1 kiss the hud1 and gfe goodbye trec approved for 2.0 hours of continuing education credit

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Kiss the Hud1 and GFE Goodbye

TREC Approved for 2.0 hours of Continuing Education Credit

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Approved Speaker Introduction

Laura PerryHomeland Title, Attorney/Owner

Franklin. Tennessee

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Deanna Cooper, Attorney, Farrar & BatesTAR Counsel Voice of TAR Hotline

The Panel of Industry Experts

Becky Rockwell,Loan OfficerBenchMark Homeloans

Karen MearsTitle Agent/Co-OwnerReliable Title & Escrow

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• A Brief Introduction to the Dodd/Frank Act and creation of the CFPB.

• An overview of the CFPB

• A Detailed look at the new TILA-RESPA Integrated Disclosure Forms required by the CFPB

The Agenda

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• A brief slightly terrifying look at the Global industry of Cyber Crime

• How Cyber Crime impacts your business as a Realtor

• What Realtors Need to Know in the future: where application is made on or after October 3, 2015.

The Agenda

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Consumer

Finance

Protection

Bureau

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Choking

Financial

Professionals &

Busy Realtors

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TRID

Tennessee

Realtors

In

Distress

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TRID

TILA-RESPAIntegrated Disclosures

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• The Wall Street Reform and Consumer Protection Act or “Dodd-Frank” Act created the CFPB.

• It was established July 21, 2010.

• And became operational on July 21, 2011.

• Powerful Rule Making & Enforcement Bureau.

• CFPB is funded by the Federal Reserve.

Dodd Frank Act

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• 2015 Budget is $618.7 million.

• 2016 Budget is $631.7 million.

CFPB Introduction

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• CFPB is empowered with Enforcement authorities for:

• FED• OTS• OCC• FDIC• NCUA• HUD• FTC

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Cop on the FinancialProtectionBeat

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CFPB Introduction

GOAL OF CFPB

• Insure Consumers of financial products get:

• Timely

• Understandable information

• To empower the consumer to make responsible decisions in financial transactions: “Know Before You Owe”

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The CFPB – Mortgage Loan Disclosures

CFPB Final Rule on Mortgage Disclosures

• It took 2 years and 4 months.

• CFPB published “The Final Rule” on November 21, 2013

• “The Final Rule” is 1,888 pages long

• “The Final Rule” creates the New Mortgage Disclosure Forms and Implementation Rules for Lenders

• Two New Forms for Mortgage Disclosures must be used on loans originated on or after October 3, 2015

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Current Confusing Forms• The Dodd/Frank Legislation required the CFPB to simplify mortgage disclosures by combining “Currently Confusing Forms”

• Truth-In-Lending Act (TILA)• Purpose: “enables consumers to determine the true

amount they are paying for credit”• Forms Currently used: Initial TIL and the Final TIL

• Real Estate Settlement Procedures Act (RESPA)• Purpose:

• to help consumers become better shoppers for settlement services

• Forms Currently used: Good Faith Estimate (GFE) and the HUD-1 Settlement Statement

The CFPB – Integrated Consumer Disclosures

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• Loan Estimate

• A Whole New form to combine and replace:

• the Good Faith Estimate (GFE) and • the Initial Truth In Lending Act (Initial TIL) disclosure• Adds new disclosure items required by Dodd-Frank

• Closing Disclosure

A Whole new form to combine and replace:

• the HUD-1 Settlement Statement and • the Final TIL disclosure• Adds new disclosure items required by Dodd-Frank

New TRID Forms:

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Loan Estimate – Page 1

Basic Transaction Information

Basic Loan Terms

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Information about the New Monthly Mortgage Payment

Estimates amount borrower will need at closing

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Alphabetical Order

Loan Fees

AppraisalCredit ReportFlood Tax Service

TermiteSurveyTitle

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Owner’s Title Insurance

- If paid by borrower, must show “(optional)” in description

- Fees will be disclosed differently

- but the cost of both policies will

- remain the same

OTHER/OTHER BOX

Cash to Bring to Closing

Government Costs

Prepaids

Initial Escrows

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TIP 69.447%Total Interest PercentageLoan of $162,000 x 69.447%

= 112,504.00.Total interestover the life of the loan

Total interest & Principal in 1st 5 years

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Intent to Proceed

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Receiving the Loan Estimate

• Lender must deliver within 3 business days of the Borrowers “application.”

