TILA-RESPAINTEGRATEDMORTGAGE DISCLOSURES

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History Timing

Variations/Tolerances

5 Things to Know as a Real Estate Professional

Purpose

Coverage

Changes Definition of an Application Loan Estimate Closing Disclosure

Explaining the New Rule

CFPB & Dodd Frank

The TILA-RESPA Integrated Disclosure (TRID) rule is part of the Dodd Frank Reform & Consumer Protection Act. • The result of this legislation clarifies the industry’s definition of an application, overhauls closing documents, and institutes timelines for real estate settlement procedures.

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Understanding

Timeliness

EducatedDecisions

Clarifying disclosures for those who don’t work within the mortgage industry. (Making disclosures easily understood by using common diction).

Providing customers with enough time to thoroughly review documents.

Ease of understanding and time will enable customers to make responsible decisions.

The Purpose of TRID• To help customers understand mortgage transactions through the use of clear language in disclosures and simplifying the technical nature of the disclosure documents.

• To ensure that customers receive adequate time to make informed and responsible decisions regarding their home loan.

CoverageLoan Types Affected: Does NOT Apply To:

• Closed-end consumer mortgages secured by real property, including:

• 25-Acre Loans

• 1-4 Family Residential Properties

• Vacant Land Loans

• HELOCs

• Federally related mortgage loans extended by a person, not a creditor (Reg Z)

• Chattel-Dwelling Loans

• Reverse Mortgages

CoverageCreditors originating reverse mortgages, HELOCs, chattel-dwelling loans or other transactions not covered by the TILA-RESPA Integrated Mortgage Disclosure rule must continue to use, as applicable, the GFE, HUD-1, and Truth in Lending disclosures required under current law. In these specific circumstances, timing requirements also do not change from the current law requirements.

What TRID Changes1. Provides a Clear Definition of the Term “Application”2. Creation of a Loan Estimate Form3. Creation of a Closing Disclosure Form4. Modifies Timing Requirements5. New Variations

What Constitutes a Completed Application?

Current Definition6 elements define a mortgage application, plus a seventh “catch all”

1. Consumer Name 2. Income 3. Social Security Number 4. Property Address 5. Estimated Value 6. Loan Amount Requested 7. Any other information deemed necessary by the loan originator

• Disclosures must be issued within 3 business days of a completed app.

New DefinitionThe new rule eliminates the “catch all”

1. Consumer Name 2. Income 3. Social Security Number 4. Property Address 5. Estimated Value 6. Loan Amount Requested 7. Any other information deemed necessary by the loan originator

• The 3 day disclosure requirement does NOT change

The Impact of the New Definition

Current DefinitionDue to the “catch all,” lenders can define when the application is completed, therefore controlling when disclosures are issued.

When the 6 items are received, it’s an official completed application and requires the necessary (and new) loan

estimate disclosure within 3 business days.

New DefinitionThe new structure will still allow for lenders to request additional information, but the lender is prohibited from holding up on providing a loan estimate if the customer does not submit the additional information.

Supreme Lending always operated under the 6 item rule -so this has no impact on our business process.

The Loan Estimate

GFE Initial TIL

Loan Estimate (LE)

The Loan EstimateCurrently, borrowers receive two separate forms from their lender at the beginning of the process: a Good Faith Estimate (GFE) and an initial Truth in Lending disclosure (TIL). Beginning October 3rd, these two documents will be consolidated into one, new three page loan estimate document. The new Loan Estimate (LE) still needs to be provided to borrowers on the same timeline as the GFE (three business days).

A Look at the New Loan Estimate

Loan Terms

Projected Payments

Costs at Closing

A Look at the New Loan Estimate

Costs at Closing Detailed Break-Out

New Loan Estimate (cont.)

Total Interest Percentage: the total interest paid over the term of the loan as a % of the loan amount.

New Loan Estimate (cont.)• As with the 2010 rule, interest rate dependent and non-interest rate dependent terms are separate and not related.

• Non-interest rate costs must be offered until accepted but expire in “10” business days (general definition) after originally provided if consumer does not indicate an intent to proceed within that time frame.

• Re-disclosure required if interest rate dependent terms change.

• Estimated Cost to close will require knowing the tax information for the property-best information reasonably available.

Closing Disclosure

HUD-1 Final TIL

Closing Disclosure (CD)

A Look at the New Closing Disclosure: Page 1

A Look at the New Closing Disclosure: Page 2

Everything is itemized - but line numbers have been removed. All fees & charges are placed in one of 7 areas (labeled A-H, excluding D).

A Look at the New Closing Disclosure: Page 3

Pg. 3: Cash to Close:A Payoffs & Payments table is used for the “Summaries of Transaction” section.

