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TRID – LE Timing & Restrictions Boot Camp 360 Series Presented by Kimberly Lundquist

TRID – Loan Estimate Timing & Restrictions - “Boot Camp 360” - Copyright © 2019 FIC Conferences, Inc. 2

TILA-RESPA Integrated Disclosures (Effective for Applications taken on or after October 3, 2015)

The TILA-RESPA rule for integrated disclosure applies to most closed-end consumer credit transactions secured by real property. Credit that is extended to certain trusts for tax or estate planning purposes is covered by this rule and certain types of loans that are currently subject to TILA but not RESPA are subject to the TILA-RESPA rule for integrated disclosures, including: 1. Construction Only Loans 2. Loans Secured by Vacant Land (Lot Loans) 3. Loans Secured by 25 or more Acres The TILA-RESPA rule includes some new restrictions on certain activity prior to a consumer’s receipt of the Loan Estimate. These restrictions take effect on the calendar date of October 3, 2015, regardless of whether an application has been received on that date. For transactions where the application is received prior to October 3, 2015, creditors will still need to follow the current disclosure requirements under Regulations X and Z, and use the existing forms (Truth-in-Lending disclosures, GFE, HUD-1). Some specific categories of loans are excluded from the integrated disclosure rule. Specifically, the rule does not apply to: 1. Home Equity Lines of Credit (HELOCs) 2. Reverse Mortgages 3. Mortgages secured by a Mobile Home or by a dwelling that is not attached to real property (i.e., land) 4. Partial exemption for certain transactions associated with housing assistance loan programs for low and moderate income consumers. Creditors originating these types of mortgages must continue to use, as applicable, the GFE, HUD-1 and Truth-in-Lending disclosures required under current law. A creditor cannot use the new Integrated Disclosure forms instead of the GFE, HUD-1 and Truth-in-Lending forms for transactions that are covered by TILA or RESPA that require those disclosures (e.g., reverse mortgages). However, creditors are not prohibited from using the Integrated Disclosure forms on loans that are not covered by TILA or RESPA (e.g., mortgages associated with housing assistance loan programs for low and moderate income consumers). For the transactions associated with housing assistance loan programs for low and moderate income consumers, creditors are exempt from these requirements: 1. Providing the RESPA Settlement Cost Booklet, RESPA GFE, RESPA Settlement Statement, and Application Servicing Disclosure Statement requirements. 2. Providing the Loan Estimate, Closing Disclosure and Special Information Booklet.


Cooperatives The 2017 Rule creates a uniform rule that covers and requires the TILA-RESPA Disclosures for closed-end consumer credit transactions (other than reverse mortgages) secured by a cooperative unit, regardless of whether state law classifies cooperative units as real property. Trusts The 2017 Rule explains that a trust and its trustee are considered to be the same person for purposes of Regulation Z. Where credit is extended to trusts established for tax or estate planning purposes, the Loan Estimate and Closing Disclosure may be provided to the trustee on behalf of the trust. However, in rescindable transactions the Closing Disclosure must be given separately to each consumer who has the right to rescind. The 2017 Rule also explains that, on the Loan Estimate, a creditor must disclose the name and mailing address of each consumer to whom the Loan Estimate will be delivered. If the Loan Estimate is delivered to the trustee on behalf of the trust (and to no other consumer), a creditor may opt to disclose the name and mailing address of the trust only, although nothing prohibits the creditor from additionally disclosing the names of the trustee or of other consumers applying for the credit. Further, on both the Loan Estimate and the Closing Disclosure, a creditor may include a signature line and insert the trustee’s name below, along with a designation that the trustee is serving in its capacity as a trustee. Housing Assistance Loans Regulation Z provides an exemption from TRID disclosure requirements for certain low-cost, non-interest bearing, subordinate lien, housing assistance loans that satisfy six criteria. The 2017 Rule revises two of the six criteria regarding the costs that may be payable by the consumer without loss of eligibility for the partial exemption:

• Transfer taxes, in addition to recording, application, and housing counseling fees, may be payable by the consumer at consummation without losing eligibility for the partial exemption; and

• Recording fees and transfer taxes are excluded from the 1% cap on total costs payable by the consumer at consummation.

Additionally, the 2017 Rule revises the disclosures that must be provided to meet a condition for the partial exemption. The creditor may provide a Loan Estimate and Closing Disclosure as an alternative to providing a disclosure of the cost of credit under 12 CFR 1026.18. Disclosures must comply with all Regulation Z requirements pertaining to those disclosures. The 2017 Rule explains that, assuming the other criteria for the partial exemption are satisfied, a creditor may provide either a compliant disclosure of the cost of credit under 12 CFR 1026.18 or a compliant Loan Estimate and Closing Disclosure, and does not need to provide the Special Information Booklet or certain RESPA disclosures, including the Good Faith Estimate and HUD-1 Settlement Statement, as applicable.


