TRID August 1, 2015
Disclosure Pages of LE and CD
Venessa Snell
LE Page 3:
Other Considerations
1. Appraisal
2. Assumption
3. Homeowner’s
Insurance
4. Late Payment
5. Refinance
6. Servicing
7. Liability after
Foreclosure (Refinance)
8. New Construction
LE Page 3 : Appraisal
A. Originally separate disclosure;
1026.37(m)(1) Appraisal The required
verbiage as implemented in Regulation B
CFR part 1002 (ECOA) and this part, must
be provided on page 3 of the Loan
Estimate (LE) under Other Considerations
section and titled “Appraisal”:
1. The creditor may order an
appraisal to determine the value of the
property identified and may charge the
consumer for that appraisal;
2. The creditor will promptly
provide the consumer a copy of any
appraisal, even if the transaction is not
consummated; and
3. The consumer may choose
to pay for an additional appraisal of the
property for the consumer's use.
B. If loan is not subject to 1026.37 or
1026.38, and is a 1st lien the standard
ECOA disclosure will still be required
LE Page 3 : Assumption
A. Original Placement on the Truth in
Lending (TIL);
1026.37(m)(2) Assumption. A statement
of whether a subsequent purchaser of the
property may be permitted to assume the
remaining loan obligation on its original
terms, labeled “Assumption.”
Commentary
2. Original terms. For purposes of
§ 1026.37(m)(2), the imposition of an
assumption fee is not a departure from
the original terms of the obligation but a
modification of the legal obligation, such
as a change in the contract interest rate,
represents a departure from the original
terms.
B. Will vary based on Agency, Creditor
and product.
LE Page 3 : Insurance
A. Original Placement on the Truth in
Lending (TIL);
1026.37(m)(3) Homeowner’s insurance.
1. Optional disclosure. Section
1026.37(m)(3) provides that creditors
may, but are not required to, disclose a
statement of whether homeowner’s
insurance is required on the property and
whether the consumer may choose the
insurance provider, labeled
“Homeowner’s Insurance.”
2. Relation to the finance charge. Section
1026.4(d)(2) describes the conditions
under which a creditor may exclude
premiums for homeowner’s insurance
from the finance charge. For transactions
subject to § 1026.19(e), a creditor
satisfies § 1026.4(d)(2)(i) by disclosing the
statement described in § 1026.37(m)(3).
B. Though disclosure is optional, written
notice must be present to meet
requirements of TIL to exclude premiums
from the finance charge.
LE Page 3 : Late Payment
A. Original Placement on the Truth in
Lending (TIL);
1026.37(m)(4) Late payment. A
statement detailing any charge that may
be imposed for a late payment, stated as
a dollar amount or percentage charge of
the late payment amount, and the
number of days that a payment must be
late to trigger the late payment fee,
labeled “Late Payment.”
Commentary
(2.) Applicability of State law. Many State
laws authorize the calculation of late
charges as either a percentage of the
delinquent payment amount or a
specified dollar amount, and permit the
imposition of the lesser or greater of the
two calculations. The language provided
in the disclosure may reflect the
requirements and alternatives allowed
under State law.
B. Will vary based on Agency, and State.
LE Page 3 : Refinance
A. Original Placement on the Truth in
Lending (TIL);
1026.37(m)(5) Refinance. The following
statement, labeled “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.”
B. Notice came about with issues
regarding defaults on products that
consumers were incapable of refinancing
due to credit issues, and consumers lack
of understanding
LE Page 3 : Servicing
A. Originally a separate disclosure;
1026.37(m)(6) Servicing. A statement of
whether the creditor intends to service
the loan or transfer the loan to another
servicer, labeled “Servicing.”
Commentary
1. Creditor’s intent. Section
1026.37(m)(6) requires the creditor
to disclose whether it intends to
service the loan directly or transfer
servicing to another servicer after
consummation. A creditor complies
with § 1026.37(m)(6) if the disclosure
reflects the creditor’s intent at the
time the Loan Estimate is issued.
B. Previous versions of disclosure were
more concrete, with percentage of
transfers indicated.
LE Page 3 : Liability after
Foreclosure
A. On Loan Estimate for Refinance
only;
1026.37(m)(7) Liability after foreclosure.
If the purpose of the credit transaction is
to refinance an extension of credit as
described in paragraph (a)(9)(ii) of this
section, a brief statement that certain
State law protections against liability for
any deficiency after foreclosure may be
lost, the potential consequences of the
loss of such protections, and a statement
that the consumer should consult an
attorney for additional information,
B. Direct notification on LE for refinance
transactions and all CDs; Up to lender to
verify if the specific state of the subject
property has Anti-Deficiency Laws and/or
under what terms it allows for collection
of remaining balance after foreclosure
action.
LE Page 3:
New Construction
A. Originally a separate disclosure;
1026.37(m)(8) Construction loans. In
transactions involving new construction,
where the creditor reasonably expects
that settlement will occur more than 60
days after the provision of the loan
estimate, at the creditor's option, a clear
and conspicuous statement that the
creditor may issue a revised disclosure
any time prior to 60 days before
consummation, pursuant to
§ 1026.19(e)(3)(iv)(F).
Commentary
1. Clear and conspicuous statement
regarding redisclosure for construction
loans.
CD Page 4: Additional
Loan Information
1.
2.
3.
4.
5.
6.
7.
Assumption
Demand Feature
Late Payment
Negative Amortization
Partial Payments
Security Interest
Escrow Account
AP and AIR Tables will
appear when applicable
CD Page 4: Additional Loan
Information
Assumption: LE Page 3
Late Payment: LE Page 3
CD Page 4:Demand Feature
A. Originally from TIL;
1026.38(l)(2) cross-referenced to;
1026.18(i)(2) Covered demand features.
