tila-respa integrated disclosures (trid) completing the loan estimate september 10, 2015 choose one...

TILA-RESPA Integrated Disclosures (TRID)Completing The Loan Estimate

September 10, 2015

Choose one of the following audio options: TO USE YOUR COMPUTER'S AUDIO:

When the webinar begins, you will be connected to audio using your computer's microphone and speakers (VoIP). A headset is

recommended.--OR--

TO USE YOUR TELEPHONE:If you prefer to use your phone, you must select "Use Telephone"

after joining the webinar and call in using the numbers below.Toll:XXX-XXX-XXXX

Access Code:XXX-XXX-XXXAudio PIN: Shown after joining the webinar

JMAC’s TRID Resource Hotline

[email protected]

What’s new ??? – NEW FORMS

• Loan Estimate (LE)• Replacing the current GFE and Initial TIL Forms

• Closing Disclosure Form (CD)• Replacing Current HUD-1 and Final TIL Forms

What’s New ??? – NEW Terminology

OLD TERMINOLOGY NEW TERMINOLOGY

Lender Creditor

Borrower Consumer

Closing/Settlement Consummation

Tolerances Variances

Implementation

• Effective October 3, 2015 (Was postponed from August 1, 2015)• What does it mean?

• Applies to all “applications” on or after October 3, 2015• Applies to Closed-end 1-4 unit dwelling attached to real property

• Exempt:• HECM (Reverse Mortgage)• HELOC• Loans secured by Mobile Home (not attached to real property)• No-interest second mortgages made for DAP for low/moderate-income consumers

Define “Application”

Now (7 Elements) October 3, 2015 (6 Elements)

1. Consumer’s Name 1. Consumer’s Name

2. Consumer’s Income 2. Consumer’s Income

3. Consumer’s SSN 3. Consumer’s SSN

4. Property Address 4. Property Address

5. Est. Value of the property 5. Est. Value of the property

6. Loan Amount Sought 6. Loan Amount Sought

7. Interest Rate (Lender’s Catch-all)

“What Triggers Loan Estimate”

The Loan Estimate – The Rules

• The Loan Estimate must • Provide a “good faith estimate” of the loan’s costs and terms.

• Until the Loan Estimate is provided and the consumer indicates an intent to proceed with the transaction, a creditor cannot impose any fee other than a bona fide and reasonable credit report fee.

• Cannot hold checks for later deposit or credit card numbers.

• A creditor is also prohibited from requiring the consumer to submit documents verifying information relating to the consumer’s application until the Loan Estimate has been provided.

Timing Requirements

Initial Loan Estimate delivered within:

• 3 general business days after receiving Application (Creditor or Broker) • If not provided in person, receipt assumed within 3 business days after delivery or mailing • For purposes of providing the Loan Estimate, a general 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 (aka - “open for business day”)

• 7 specific business days before consummation (*day the Note is signed). This requirement is the same as today’s MDIA rule (specific business day includes ALL days but Sunday and specific federal holidays)

Revised Loan Estimate delivered within: • 3 general business days of receiving information sufficient to establish Change of Circumstance • 3 general business days of interest rate lock (Rev. Jan. 2015) • 4 specific business days before consummation • Cannot be delivered with or after Closing Disclosure (CD)

* For purposes of TRID, JMAC has determined that consummation is defined as the date the borrower signs the Note (as defined by California)

Fee and Closing Cost Worksheets

A fee or closing cost worksheet may be provided to the borrower prior to the Loan Estimate, subject to conditions:

• Must clearly and conspicuously include the following disclaimer in 12 point font: “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.”

• May not use headings, content and format similar to the Loan Estimate or Closing Disclosure.

• Requirements do not apply to generic cost lists or advertisements.

Loan Estimate – COC

• General Rule: Creditors are bound by the Loan Estimate, and may not issue revisions because they later discover technical errors, miscalculations, or underestimations of charges.

• Creditors may only charge more than the amount disclosed when the original estimate, or lack thereof, was based on the best information reasonably available at the time of the disclosure.

