller, Buyer, and Settlement Agent validating it as “true
and accurate” reflection of the terms of the transaction.
Loan Application
6 items of information required to complete Loan Application
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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.
NOTE: This new definition of application is similar to the current
definition under Regulation X (§ 1024.2(b)). The Bureau has revised the
definition of application to remove the seventh “catch-all” element of
the current definition under Regulation X, that is, “any other
information deemed necessary by the loan originator.”
Delivery Options
§1026.19(f)(1)
 Hand delivery: In person delivery to consumer. (i.e.
deliver CDF on Monday, close on Thursday)
 US Mail: assumed receipt 3 days after placed in mail
 Email: with receipt confirmed by consumer after
approval to use email method of delivery (if not,
assumed 3 days to open email)
 Overnight Delivery: with consumer confirmed receipt
Delivery Option Concerns
There are some compliance concerns if the lender
chooses a delivery method other than “Hand Delivery”
or “US Mail”.
 Protection of NPI or NPPI (Non-Public Information and
Non-Public Personal Information)
 Risk to lender to document confirmation of receipt was
actually received from borrower(s) required to receive
the form within the timing requirements under the rule
 Most lenders are choosing to implement processes to
document delivery by US Mail or Hand Delivery
Waiver
§1026.19(f)(1)(iv)
 Consumer may waive waiting period if they have a bona fide personal
financial emergency.
 Must be in writing by consumer and not pre-typed form provided
by lender.
 Lender compliance departments will most likely take the
conservative approach to NOT WAIVE when reviewing request for
waiver
 No waiver afforded for Seller’s financial emergency.
 Purposely narrow definition by example: an imminent sale of
consumer’s home at foreclosure for refinances transactions. Bureau
chose not to expand definition.
Re-disclosure Requirements
If the creditor makes any of the following changes between the time the Closing
Disclosure form is given and consummation, a new Closing Disclosure must be
delivered to the borrower and a new waiting period must commence:
Requiring additional 3-day review period
Inaccurate APR
Change in loan product
Prepayment penalty added
Delivery Period Examples
If the delivery of the
Closing Disclosure is
by any means other
than “hand
delivery,” a three
day delivery period
is added.
 The three day delivery
period expires on third
day or upon receipt of
signed confirmation by
ALL borrowers.
 Then the three day
waiting period starts.
Delivery Period Examples
The waiting period is
based on business days
of Monday through
Saturday, excluding
Sunday and federal
holidays.
If the settlement agent or
lender hands the Closing
Disclosure to the borrower
on a Monday, the soonest
the transaction can close is
Thursday.
Loan Types Affected
Most close-ended loans originated after August 1, 2015
will be subject to the new rules and forms.
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Purchase money
Refinance
25 acre
Vacant Land
Construction-only
Timeshare
Exempted Transactions
Close-ended loans not subject to the new rule
 Reverse Mortgages
 Home Equity Line of Credit (HELOCs)
 Chattel-dwelling/Mobile Home-only loans
 Creditors who originate less than 5 loans in a calendar year
The portions of TILA and RESPA governing reverse mortgages are not
being replaced or deleted. For these loans:
 Creditors must issue a TILA disclosure and Good Faith Estimate
 Settlement agents must use a 2010 HUD-1 settlement statement to
close
TRID Terminology
New Terminology
 Consummation is defined as the day the
borrower becomes legally obligated under
the loan, which would be the date of
signing, even if the loan has a rescission
period under TILA’s Regulation Z.
 It is anticipated lenders will send out the
Closing Disclosure prior to delivering loan
documents to the settlement agent for
signing.
Loan Estimate
The creditor can only reissue a Loan Estimate based on six
events which qualify as a “Changed Circumstance:”
 Information provided by consumer inaccurate
 Extraordinary event
 Discovery of new info specific to consumer or transaction
 Revision requested by consumer
 On day of locking rate
 After 10-day expiration
*Disclosure required within 3 days of knowledge but not on same
day as Closing Disclosure
How will this affect our industry?
 Lenders are more likely to prepare their own Closing Disclosure
earlier and mail it out far in advance of the actual closing.
 Statement to explain the closing costs at signing.
 Sellers will know if closing will occur.
 Lenders are requiring final information 10 days prior to
closing
 The rule doesn’t cover sellers therefor sellers may not
receive final figures until day of closing as the final numbers
come through to the Settlement Agent
Resources and References
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Nationally - NAR, MBA, ABA &
ALTA Industry Publications
RESPA-TILA-TALK.com
CFPB.gov
 5 page Executive Summary
 Small Business Compliance
Guide – great 89 pages
 What it Means for Service
Providers summary
 Sign up for Emails
WACO IS READY
www.wacotitle.com
1. Example of Closing Disclosure
2. RESPA/TILA article by Waco CEO,
Patrick Curry
3. TRID Resources
4. Link for TRID Questions
5. Stay engaged in the conversation
#wacoisready AND #wacoknows