Loan Estimate – Model H-24 For any loans subject to Section 1026.19(e) that are federally related mortgage loans subject to RESPA (which will include most mortgages), form H-24 is a standard form, meaning creditors must use form H-24. For other loans subject to the TILA-RESPA rule that are not federally related mortgage loans, form H-24 is a model form, meaning creditors are not strictly required to use form H-24, but the disclosures must contain the exact same information and be made with headings, content, and format substantially similar to form H-24. The disclosures may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act. The creditor is required to provide the consumer with good faith estimates of credit costs and transaction terms on the Loan Estimate which integrates and replaces the existing RESPA GFE and the Initial TIL Disclosures for covered transactions. The Loan Estimate must be delivered by hand or placed in the mail no later than the third business day after receiving the consumer’s loan application. If a mortgage broker receives a consumer’s application, either the creditor or the mortgage broker may provide the Loan Estimate. The lender (or the mortgage broker) must provide the Loan Estimate to the loan applicant by hand delivery, by placing it in the mail, or if the applicant agrees, by fax, email, or other electronic means. The lender is responsible for ensuring that the requirements for the Loan Estimate have been met regardless of whether the lender or the mortgage broker provides the Loan Estimate. The Loan Estimate must also be delivered or placed in the mail no later than the seventh business day before consummation of the transaction. The seven-business day waiting period begins when the creditor delivers the disclosures or places them in the mail, not when the consumer receives or is considered to have received the disclosures. Consummation may not occur until on or after the 7th business day following the Loan Estimate being delivered or placed in the mail. Application An application can either be in writing or electronically submitted, including a written record of an oral application. An application is deemed received when the consumer provides the following information: 1. Consumer’s Name 2. Consumer’s Income 3. Consumer’s Social Security number to obtain a Credit Report 4. Address of the Property 5. Estimate of the Value of the Property, and 6. Mortgage Loan Amount Sought Business Day for Delivery of Loan Estimate within 3 Business Days For the purpose of delivering or placing in the mail, the Loan Estimate or any revised Loan Estimate, “Business Day” means a day in which the creditor’s offices are open to the public for carrying on substantially all of its business functions.


Business Day for Delivery of Loan Estimate within 7 Business Days For all other purposes, including the purpose of delivery 7 business days before consummation “Business Day” means all calendar days except Sundays and legal public holidays specified in 5USC 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. If the Loan Estimate is not provided to the consumer in person, the consumer is considered to have received the Loan Estimate three business days after it is delivered or placed in the mail, not including Sundays and legal public holidays specified in 5USC 6103(a). “Business Day” means all calendar days except Sundays and legal public holidays specified in 5USC 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. Consumer’s Waiver of Waiting Period If the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency, the consumer may waive the seven business day waiting period for early disclosures, after receiving the Loan Estimate. To modify or waive the waiting period, the consumer shall give the creditor a dated written statement that describes the emergency that necessitates consummating the credit transaction before the end of the waiting period, specifically modifies or waives the waiting period, and bears the signature of all the consumers who are primarily liable on the legal obligation. Printed forms for this purpose are prohibited. Application Denied/Withdrawn within 3 Business Days If the creditor determines within the 3 business day period that the consumer’s application will not or cannot be approved on the terms requested by the consumer, such as when a consumer’s credit score is lower than the minimum score required for the terms the consumer applied for, or the consumer applies for a type or amount of credit that the creditor does not offer. In that case, or if the consumer withdraws the application within the 3-day period, the creditor is relinquished of the requirement to provide the Loan Estimate. The creditor should make certain that the Notice of Action Taken has been provided to the consumer within this 3 business days when relinquished of the Loan Estimate requirement. Amending an Application If the consumer amends an application and the creditor determines the amended application may proceed, then the creditor is required to comply with the Loan Estimate requirements, including delivering or mailing the Loan Estimate within 3 business days of receiving the amended or resubmitted application. The Loan Estimate must contain a good faith estimate of credit costs and transaction terms. If any information necessary for an accurate disclosure is unknown, the creditor must make the disclosure based on the best information reasonably available at the time the disclosure is provided to the consumer, and use due diligence in obtaining the information. Model Form – H-26 The Bureau has provided a model of the required statement in form H-26 of appendix H to Regulation Z. The TILA-RESPA rule does not prohibit a creditor or other person from providing a consumer with estimated terms or costs prior to the consumer receiving the Loan Estimate. However, if a person (such as a lender or mortgage broker) provides a consumer with a written estimate of terms or costs specific to that consumer before the consumer receives the Loan Estimate, it must clearly and


conspicuously state at the top of the front of the first page of the written estimate “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing the loan.” There are other restrictions on the form of this statement to assure it is not confused with the Loan Estimate:

• Must be in font size no smaller than 12-point font. • May not have headings, content, and format substantially similar to the Loan Estimate or the