• Revised Loan Estimates permitted only in certain specific circumstances:

• Changed circumstances that occur after the Loan Estimate is provided to the consumer cause settlement charges to increase more than permitted

• Changed circumstances that occur after the Loan Estimate is provided to the consumer affect the consumer’s eligibility for the terms for which the consumer applied or the value of the security for the loan

• Revisions are requested by the consumer

• Interest rate not locked when the Loan Estimate was provided, and locking the rate causes the points or lender credits disclosed on the Loan Estimate to change

• Consumer indicates an intent to proceed with the transaction more than 10 business days after the Loan Estimate was originally provided

• The loan is a new construction loan, and settlement is delayed

Completing the Loan Estimate (LE)

Exact form must be used

Cannot add pages to the Loan Estimate except to accommodate more signature lines for multiple co-applicants

Signatures are on page three

Completing the Loan Estimate (LE)

Rounding numbers to the nearest dollar amount on the Loan Estimate is required with the exception of the P&I payment, per diem interest charge and prepaids.

If decimals - round to max three places (ex. 3.875%)

If certain portions of the Loan Estimate do not apply they should be left blank – DO NOT use "N/A".

Completing the LE (Page 1)

General Information • Page one provides general information such as name,

subject property and the transaction.


Date Issued • The date the Loan Estimate is delivered or mailed to the applicant, whether a creditor or

a broker issues the disclosure.

Applicants • Each applicant's name and mailing address should be included.

Property • Show the full property address.


Sale Price • Enter the sale price of the property for a purchase transaction. • If the loan is a transaction without a seller or the purchase contract is not yet finalized,

show the appraised value or an estimated value (*Refinance) Loan Term • Show the term in whole years such as 30 years. • A loan term that is not in whole years, such as 242 months, would be described as "20

yr., 2 mo.“ • If the term is less than 24 months and not a whole year, it should be shown in months

only; such as "15 mo."


Purpose • The purpose of the loan should be only "purchase", "refinance", "construction" or "home

equity loan". • The term "construction" refers to initial construction loans or construction-permanent

loans, but not renovation loans. • If the loan is a construction-permanent loan, the lender has the option to disclose the loan

as one transaction or separate transactions.


Product Information First show any product feature (with duration) that may change the payment, and then the product description. If there are no applicable features, show only the product description.

Optional Product Features: Negative Amortization, Interest Only, Step Payment, Balloon Payment, Seasonal Payment. Note: JMAC does not offer any of these product features. Optional Product Descriptions: "Fixed Rate“ or "Adjustable Rate“. • The term "Adjustable Rate" is used if the amounts of future adjustments are not known at

the time of closing.


Rate Lock • If “Yes”: show the expiration date with time (and time zone).

• If “No”: Include "Before closing, your interest rate, points and lender credits can change unless you lock the interest rate. All other estimated closing costs expire on 00/00/0000 at 00:00 p.m. (time zone)".


Loan Terms Section

• Rule includes specific requirements related to rounding and how to show an increasing principal balance.

• Loan Amount: disclosed in whole dollars. • Initial Interest Rate: if rate has no decimal then disclosed without (ex. 4%)

• If rate has decimal then disclosed with 3 decimal points. (ex. 3.375% • Monthly Principal & Interest: includes dollars and cents. If applicable must include

description of any future adjustments. • Pre-Payment Penalty: JMAC does not have any programs with pre-payment penalties. • Balloon Payment: JMAC does not currently offer any balloon payment products.


Projected Payments

• Principal & Interest: includes decimal. • Mortgage Insurance: rounded and separate column will show year in which it will

terminate. If loan does not have Mortgage Insurance then indicated with “—”. Estimated Escrow: rounded with additional information shown below.

• Estimated Total Monthly Payment: total of above calculations and rounded.• Estimated Taxes, Insurance & Assessments: total is rounded. Designated as In

Escrow, YES/NO. Includes HOA, Condo Fees, etc.


Projected Payments

Show a breakdown of P&I and MI Include estimated monthly amounts and a total for escrowed items, such as: • Taxes, Assessments • HOA fees, ground rent or leasehold payments • Any insurance required by the lender


Projected Payments

Range of Payments • Up to four columns are available to illustrate payment changes • Minimum and maximum payment amounts should be shown


Projected Payments

PMI TerminationThe PMI automatic drop point must be shown. • The origination system will show PMI termination after all required payment change

information is shown. • Remember: Automatic drop is always based on scheduled amortization and does not

apply when the borrower has paid down the Unpaid Principal Balance.


Projected Payments

Escrow Account

• The total of these amounts MUST BE disclosed whether or not an escrow account will be established.

• Indicate "YES" or "NO" or "SOME" to indicate if the items will be escrowed.