A Look at the New Closing Disclosure: Page 4

“Closing Costs Financed” disclosure is NEW.

A Look at the New Closing Disclosure: Page 5

NEW Dodd Frank Disclosures (negative amortization and escrow account disclosure).

A Look at the New Closing Disclosure: Page 6“Liability After Foreclosure” requires creditor to select one of two options for borrower liability for deficiency.

Real Estate Broker information (license and contact information) is now required in the CD as well as Settlement Agent information.

A Look at the New Closing Disclosure

• If there is more than one consumer in the transaction, the first consumer signs as the applicant and each additional consumer signs as a “co-applicant.”

• Must use the same fee name as used in the loan estimate.

• With refinances, the Closing Disclosure must be delivered to both obligators.

• On purchase transactions, the Closing Disclosure must be delivered to one obligator.

TimingDefining “Business Day”

General Business Day: A day on which the creditor’s offices are open to the public for carrying on most all of its business functions. (For most intents & purposes: M-F)

Specific Business Day: All calendar days except Sundays and legal public holidays. *If the post office is open, it counts as a “specific business day” when mailing the docs.

Email is considered mailing (therefore, apply specific business day definition), unless there is proof of receipt.

Supreme’s e-disclosure method cuts this timing by delivering and retaining proof of receipts.

TimingLoan Estimate Timing • Initial Loan Estimates: - Lenders have 3 business days for delivery of the LE from date of app (apply general definition if in person, and specific definition if mailed.) - Must wait 7 specific business days before closing. • Revised Loan Estimate: - Must be received by the consumer no later than 4 specific business days prior to consummation.

Closing Disclosure Timing • Must be received by the borrower 3 specific business days prior to consummation (apply mailbox rule where necessary).

Providing the Closing Disclosure • Creditor is accountable for the on time delivery of an accurate Closing Disclosure to the consumer. • Creditor and Settlement Agent may agree to share responsibilities in completing and delivering the Closing Disclosure. • Settlement Agent is responsible for delivering the CD to the seller.

Example Closing CalendarSunday Monday Tuesday Wednesday Thursday Friday Saturday

CD put in Mail 1 2CD Received by Consumer: 3 Day

Wait Period1 2

CD Hand Delivered: 3 Day

Wait Begins1 2 Earliest Closing Date

Waiting continued (Sunday doesn’t count)

Earliest Closing Date

CD Timeline Delivered through Mail is Shown in Yellow

CD Timeline Delivered by Hand is Indicated in Green

Supreme Lending will be handling the completion and delivery of the CD to the consumer.

New Variations for the Loan EstimateZERO Tolerance

• These fees may NOT increase: - Fees paid to the creditor • Origination Charges • Mortgage Brokers • Affiliates of the Creditor or Broker • Unaffiliated 3rd party if the creditor did not allow the consumer to shop for the service provider (credit reports, appraisals) • Transfer Taxes

• Lender Credits Cannot Decrease

Under the current rule, these items fall under the 10% aggregate tolerance levels.

New Tolerances for the Loan Estimate10% Aggregate Variance

• These fees and charges may exceed the amounts initially disclosed on the LE by an aggregate of 10%:

- Fees paid to an unaffiliated 3rd party if the creditor permits the consumer to shop for the service, and the consumer selects a provider from the list provided by the creditor. • Creditor must disclose on the list that the consumer may select a provider not included on the list.

- Recording Fees

Permitted Variations

• Fees and charges that can exceed the initial amounts disclosed on the Loan Estimate (if they were consistent with the best and most reasonable information available at the time of the disclosure):

- Prepaid interest

- Property insurance premium

- Amounts placed into an escrow account

- Charges paid to 3rd party providers not included on the creditor’s provided list

- Charges paid for 3rd party services not required by the creditor (these charges may be paid to affiliates of the creditor)

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5 Things to Know as a Real Estate Professional

Effective Date October 3, 2015 • Applications taken on or after October 3rd will be subject to the new TRID requirements.

The Timing of Closings are Impacted • Remember the 3 business day rule!

Line Number Changes & License / Contact Information • The HUD-1 numbering is gone. Fees & Charges are now in one of seven segmented areas (as mentioned previously): - Origination Charges - Services Borrowers Did Not Shop For - Taxes and other Government Fees - Pre-paids - Initial Escrow Payment at Closing - Other

*Remember to provide to the lender your license & contact information for the Closing Disclosure

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5 Things to Know as a Real Estate Professional

Line Number Changes & License / Contact Information • The HUD-1 numbering is gone. Fees & Charges are now in one of seven segmented areas (as mentioned previously): - Origination Charges - Services Borrowers Did Not Shop For - Taxes and other Government Fees - Pre-paids - Initial Escrow Payment at Closing - Other

Likelihood of Multiple Disclosures • Your borrowers will likely receive: - A CD several days before closing. - Possibly a CD a few days before a walk through of the property. - A new updated CD at the closing reflecting any changes that occurred between the initial disclosure and closing. - And then, if any changes occurred to financial disclosure numbers, the amount(s) must be re-disclosed, even post-closing.