Closing Disclosure. Restrictions on the Imposition of Fees Creditors are restricted from imposing fees on a consumer before the consumer has received the Loan Estimate and indicated an intention to proceed with the transaction. A consumer may indicate an intent to proceed, in any manner the consumer chooses, unless a particular manner of communications is required by the creditor. This may include oral communication in person immediately upon delivery of the Loan Estimate; oral communication over the phone, written communication via email, or signing a preprinted form after receipt of the Loan Estimate. The consumers silence is not indicative of intent to proceed. Creditors must document this communication and satisfy the record retention requirements. The lender (or the mortgage broker) is not permitted to charge, as a condition of providing the Loan Estimate, any fee for an appraisal, inspection or other settlement service. The lender (or the mortgage broker) may, at its option, charge a reasonable fee limited to the cost of a credit report. The lender (or the mortgage broker) may not charge additional fees until after the applicant is considered to have received the Loan Estimate and has indicated an intent to proceed with the loan covered by the Loan Estimate. In addition, if a third-party submits a consumer’s application to a creditor following a different creditor’s denial of the consumer’s application (or following a consumer’s withdrawal of that application), and if a fee already has been assessed for obtaining the credit report, the new creditor or third-party does not impose any additional fee until the consumer receives the Loan Estimate from the new creditor and indicates an intent to proceed with the transaction described by those disclosures. If the Loan Estimate is not provided to the applicant in person, the applicant is considered to have received the Loan Estimate three business days after it is delivered or placed in the mail, not including Sundays and legal public holidays specified in 5USC 6103(a). “Business Day” means all calendar days except Sundays and legal public holidays specified in 5USC 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. A fee is imposed by a person if the person requires the consumer to provide a method for payment, even if the payment is not made at that time. This would include, for example:

• A creditor or mortgage broker requiring the consumer to provide a check to pay for a processing fee before the consumer receives the Loan Estimate, even if the check is not to be cashed until after the Loan Estimate is received and the consumer has indicated an intent to proceed.

• A creditor or mortgage broker requiring the consumer to provide a credit card number for a processing fee before the consumer receives the Loan Estimate, even if the credit card will not be charged until after the Loan Estimate is received and the consumer has indicated an intent to proceed.


Restrictions on Submission of Supplemental Documentation A loan originator is prohibited from requiring an applicant, as a condition of providing the Loan Estimate, to submit supplemental documentation to verify the information provided by the applicant on the application. Borrowers may not be required to sign consents to verify employment, income or deposits prior to issuing the Loan Estimate as such requirement may inhibit borrowers from shopping for the best loan by leading borrowers to believe that they are committed to obtaining a loan from that loan originator. For example:

• A creditor may ask for the sale price and address of the property, but may not require the consumer to provide a purchase and sale agreement to support the information the consumer provides orally before the creditor provides the Loan Estimate.

• A mortgage broker may ask for the names, account numbers, and balances of the consumer’s checking and savings accounts, but the mortgage broker may not require the consumer to provide bank statements or similar documentation to support the information orally provided by the consumer before the creditor provides the Loan Estimate.

Loan Estimate Made in Good Faith Creditors may estimate disclosures using the best information reasonably available when the actual term or cost is not reasonably available to the creditor at the time the Loan Estimate disclosure is made. However, creditors must act in good faith and use due diligence in obtaining the information. The creditor normally may rely on the representations of other parties in obtaining the information, including, for example, the settlement agent. The creditor is required to provide corrected disclosures containing the actual terms of the transaction at or before consummation. Whether or not a Loan Estimate was made in good faith is determined by calculating the difference between the estimated charges originally provided in the Loan Estimate and the actual charges paid by or imposed on the consumer in the closing disclosure. The loan originator is bound, within the tolerances, to the settlement charges and terms listed on the Loan Estimate provided to the borrower, unless a new Loan Estimate is provided prior to consummation consistent with an allowable “changed circumstance.” Revised or Corrected Loan Estimates The 2017 TILA-RESPA Rule allows Creditors to use revised or corrected Loan Estimates for informational purposes, as well as to reset tolerances when specific requirements are met. Charges that are not required by the Creditor should be estimated based on the best information reasonably available, i.e., property taxes, property insurance premiums (including homeowner’s insurance), amounts placed in escrow, impound or reserve accounts, prepaid interest and third party services which are not required by the Creditor. Creditors are permitted to issue revised Loan Estimates in the case of the following allowable “Changed Circumstances”: A. When there are “Changed Circumstances” Affecting Settlement Charges A creditor may provide and use a Revised Loan Estimate re-disclosing settlement charges if “changed circumstances” cause the estimated charge to increase or, in the case of charges subject to the 10% cumulative or aggregate tolerance, cause the sum of those charges to increase by more than the 10% tolerance. If “changed circumstances” cause the estimated charge(s) subject to the 10% cumulative or aggregate tolerance to increase by less than the 10% tolerance, revised disclosures are not prohibited,