A p p l i c a t i o n – automatically occurs when lender receives six pieces of information:

• Borrower(s) Name(s)• Income• Social Security Number(s)• Property Address• Estimated Value of Property• Mortgage Loan Amount

• Lender must attach separate a 4th page: The Provider List similar to that currently used with the GFE

• Now includes all services which the borrower may need for the transaction (not just items required for loan)

The CFPB Disclosures – The Loan Estimate

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The Provider List – Page 4

Lenders will give a list of providers

Complete with Contact information

Including Services that Borrower may need but not required for the loan

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The CFPB Disclosures – The Loan Estimate

Super Important

Loan Estimate expires in 10 daysNo Appraisal can be orderedUntil

Consumer indicates an Intent to Proceed

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The Closing Disclosure

The New Closing Disclosure Form

• Combination of the Final TIL and the HUD-1 Settlement Statement

• Includes new disclosures required under Dodd-Frank

• Must be delivered to the Consumer 3 days before Consummation

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Closing Disclosure – Page 1

Basic Transaction Information

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Description of Basic Loan Terms

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Information about the New Monthly Mortgage Payment

Amount includes monthly obligations on property even if not included in impound amount

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Cash to Close – shows the buyer/borrower the amount necessary for closing

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Alphabetical Order

“Title –” designation on all Title and Settlement Fees

Lender’s Title Rule

Cost DescriptionsMust be substantially similar to description on Loan Estimate

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Owner’s Title

Real Estate Commissions

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Comparison Table a comparison of amounts from Loan Estimate v. Closing Disclosure

Explanation Box

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Balance of Page 3

summary of the transaction similar to page 1 of the HUD-1 Settlement form

Buyer Numbers Seller Numbers

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Page 4 – contains various lender disclosures required under TILA, RESPA or Dodd-Frank

Fine Print Printed Bigger

Initial Escrow Disclosures

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New Modern Version of TIL

Various lender disclosures required under TILA, RESPA or Dodd-Frank

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Contact InformationPhone numbersEmailsLicense Numbers

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Bottom of the Brand New TAR Purchase & Sale Agreement

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The Closing Disclosure

Who Prepares the New Closing Disclosure Form?

• The Lender is primarily responsible for the

preparation

and

delivery of the Closing Disclosure.

• The Lender may permit the Settlement agent to prepare some portions or all of the form and/or deliver the form

• The Lender will remain liable or responsible for the for those portions prepared or delivered by the Settlement Agent.

• Lender remains responsible for all portions of the Closing Disclosure to “ensure the disclosures are provided” in accordance with “The Final Rule.”

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Closing Disclosure – Timing……Delivery

What is delivery for the Closing Disclosure?

• Hand-delivery Requires face to face wet ink signature

• Electronic-deliveryRequires some type of Acknowledgement

What is Acknowledgement?

Each Lender will decide :

• Read Receipt• Print, Sign and Email Back• Digital Signature• Log into Secure Portal

• Mail-delivery• Requires additional 3-day Delivery Period

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Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2Non-Hand Delivery of Closing Disc. (i.e., mail)

3 4 5“Delivery” of Closing Disc. Occurs

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8 9First Date Closing May Occur, if no tolerance change occurs;

10 11 12First Date Closing May Occur

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15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

3-day delivery

3-day waiting

3-day waiting

3-day redisclosure delivery

Closing Disclosure Timing Examples

(Sunday not counted)

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Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2Non-Hand Delivery of Closing Disc. (i.e., mail)

3 4 5“Delivery” of Closing Disc. Occurs

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8 9First Date Closing May Occur, if no tolerance change occurs;

10 11 12First Date Closing May Occur

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15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

3-day delivery

3-day waiting

3-day waiting

3-day redisclosure delivery

Closing Disclosure Timing Examples

(Sunday not counted)

Delivery ofClosing Disclosure

Closing occurs

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New TAR Purchase & Sale Agreement

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Changes to Initial Closing Disclosure After Delivery

• Only 3 changes will trigger another 3-day waiting period

• Changes to Annual Percentage Rate (APR) greater than 1/8.