How to Explain the Differences • How is the new Loan Estimate different from the Closing Disclosure?

• How does it help the consumer?

5 Things Consumers Should Know

These changes were instituted to help give consumers more time to understand the commitments being made in obtaining a mortgage.

The features of the form are meant to bring to attention certain warnings and/or highlight specific information that will be most important to consumers (such as total closing costs or pre-payment penalties).

Taxes and insurance costs will be more defined - helping customers understand the full scope of their financial commitment.

The rule makes cost estimates more reliable for consumers - making sure there are no surprise fees during the process.

The new disclosures clarify language to help the consumers understand the loan obligations without being industry experts.

TILA-RESPA Integrated Disclosure Glossary

TRID: TILA-RESPA Integrated Disclosure

CFPB: Consumer Financial Protection Bureau

Business Days

• General Business Day: Creditor’s offices are open to the public for carrying on substantially of all its business functions (for Supreme Lending, this is Monday through Friday with the exception of legal public holidays).

• Specific Business Day: All calendar days except Sundays and legal public holidays.

Mailbox Rule: If a disclosure is mailed (USPS) it is deemed received by the consumer on the 3rd business day. The same applies if the disclosure was e-mailed (unless the lender has proof of receipt).

Loan Estimate: The Loan Estimate (LE) form combines information from the Good Faith Estimate (GFE) and the Truth in Lending (TIL) forms. The LE is three (3) pages.

Closing Disclosure: The Closing Disclosure (CD) merges and replaces the final Truth in Lending (TIL) statement and the HUD-1 settlement statement. The CD is five (5) pages.

TILA-RESPA Integrated Disclosure Glossary

Total Interest Percentage: The Total Interest Percentage (TIP) is the total amount of interest that the applicant(s) will pay over the life of the loan, reflected as a percentage of the loan amount.

Cost Estimate: Written estimate (“Worksheet”) of fees during the pre-qualification period.

• The “Worksheet” cannot look like or resemble the Loan Estimate.

Zero Tolerance Fee: Lenders are not permitted to charge applicant(s) more than the amount disclosed unless there is a RESPA defined changed circumstance that permits a revised Loan Estimate.

Intent to Proceed: The applicant(s) acknowledge their intent to proceed with the mortgage application.

• Can only occur after receipt of the LE.

• The “intent to proceed” must be documented.

Consummation: The day in which the applicant(s) becomes contractually obligated to the creditor.

Contact Supreme Lending

www.SupremeLending.com877.350.5225

EVERETT FINANCIAL, INC. D/B/A SUPREME LENDING (NMLS ID #2129) at 14801 Quorum Dr., #300, Dallas, TX 75254. 877-350-5225. Copyright © 2015. All rights reserved. This is not an offer to enter into an agree-ment. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states. Other restrictions and limitations may apply. Supreme Lending is not affiliated with any government agency. Supreme Lending is required to disclose the following license information: Arizona Mortgage Bankers License #BK 0925918, Arizona Principal Office: 25030 S 190th Street, Queen Creek, AZ 85142; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act-License 4130655; Colorado Mortgage Company Registration - Regulated by the Division of Real Estate; Georgia Mortgage Lender License 22114 – Georgia Residential Mortgage Licensee; Illinois Residential Mortgage License - Other Trade Name #1 MB.6760323 – Illinois Residential Mortgage Licensee; Kansas Licensed Mortgage Company, License # MC.0001578; Mississippi Mortgage Lender License 2129 – Licensed by the Mississippi Department of Banking and Consumer Finance; NV Division of Mortgage Lending Mortgage Banker #4062; New Hampshire Mortgage Banker License 18191-MB – Licensed by the New Hampshire Banking Department; Licensed by the N.J. Department of Banking and Insurance – Residential Mortgage Lender License; Oregon Mortgage Lending License ML-4265; Pennsylvania – Licensed Mortgage Banker by the PA Department of Banking # 45048; Rhode Island Licensed Lender 20152998LL; Texas-SML Mortgage Banker Registration – Residential Mortgage Loan Originator. The corporate office is licensed and examined by the Office of the Consumer Credit Commissioner of the State of Texas, Regulated Lender License #43044; VA: NMLS ID# 2129 (www.nmlsconsumeraccess.org); Washington Consumer Loan Company License CL-2129. For all other licenses, visit http://www.nmlsconsumeraccess.org/.

We are committed to providing exceptional service throughout these changes.