but the creditor would not be able to use this revised disclosure for comparison purposes since the changed circumstance did not cause the sum of all costs subject to the 10% tolerance category to increase by more than 10%. Remember, providing a revised Loan Estimate allows creditors to compare the updated figures for charges that have increased due to an event that allows for re-disclosure to the amount actually charged for those services. If amounts decrease or increase only to an extent that does not exceed the applicable tolerance, the original Loan Estimate is still deemed to be in good faith. “Changed Circumstances” for the purposes of a revised Loan Estimate means: An extraordinary event beyond the control of any interested party or other unexpected event

specific to the consumer or transaction; Information specific to the consumer or transaction that the creditor relied upon when providing

the Loan Estimate that was inaccurate or changed after the disclosures were provided; or New information specific to the consumer or transaction that the creditor did not rely on when

providing the Loan Estimate. Examples of “changed circumstances” affecting settlement costs include:

• A natural disaster, such as a hurricane or earthquake, causing damages to the property or otherwise results in additional closing costs;

• The creditor provided an estimate of title insurance on the Loan Estimate, but the title insurer goes out of business during underwriting;

• New information not relied upon when providing the Loan Estimate is discovered, such as a neighbor of the seller filing a claim contesting the boundary of the property to be sold.

B. When there are “Changed Circumstances” Affecting Eligibility A creditor also may provide and use a revised Loan Estimate if a changed circumstance affected the consumer’s creditworthiness or the value of the security for the loan, and resulted in the consumer being ineligible for an estimated loan term previously disclosed. This may occur when a changed circumstance causes a change in the consumer’s eligibility for specific loan terms disclosed on the Loan Estimate, which in turn results in increased cost for a settlement service beyond the applicable tolerance threshold. For example:

• The creditor relied on the consumer’s representation to the creditor of a $90,000 annual income, but underwriting determines that the consumer’s annual income is only $80,000.

• There are two co-applicants applying for a mortgage loan and the creditor relied on a combined income when providing the Loan Estimate, but one applicant subsequently becomes unemployed.

C. When Revisions are Requested by the Consumer A creditor may use a revised estimate of a charge if the consumer requests revisions to the credit terms or settlement that affect items disclosed on the Loan Estimate and cause an estimated charge to increase above the estimated fee. For example, assume that the consumer decides to grant a power of attorney authorizing a family member to consummate the transactions on the consumer’s behalf after the Loan Estimate has been provided.


If the creditor provides revised disclosures reflecting the fee to record the power of attorney, then the actual charges will be compared to the revised charges to determine if the fees have increased. D. When there are Interest Rate Dependent Charges If the interest rate for the loan was not locked when the Loan Estimate was provided and, upon being locked at some later time, points or lender credits for the mortgage loan change, the creditor is required to provide a revised Loan Estimate no later than 3 business days after the rate is locked, and may use the revised Loan Estimate to compare to points and lender credits charged. For the purpose of delivery of the revised Loan Estimate no later than 3 business days after the rate is locked “Business Day” means a day in which the creditor’s offices are open to the public for carrying on substantially all of its business functions. If the rate is locked or other allowable revisions occur after the Closing Disclosure has been provided, a revised or corrected Closing Disclosure must be provided at or before consummation to reflect the changes. If the changes trigger a new three day waiting period, the Creditor must deliver the corrected CD at least three business days prior to consummation. E. When the 10 Business Days Expires If the consumer indicates an intent to proceed with the transaction more than 10 business days after the Loan Estimate was delivered or placed in the mail to the consumer, a creditor may use a revised Loan Estimate. No justification is required for the change to the original estimate of a charge other than the lapse of 10 business days. Creditors should count the number of business days from the date the Loan Estimate was delivered or placed in the mail to the consumer, and use the definition of business day that applies for purposes of providing the Loan Estimate. “Business Day” means a day in which the creditor’s offices are open to the public for carrying on substantially all of it’s business functions. Voluntarily extending the expiration date of a Loan Estimate, either orally or in writing, allows the consumer a longer period to indicate an intent to proceed. If the consumer indicates an intent to proceed within the extended period, the creditor must use the charges disclosed in the Loan Estimate when determining good faith and tolerances, unless Regulation Z otherwise allows the creditor to reset tolerances. If a revised Loan Estimate is issued after the consumer indicates an intent to proceed, the expiration date and time for the disclosed costs are left blank on the revised Loan Estimate. F. When the Settlement Date is Delayed on a Construction Loan Creditors may also use a revised Loan Estimate where the transaction involves financing of new construction and the creditor reasonably expects that settlement will occur more than 60 calendar days after the original Loan Estimate has been provided. Creditors may use a revised Loan Estimate in this circumstance only when the original Loan Estimate clearly and conspicuously state that at any time prior to 60 days before consummation the creditor may issue revised disclosures. If no such statement is provided, the creditor may not issue revised disclosures for this reason. A new construction loan is a loan for the purchase of a home that is not yet constructed or the purchase of a new home where construction is currently underway, not a loan for financing home improvement, remodeling, or adding to an existing structure. Nor is it a loan on a home for which a use and occupancy permit has been issued prior to the issuance of a Loan Estimate. If a use and occupancy permit has been issued for a home prior to the issuance of the Loan Estimate, then the home is not considered under construction and the transaction would not be a construction loan for purposes of this section.