The type of demand feature triggering the
disclosures required by §1026.18(i)
includes only those demand features
contemplated by the parties as part of
the legal obligation. For example, this
provision does not apply to transactions
that convert to a demand status as a
result of the consumer's default. A dueon-sale clause is not considered a
demand feature.
B. A demand feature refers to a clause in
which the lender can demand repayment
in full of the debt at any time deemed
within. For example;
-If interest rates rise
-declining market conditions
-Loans Made to executive officers may
include demand features for payment
when governed by Regulation O.
CD Page 4:
Negative Amortization
A. Originally from TIL;
1026.38(l)(4) Negative amortization.
Under the subheading “Negative
Amortization (Increase in Loan Amount),”
a statement of whether the regular
periodic payments may cause the
principal balance to increase.
B. Summary of (i)&(ii) If the regular
periodic payments, or payment option
chosen by borrower do not cover all of
the interest due, the creditor must
provide a statement that the principal
balance will increase, such balance will
likely become larger than the original loan
amount, and increases in such balance
lower the consumer's equity in the
property.
CD Page 4 :
Partial Payments
A. New Disclosure;
1026.38(l)(5) Partial payment policy
Under the subheading “Partial
Payments”:
Summary;
(i) If periodic payments that are less than
the full amount due are accepted, and
applied to the consumer's loan;
(ii) If periodic payments that are less than
the full amount due are accepted but not
applied to a consumer's loan until the
consumer pays the remainder of the full
amount due
(iii) If periodic payments that are less
than the full amount due are not
accepted, and
(iv) A statement that, if the loan is sold,
the new creditor, using the term “lender,”
may have a different policy.
CD Page 4: Security Interest
A. Originally from TIL;
1026.38(l)(6) Security interest. Under the
subheading “Security Interest,” a
statement that the consumer is granting a
security interest in the property securing
the transaction, the property address
including a zip code, and a statement that
the consumer may lose the property if
the consumer does not make the
required payments or satisfy other
requirements under the legal obligation.
B. Commentary indicates allowance of
alternate address descriptions for
properties not assigned a standard
address including; legal, or lot & block
descriptions; and
C. Personal property and additional
collateral may also be listed in this section
with allowance for an addendum if
adequate space is not provided on page.
“The creditor may use one addendum to
disclose the personal property under
§ 1026.38(a)(3)(vi) and (l)(6).”
CD Page 4: Escrow Account
A. From GFE and Escrow disclosures ,
but now expanded;
38(l)(7) Escrow account.
1. Will have an escrow account
• Estimated total Escrowed costs over
the first year.
• Estimated total of Non-Escrowed costs
over the first year
• Initial Escrow Payment- Cushion paid
at closing
• Monthly Escrow Payment
2. Will not have an escrow account
• Declined by borrower
• Not offered by lender
• Estimated total required to be paid
directly by the consumer over the first
year
B. In the future- Statement must include
information on how the consumer’s
escrow costs may change due to property
cost changes. Indication that the
consumer may cancel escrow accounts in
the future, and responsibility for direct
payment. Additionally, the repercussion
for failure to pay escrow payment.
CD Page 5:
Other Information;
Other Disclosures
1. Appraisal Disclosure-Final
2. Contract Details
3. Liability after Foreclosure
4. Refinance
5. Tax Deductions
CD Page 5: Appraisal
A. Previously separate disclosure;
(descriptions added)
1026.38(p)(1) Appraisal. For transactions
subject to 15 U.S.C. 1639h(high-risk
mortgage appraisal requirements) or
1691(e)(Civil Liability and Good Faith
Compliance), as implemented in this part or
Regulation B, 12 CFR part 1002 (ECOA),
respectively, under the subheading
“Appraisal,” that:
(i) If there was an appraisal of the property
in connection with the loan, the creditor is
required to provide the consumer with a
copy at no additional cost to the consumer
at least three days prior to consummation;
and
(ii) If the consumer has not yet received a
copy of the appraisal, the consumer should
contact the creditor using the information
disclosed pursuant to paragraph (r) of this
section.
CD Page 5: Contract Details
A. New disclosure based on previous
concept;
1026.38(p)(2) Contract details. A statement
that the consumer should refer to the
appropriate loan document and security
instrument for information about
nonpayment, what constitutes a default
under the legal obligation, circumstances
under which the creditor may accelerate the
maturity of the obligation, and prepayment
rebates and penalties, under the
subheading “Contract Details.”
CD Page 5:
Liability After Foreclosure
A. Same disclosure as noted on page 3 of
Loan Estimate for refinance; however
applicable to all covered transactions;
Commentary
1026.38(p)(3) Liability after foreclosure.
1. State law requirements. If the creditor
forecloses on the property and the proceeds
of the foreclosure sale are less than the
unpaid balance on the loan, whether the
consumer has continued or additional
responsibility for the loan balance after
foreclosure, and the conditions under which
liability occurs, will vary by State. If the
applicable State law affords any type of
protection, other than a statute of
limitations that only limits the timeframe in
which a creditor may seek redress,
§ 1026.38(p)(3) requires a statement that
State law may protect the consumer from
liability for the unpaid balance.
CD Page 5: Refinance
A. Same disclosure as noted on page 3 of
Loan Estimate;
1026.38(p)(4)
1026.37(m)(5) Refinance. The following
statement, labeled “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.”
CD Page 5: Tax Deductions
A. New Disclosure;
1026.38(p)(5) Tax deductions. Under the
subheading “Tax Deductions,” a statement
that, if the extension of credit exceeds the
fair market value of the property, the
interest on the portion of the credit
extension that is greater than the fair
market value of the property is not tax
deductible for Federal income tax purposes
and a statement that the consumer should
consult a tax adviser for further information.