Costs At Closing

• The totals on page one are calculated based on amounts shown on page two. • Verify the cash to close estimate is as accurate as possible based on information

known at the time.


Loan Estimate - Page Two

The primary sections of page two of the Loan Estimate include:

• Loan Costs Section • Other Costs Section • Calculating Cash to Close Section

• UNIFORM, ALPHABETICAL FEE NAMING (NEW) • FEE LINES ARE NOT NUMBERED (NEW) • NUMBER OF LINES ALLOWED ARE DEFINED (NEW) • DOLLAR AMOUNTS ARE ROUNDED (NEW) • LENDER PAID COMP. NOT DISCLOSED (NEW)


Loan Costs Sections

A. Origination Charges • Max 13 items permitted • Points (QM process for exclusion of bona fide

points remains) • Application, Origination, etc. • Lender Paid Compensation is NOT disclosed • Zero Tolerance

B. Services You Cannot Shop For • Max 13 items permitted • Appraisal Fee, Credit Report, Flood

Determination, Upfront MI • Zero Tolerance

C. Services You Can Shop For • Max 14 items permitted • Pest Inspection, Survey, Title Fees (must start

with “Title – “) • 10% Tolerance unless paid to Creditor or

Affiliate of Creditor


Other Costs Sections E. Taxes and Other Government Fees • Max 2 items permitted • Items predefined • Fees left blank may not use N/A • Recording Fees = 10% Tolerance • Transfer Taxes = Zero Tolerance

F. Prepaids • First 4 items predefined • Max 7 items permitted • Fees left blank may not use N/A

G. Initial Escrow Payment at Closing • First 3 items predefined • Max 8 items permitted • Fees left blank may not use N/A

H. Other • Max 5 items permitted • Owner’s Title (“Title – “) • Home Warranty • Borrower paid real estate commission (if agreed

to in sales contract)


Other Costs Sections

Transfer Tax – Zero Tolerance

The CFPB gave these examples to illustrate when the transfer tax should be shown on the Loan Estimate:

• If a State law indicates a lien can attach to the consumer's acquired property if the charge is not paid, the amount should be included on the Loan Estimate.

• If State of local law is unclear or does not specifically attribute the amount to the borrower or the seller, common practice in the area will apply. The transfer tax should not be shown if typically paid by the seller.


Other Costs Sections

J. TOTAL CLOSING COSTS • Total Loan Costs + Other Costs (D + I) • Lender Credits = sum of lender credits disclosed

as a negative number.

Calculating Cash to Close Section

Purchase: Refinance


Lender and Broker Information • NMLS Identifier(s) • Phone and E-Mail

Comparisons • Total paid in P&I, MI, Loan Costs in 5 yrs. (NEW) • APR (moved to last page) • Total Interest Percentage (TIP) (NEW)

Additional Disclosures • Appraisal (NEW) Replaces ECOA disclosure • Assumption (from TIL) • Homeowner’s Insurance (from TIL) • Late Payment (from TIL) • Refinance (from TIL w/revised verbiage) • Servicing (NEW) Replaces servicing disclosure

Confirm Receipt • Similar disclosure from TIL • Signature does not indicate Intent to Proceed.


Comparisons Section

The Comparisons section discloses information designed to help the borrower shop and make comparisons between lenders.


Annual Percentage Rate (APR) Disclose the APR for the loan and include the statement, "Your costs over the loan term expressed as a rate. This is not your interest rate."

Total Interest Percentage (TIP) Disclose the total amount of interest (TIP) that the borrower will pay over the loan term, as a percentage of the loan amount. TIP calculation example:

Loan amount = $100,000 Interest paid over loan term = $50,000 TIP = 50%


Other Considerations Sections

• The appraisal and servicing transfer disclosure are included on the Loan Estimate. • Review all disclosure notices with the borrower


Confirming Receipt Sections

The signature line is optional. If a signature line is used, it must include the signatures of all applicants and co-applicants

Disclaimer

The information in this presentation is not intended to be legal or business advice. In no event shall JMAC Lending, Inc. be liable to any person or business entity for any special, direct, indirect, incidental, punitive, or consequential damages as a result of any information gathered from this presentation.

tila-respa integrated disclosures (trid) completing the loan estimate september 10, 2015 choose one...

Documents

specific business days

general business days

rulesthe loan estimate

loan estimateseptember

business functions

consumers application

consumers name1

consumers name2