• Change in the loan program (change in amortization or change in fixed/adjustable rate)

• The addition of a prepayment penalty

The Closing Disclosure – Changes After Delivery

Not Really any different than it has been since 2009

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Your Client Will Likely Receive More Than One Closing Disclosure Since the Buyer/Consumer will receive a Closing Disclosure 3 days before the consummation

(and days before a walk-through on the property),

Buyers/Consumers will likely receive a new, adjusted Closing Disclosure at the Consummation showing any changes that occurred between the initial Closing Disclosure and the Consummation,

adjustments due to: timing of the Consummation, walk-through discoveries (seller repairs)

and other matters (recording fees)

The Closing Disclosure – Changes After Delivery

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The Seller’s Closing Disclosure

Sellers are not Consumers according to the CFPB

The Seller’s Closing Disclosure is a totally separate document

The Seller’s Closing Disclosure is prepared by the Settlement Agent.

Sellers are not entitled to a 3 day Waiting period.

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Seller Net Sheet Agent InfoBuyer’s

Seller’s Agent Info

Title Agent Info

Basic TransactionInformation

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Page 2 is entirely devoted to:

Seller Paid Costs for Buyer – Related to Buyer’s Loan

Other Seller Paid Costs Govt Recording fees Prepaids HOA fees Taxes Title Insurance

Other/Other Box

Seller Paid Owner’s Title PolicyReal Estate Commissions

Loan fees

AppraisalTax ServiceFlood CheckTitleTermiteHome Inspection

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Loans Now Covered – TRID forms will now be used for:

• Purchase Money Loans• Refinances• Vacant Land Loans• Construction Only loans• Loans for 25 acres or more

“The Rule” – Other Provisions

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Loans and Transactions that will NOT use TRID forms

• Reverse mortgages• Home Equity Lines of Credit (HELOCS)• Mobile Home Loans• Loans from Hard Money Lenders• Seller Financed Deals• Loans for a Company • CASH

documented using the Settlement Statements, TILA & RESPA compliant forms and rules

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If the Buyer is paying for the Owner’s Title Policy

Both the Loan Estimate and Closing Disclosure will say:

Owner’s Title PolicyOptional

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If the SELLER is paying for the Owner’s Title Policy

Both the Loan Estimate and Closing Disclosure will say:

Owner’s Title Policy

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Hamilton County Purchase

$208,000.00 Sales Price

$166,400.00 Loan Amount

$41,600.00 Down Payment

Currently,

Owner’s Coverage = $1118.00

Lender’s Coverage = $ 35.00

Total for both $1153.00

October 3, 2015 and beyond

Owner’s Coverage = $ 158.00


Total for both $ 1153.00

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Hamilton County Purchase

$150,000.00 Sales Price


$50,000.00 Down Payment

Currently,



Total for both $979.00

October 3, 2015


Lender’s Coverage = $794.00

Total for both = $979.00

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Owner’s Title Policy

Example of Title Fees

$300,000.00 Purchase Price-Davidson County


$50,000.00 Down PaymentCurrently,

Owner’s Policy $1694.00

Lenders PolicySimultaneous Issue: $35.00

Total for Both: $1729.00

After October 3, 2015

Lenders Policy $1469.00

Owner’s PolicySimultaneous Issue $ 260.00

Total for Both: $1729.00

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Title Expenses in New TAR Purchase & Sale Agreement

Seller to pay

Financial Crimes The Cyber Nexus

The Perspective

U.S. Secret Service

Nashville Field Office

• Target criminal groups engaged in

organized financial crimes

Strategy

Global Identity TheftElectronic Crimes

Organized transnational criminal groups

Ebay like site for Stolen American Identities in Russia and other Eastern Block Countries

A stolen Identity is worth $34.00-$50.00 on the Black Market EBAY like site.