NOTE: Creditors are not required to collect all six pieces of information constituting the consumer’s application—i.e., the consumer’s name, monthly income, social security number to obtain a credit report, the property address, an estimate of the value of the property, or the mortgage loan amount sought—prior to issuing the Loan Estimate. However, creditors are presumed to have collected this information prior to providing the Loan Estimate and may not later collect it and claim a changed circumstance. For example, if a creditor provides a Loan Estimate prior to receiving the property address from the consumer, the creditor cannot subsequently claim that the receipt of the property address is a changed circumstance. Timing for Revised Loan Estimates The general rule is that the creditor must deliver or place in the mail the revised Loan Estimate to the consumer no later than three business days after receiving the information sufficient to establish that one of the allowable reasons for the revision has occurred. Within 3 business days of receiving information sufficient to establish that an event permitting re-disclosure has occurred, the standard or general definition of business day applies. “Business Day” means a day in which the creditor’s offices are open to the public for carrying on substantially all of it’s business functions. The revised Loan Estimate may not be provided on or after the date the Closing Disclosure is provided. Because the Closing Disclosure must be provided to the consumer no later than three business days before consummation, this means the consumer must receive a revised Loan Estimate no later than four business days prior to consummation. The creditor must ensure that the consumer receives the Loan Estimate no later than four business days prior to consummation. If the creditor is mailing the revised Loan Estimate and relying upon the 3 business day mailbox rule, the creditor would need to place in the mail the Loan Estimate no later than seven business days before consummation of the transaction to allow 3 business days for receipt. “Business day” means all calendar days except Sundays and legal public holidays specified in 5 USC 6103(a) such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. When a revised Loan Estimate is provided in person, it is considered received by the consumer on the day it is provided. If it is mailed or delivered electronically, the consumer is considered to have received it three business days after it is delivered or placed in the mail. However, if the creditor has evidence that the consumer received the revised Loan Estimate earlier than three business days after it is mailed or delivered, it may rely on that evidence and consider it to be received on that date. If there are less than four business days in between the time a the revised Loan Estimate would have been required to be provided to the consumer and consummation, creditors may provide consumers with a Closing Disclosure reflecting any revised charges resulting from the changed circumstance and rely on those figures (rather than the amounts disclosed on the Loan Estimate) for purposes of determining good faith and the applicable tolerance.

• If the changed circumstance or other triggering event occurs between the fourth and third business days from consummation, the creditor may reflect the revised charges on the Closing Disclosure provided to the consumer three business days before consummation.

• If the event occurs after the first Closing Disclosure has been provided to the consumer (i.e., within the three-business-day waiting period before consummation), the creditor may use


revised charges on the Closing Disclosure provided to the consumer at consummation, and compare those amounts to the amounts charged for purposes of determining good faith and tolerance.

Consummation is not the same thing as closing or settlement. Consummation occurs when the consumer becomes contractually obligated to the creditor on the loan, not, for example, when the consumer becomes contractually obligated to a seller on a real estate transaction. The point in time when a consumer becomes contractually obligated to the creditor on the loan depends on applicable State law. Creditors and settlement agents should verify the applicable State laws to determine when consummation can occur, and make sure delivery of the Closing Disclosure occurs at least 3 business days before this event. No Fee May be Imposed for preparation or delivery of the Loan Estimate Shopping for Settlement Service Providers A creditor permits a consumer to shop for a settlement service if the creditor permits the consumer to select the provider of that service, subject to reasonable requirements. The creditor shall identify the settlement services for which the consumer is permitted to shop on the Loan Estimate. If a creditor fails to disclose a specific settlement service on the written list of providers or fails to provide a compliant list, the 10 percent aggregate standard for determining good faith continues to apply to a required third-party, non-affiliate settlement service charge so long as the consumer is permitted to shop. However, good faith for such charge is determined under the zero tolerance standard if the creditor fails to permit the consumer to shop. Fees payable to the Creditor or to an affiliate become zero tolerance. Whether the creditor permits the consumer to shop is determined based on all the relevant facts and circumstances. Remember, if the consumer is permitted to shop and a re-disclosure is issued due to a valid change in circumstance which results in a new fee for a service the consumer is permitted to shop for, the failure to reissue the written list of providers, results in this fee falling in the 10% tolerance category. The best information available standard applies to bona fide charges for third party services if a consumer is permitted to shop for the service, and selects a provider not listed on the written list of settlement service providers provided to the consumer. Fees for optional services or those which are not subject to tolerance remain in the no tolerance category, even if the service provider is the creditor or one of it’s affiliates. So long as the consumer is permitted to shop for settlement services, the creditor provides a compliant “written list of providers” without affiliates listed, if the consumer selects an affiliate service provider, the fee is not subject to tolerance limitations and remains in Section C (i.e., Services You Can Shop For or Services Borrower Did Shop For). Written List of Providers In addition to the Loan Estimate, if the consumer is permitted to shop for a third-party settlement service, the Creditor must provide the consumer with a written list of provider of services for which the consumer can shop. The Creditor must identify each service and a service provider for each service required by the Creditor. The Creditor must provide sufficient information to allow the consumer to contact providers for the settlement services it requires. The identified providers must correspond to the settlement services for which the consume may shop. Although a Creditor is not required to use the


model H-27 for the written list of service providers, the proper use of the model form provides a safe harbor. The written list of providers is separate from the Loan Estimate, but must be provided within the same time frame and the list must:

• Identify at least one available settlement service provider for each service; and • State that the consumer may choose a different provider for that service. • The creditor may also include a statement on the written list that the listing of a settlement

service provider does not constitute an endorsement of that service provider. The itemization of the settlement service providers need not include all settlement services that may be charged to the consumer, but must include at least those settlement services required by the creditor for which the consumer may shop.

For example, if the creditor requires lender’s title insurance and permits the consumer to shop, the creditor must disclose the service (i.e., lender’s title insurance) and the fee for the service on the Loan Estimate, and at least one available provider of the service on the written list of service providers. However, the creditor is not required under the written list of service provider requirements to provide a detailed breakdown of all related fees that are not explicitly required by the creditor but that may be charged to the consumer, such as a notary fee, or other ancillary and administrative services needed to perform or provide the settlement service required by the creditor. If an individual charge that is subject to the 10% cumulative tolerance standard was omitted from the Loan Estimate but charged at consummation, it may still be in good faith if the sum of all charges subject to the 10% cumulative tolerance is in good faith.


Model Form H-27(A) Written List of Providers Borrower Can Shop For The settlement service providers identified on the written list must correspond to the settlement services for which the consumer can shop as disclosed on the Loan Estimate. See form H-27(A) of appendix H to Regulation Z for a model list.

Sample - Model Form H-27(A) Written List of Providers Borrower Can Shop For


Model H-27(C) Written List of Providers with Services the Borrower Can Not Shop For The creditor may also identify on the written list of providers those services for which the consumer is not permitted to shop, as long as those services are clearly and conspicuously distinguished from those services for which the consumer is permitted to shop. See form H-27(C) of appendix H to Regulation Z for a sample of the inclusion of this information.

Sample - Model H-27(C) Written List of Providers with Services the Borrower Can Not Shop For


Tolerances For certain costs or terms, creditors are permitted to charge consumers more than the amount disclosed on the Loan Estimate without any tolerance limitation. These charges are:

• Prepaid Interest • Property Insurance Premiums • Amounts placed into an Escrow, Impound, Reserve or Similar Account • For services required by the Creditor if the Creditor permits the consumer to shop and the

consumer selects a third-party service provider not on the creditor’s written list of providers. • Charges paid to third-party service providers for services not required by the Creditor (may be

paid to Affiliates of the Creditor) However, creditors may only charge consumers more than the amount disclosed when the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the Creditor at the time the disclosure was provided. Charges subject to 10% Cumulative Tolerance The sum of the charges for third-party services and recording fees paid by or imposed on the consumer are grouped together and subject to a 10% cumulative tolerance. This means the creditor may if necessary, charge the consumer more than the amount disclosed on the Loan Estimate for any of these charges so long as the total sum of the charges added together does not exceed the sum of all such charges disclosed on the Loan Estimate by more than 10%. Charges “paid by or imposed on the consumer” refers to the final amount for the charge paid by or imposed on the consumer at consummation or settlement, whichever is later. A fee is not considered “paid to” a person or person if the person does not retain the fee or if the person retains the fee as reimbursement for an amount it has already paid to another party. These charges are:

• Recording Fees • Charges for third-party services where:

The charge is not paid to the creditor or the creditor’s affiliate, and The consumer is permitted by the creditor to shop for the third-party service and the

consumer selects a third-party service provider on the creditor’s written list of services providers.