Any crime that involves a computer

and/or a network. The computer may have been used in the

commission of a crime, or It may be the target.

CYBERCRIMEWhat exactly is it?

WHO’S PERPETRATING BREACHES?

92% perpetrated by outsiders 14% committed by insiders

1% implicated business partners

7% involved multiple parties

19% attributed to state-affiliated actors

Data Breach StudyUS Secret Service and Verizon Business

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NPINon Public Personal Information

Considered any pieces of information about you that could be used to steal your identity

1. Name2. Social Security Number3. Driver’s License4. Date of Birth5. Address6. Phone Number7. Financial Information, Account Numbers,

Loan Numbers, etc.

An Identity thief doesn’t need all of these, only a few of them in combination

Key Methods to Detect Phishing

PHISHINGEMERGING TECHNIQUES –

FRAUDULENT EMAILS

PHISHINGEmerging Techniques – Fraudulent

Emails

• The malware hides in web traffi c (stealthier in terms of traffi c and resource use).

• diffi cult for antivirus software to detect malware due to the combination(s) of malware components.

• The malware can record keystrokes, passwords, and screenshots.

CYBERCRIMEmalicious software

Organized Structure

For Loans where Application

is made After October 3, 2015

Things Realtors Need to Know

Write ALL CONTACT Information on Contract.

cell phones work phonesemails mailing addressesstate license numbers

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FOR BUYERS:

• Encourage Sellers to Buy Owner’s Title Insurance (this removes “Optional” from TRID Forms)

• Educate Borrowers to gather ALL Financials BEFORE contract.

• Get Copy of Contract to Lender and Title Agent. ASAP

• Instruct Borrowers to send ALL Financial Information at or before contract to Lender.

• Advise Borrowers to Open the Loan Estimate and Promptly return the “Intent to Proceed.”

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Coach Borrowers to GET HOMEOWNERS INSURANCE immediately at contract.

Many of today’s closing delays are caused by a lack of Homeowners Insurance)

FOR BUYERS:

New Construction:

Finalize price of home (with upgrades) 15 days before Consummation

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Think about Timing:

• Inspection Period: A 10 day inspection period & 4 day negotiation of Repairs is a lot of time in a 30 day contract.

• ASKING to delay Appraisal until after the Inspection Period, MAY CAUSE DELAYED CLOSING

• Appraisal needs 7-12 day turn around times.

• Underwriting needs a minimum of 2-3 days.

• Closing Disclosure needs to be prepared

7-8 days prior to Consummation (aka Closing) 10 days prior for Large Lenders

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FOR SELLERS:

• Write ALL CONTACT Information on Contract. • Cell phones, • work phones, • emails, • addresses, • HOA or Condo Association Contact Information.

• Get Copy of Contract to Lender and Title Agent. ASAP

• Coach Sellers to quickly comply with all terms of the contract.

Make Repairs as fast as possible Allow Inspectors & Appraisers access

• New Construction Builders: Must FILE NOTICE OF COMPLETION 10 days prior to Consummation

• Require Sellers to Buy Owner’s Title Insurance (this removes “Optional” from TRID Forms.)

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Deanna Cooper, Attorney, Farrar & BatesTAR Counsel Voice of TAR Hotline

The Panel of Industry Experts

Becky Rockwell,Loan OfficerBenchMark Homeloans

Karen MearsTitle Agent/Co-OwnerReliable Title & Escrow

1 kiss the hud1 and gfe goodbye trec approved for 2.0 hours of continuing education credit

Documents

loan estimate slide

closing slide

agenda slide

cfpb introduction slide

trid slide

tennessee slide

doddfrank slide

loan estimate page