When the creditor allows the consumer to shop for a third-party service and the consumer chooses a service provider not identified on the creditors list, the charge is not subject to a tolerance limitation. When this occurs for a service that otherwise would be included in the 10% cumulative tolerance category, the charge is removed from consideration for purposes of determining the 10% tolerance level. If the creditor allows the consumer to shop for a third-party service and the consumer does not select a settlement service provider or chooses a service provider that is identified on the creditors list, the charge is subject to the 10% cumulative tolerance. Services Not Actually Performed The creditor should compare the sum of the charges actually paid by or imposed on the consumer with the sum of the estimated charges on the Loan Estimate that are actually performed. If a service is not performed, the estimate for that charge should be removed from the total amount of estimated charges.


Charges Not Provided on Loan Estimate A creditor may charge a consumer for a fee that would fall under the 10% cumulative tolerance but was not included on the Loan Estimate as long as the sum of all charges in this category paid does not exceed the sum of all estimated charges by more than 10%. Charges Subject to Zero Tolerance For all other charges, creditors are not permitted to charge consumers more than the amount disclosed on the Loan Estimate under any circumstances other than “changed circumstances” that permit the revised Loan Estimate. These Zero Tolerance charges are:

• Fees paid to the creditor, mortgage broker, or an affiliate of either • Fees paid to an unaffiliated third party if the creditor did not permit the consumer to shop for a

third party service provider for a settlement service • Transfer Taxes

Charge Paid to a Creditor, Mortgage Broker or an Affiliate of Either A charge is paid to the creditor, mortgage broker, or an affiliate of either if it is retained by that person or entity. A charge is not paid to one of these entities when it receives money but passes it on to an unaffiliated third party. The term affiliate is given the same meaning it has for purposes of determining Ability-to-Repay and HOEPA coverage: any company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956. (12 USC 1841 et seq.) Lender Credits Lender credits represents the sum of non-specific lender credits and specific lender credits. Non-specific lender credits are generalized payments from the creditor to the consumer that do not pay for a particular fee on the disclosures. Specific lender credits are specific payments, such as a credit, rebate, or reimbursement, from a creditor to the consumer to pay for a specific fee. Non-specific lender credits and specific lender credits are negative charges to the consumer. The actual total amount of lender credits shown on the Closing Disclosure, whether specific or non-specific, provided by the creditor cannot be less lender credits than was estimated on the Loan Estimate. Tolerance Cure If the amounts paid by the consumer at closing exceed the amounts disclosed on the Loan Estimate beyond the applicable tolerance threshold, the creditor must refund the excess to the consumer no later than 60 calendar days after consummation.

• For charges subject to zero tolerance, any amount charged beyond the amount disclosed on the Loan Estimate must be refunded to the consumer.

• For charges subject to a 10% cumulative tolerance, to the extent the total sum of the charges added together exceeds the sum of all such charges disclosed on the Loan Estimate by more than 10%, the difference must be refunded to the consumer.

A post-consummation corrected Closing Disclosure is not required if the only changes that would be required to be disclosed in the corrected disclosure are changes to per-diem interest and any disclosures affected by the change in per diem interest.


Construction & Permanent Loans Disclosures for the Construction Phase & the Permanent Phase The updated rule provides that if the creditor discloses a construction/permanent loan as two separate transactions, the creditor must allocate to the construction phase amounts for finance charges (12 CFR 1026.4) and points and fees (12 CFR 1026.32(b)(1)) that would not be imposed but for the construction financing. For example, inspection and handling fees for the staged disbursement of construction loan proceeds must be included in the disclosures for the construction phase and may not be included in the disclosures for the permanent phase. If a creditor charges an origination fee for construction financing only but charges a greater origination fee for construction/permanent financing, the difference between the two fees must be allocated to the permanent phase. Fees that are not finance charges or points and fees may be allocated between the construction phase and permanent phase in any manner the creditor chooses. Construction Only Application - Timing of the Loan Estimate Construction Loan Estimate must be provided within 3 business days of an application. Construction/Permanent in Single Application – Timing of Loan Estimate If the creditor receives a single application for both phases, it may provide a separate Construction Loan Estimate and a separate Permanent Loan Estimate (both within 3 business days of an application) or a combined Construction/Permanent Loan Estimate within 3 business days of an application. Construction Application on one date & Permanent Application on a later date - Timing The 2017 Rule provides that when disclosing a construction-permanent loan as two separate transactions, a creditor must provide a Loan Estimate for a particular phase within 3 business days of receiving the application for that phase (i.e., the creditor must provide the Loan Estimate for the construction phase within 3 business days of receiving the application for the construction phase and the Loan Estimate for the permanent phase within 3 business days of receiving the application for the permanent phase). If the creditor chooses to conduct separate closings and provide separate disclosures for the construction phase and permanent phase, it provides the Loan Estimate for the permanent phase within 3 business days of receipt of such application, and may proceed with a separate closing and Closing Disclosure for the permanent phase upon completion or near-completion of the construction phase if a revised Loan Estimate is not needed.


Quiz 1. TILA-RESPA Integrated Disclosures (TRID) are required for most consumer credit transactions secured by real property including the following: a. Mobile Homes b. Vacant Land c. Construction Only Loans d. Vacant Land and Construction Only Loans 2. Under Regulation Z and “Application” is deemed to be received when the consumer provides the following information: a. Application Form, Credit Report, Sales Contract & Valuation of Property b. Consumer’s Name, Income, Social Security, Address, Value Estimate & Loan Amount c. Borrower’s Name, Social Security, Credit Report, Application Form d. An oral or written request for credit based on established procedures 3. Business Day for the purposes of the Loan Estimate and the revised Loan Estimate is defined as the following: a. All calendar days except for Sundays and legal public holidays b. A day in which the creditor’s offices are open to the public for carrying on substantially all of it’s business functions c. Everyday that the US mail runs including Saturdays and Sundays d. None of the above 4. Creditors are allowed to require Consumer’s to submit the following prior to providing the initial Loan Estimate if the information is necessary to complete the Loan Estimate Disclosure form: a. Bank Statements and 2 years Tax Returns b. Sales Contract and any addendums c. Supplemental documentation to verify information provided on the application d. Social Security Number so that a Credit Report may be obtained 5. Lenders may provide a written estimate of terms or costs to applicants BEFORE providing the Loan Estimate as long as the following model language is included: a. “Your official closing costs will be provided on a settlement statement at the time of consummation of this loan.” b. “Your actual rate, payment and costs could be higher. Get an official Loan Estimate before choosing your loan.” c. “This written estimate of terms and costs is not a guarantee of your closing costs and other loan costs.” 6. “Changed circumstances” for the purposes of a revised or corrected Loan Estimate means: a. New information specific to the consumer or transaction that the creditor did not rely on when providing the Loan Estimate b. Information specific to the consumer or transaction that the creditor relied on when providing the Loan Estimate that was inaccurate or changed after the disclosures were provided c. An extraordinary event beyond the control of any interested party or other expected event specific to the consumer or the transaction d. None or all of the above


7. If an interest rate is locked, the creditor has a specific about of time to provide a revised Loan Estimate to the consumer: a. Only 1 business day b. 3 business days c. 10 business days d. None of the above 8. The following charges must be within the 10% cumulative tolerance limitation: a. Prepaid Interest, Recording Fees, Title Fees, Fees for services that are required by the Creditor if the Creditor permits the consumer to shop and the consumer selects a third-party provider not on the creditor’s written list of providers. b. Credit Report Fees, Appraisal or Evaluation Fee c. Amounts to be paid or placed in an Escrow, Impound or Reserve Account d. None of the above 9. Charges for Services that are shown on the Loan Estimate that do not actually get performed should be treated as follows: a. Creditor should compare the sum of the charges actually paid by or imposed on the consumer with the sum of the estimated charges on the Loan Estimate that are actually performed b. If a service is not performed, the estimate for that charge should be removed from the total amount of the estimated charges for comparison purposes c. The answers in a & b are both correct d. None of the above 10. Examples of charges that are subject to zero tolerance including charges paid to the Creditor, Mortgage Broker or an Affiliate of either one would not include which of the following: a. Transfer Taxes b. Recording Fees c. Fees paid to an unaffiliated 3rd party if the creditor did not permit the consumer to shop for the 3rd party service provider for a settlement service d. Origination Fees that are disclosed as a fixed dollar amount

Congratulations! Now that you have completed this short quiz for self-assessment, please check with your administrator for the answer key along with your Certificate of Completion! For your convenience, we have already sent these to the person who signed up your Institution for this Boot Camp 360. You are also welcome to send us your name, email and contact information and we will happily send you the answer key along with your Certificate of Completion! [email protected]


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FIC Real Estate Compliance Manual – ($297 value)

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This manual is broken down into sections to cover each of the federal regulations that effect Closed-end Residential Real Estate Lending and Compliance with those regulations. As part of the Alliance, you will receive this manual and automatic updates for one full year! In addition you will have complete access to the manual on-line 24/7! So basically you get the manual absolutely FREE!

These customized comprehensive training webinars are geared to anyone who has been or is to be in a position where real estate compliance is an integral part of their job function. It does not matter whether your Institution is involved in Purchase Money loans, Home Equity or Refinance transactions, the basic foundations in residential real estate lending and compliance are the key to a successful process.


Thank you for your participation! Please contact us if you have any questions or need assistance. We want to be “Your Partner in Compliance!” Email if you have questions concerning the information provided! Thank you for your business and we look forward to hearing from you again soon! Kimberly Lundquist [email protected] FIC Conferences, Inc. 1150 N Loop 1604 W Suite 108-603 San Antonio, TX 78248 Tel 210-493-1761 Fax 210-493-9659 www.ficconferences.com

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