TILA - RESPA Integrated Disclosure
(TRID)
When??
Training Plan
The training will be rolled out in a phased approach:
Phase I – General education of the changes coming
o Timeline: March 2015
Phase II – General education on the new Loan Estimate
o Timeline: April 2015
Phase III - General education on the new Closing Disclosure
o Timeline: May 2015
Phase IV – The New Penn Process
o Timeline: June / July 2015
Preparation will be key…
“Give me six hours to chop
down a tree and I will
spend the first four
sharpening the axe.”
- Abraham Lincoln
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Good Faith
Estimate
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Truth in
Lending
(TILA)
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HUD1
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What’s Coming?
• The GFE and TIL are gone!
• The new Loan Estimate(LE) Combines the Initial
Truth-in Lending disclosure(TIL) and the RESPA
Good Faith Estimate (GFE).
• The new Closing Disclosure(CD) combines the
Final Truth-in Lending disclosure and the RESPA
HUD-1.
• New timing requirements for the Closing
Disclosure!
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Loan Estimate(LE)
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What’s Coming?
GFE
Initial TIL
Loan Estimate
A New 3 Page
Document
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Loan Estimate (LE)
Introducing the NEW Loan Estimate:
• Discloses key features, costs, and risks of the mortgage
• Provided in good faith, based on the best info available
• Provided by the Creditor (Broker may provide, but
creditor responsible for accuracy)
Application NOW defined as:
• Name
• Income
• Social Security Number
• Property Address
• Estimate of Property Value
• Loan Amount
The 7th piece of
information “Any other
information deemed
necessary by the loan
originator” has been
eliminated.
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Application Definition Change
• Broker application date is now the lender
•
•
•
application date
Lender no longer has the ability to establish their
own application date once file has been
“accepted”
Loan Estimate (LE) must be sent to the borrower
3 days from application date and lender is
responsible for all information on the disclosure
Significant process change needed to ensure
New Penn disclosure package is sent within 3
days of application date
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Loan Estimate (LE)
Timing Requirements:
• Same as current requirements for the delivery of the GFE
or Initial TILA disclosures
o Loan Estimate is delivered no later than the third
business day after the application is received
o Loan Estimate is delivered no later than the
seventh business day before consummation
• If the application is denied or withdrawn within
the three day period, the Loan Estimate is no
longer required
• Rate Locks – Must be redisclosed 3 days from lock (This is
a change from initial regulation which was 24 hours)
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Loan Estimate (LE)
• Page 1: General
– General information related to applicants, property, loan and
rate lock status
– Loan terms
– Projected Payments during term of the loan
– Costs at closing, including the total estimated closing costs
and the estimated cash to close.
• Page 2: Costs
–
–
–
–
Loan costs
Other costs
Calculating cash to close
Adjustable interest rate and payment table (when applicable)
• Page 3 Other
–
–
–
–
Contact information for creditor and loan officer
Comparisons
Other considerations
Confirm receipt
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Loan Estimate (LE)
Restrictions
• Charging a fee: Cannot charge a fee until after the
consumer has received the Loan Estimate and has
indicated the intent to proceed
o Cannot collect credit card number before LE is received and
borrower has provided intent to proceed, even if it will not
be charged.
o Exception: a bona fide & reasonable fee for a credit report
o Intent to proceed can be communicated in any manner
unless the creditor has specified a manner
o The creditor must document the intent for record-keeping
purposes
• Verifications: Cannot require documents verifying the
consumer’s information before the Loan Estimate is
provided if the 6 items that define an application have
been obtained
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Loan Estimate (LE)
Pre-Qualification Requirements (applies to consumerspecific written estimates provided to the borrower before
the official Loan Estimate)
• Cannot follow the format of the Loan Estimate
• Special 12-point notice required on the document stating:
“Your actual rate, payment, and costs could be higher. Get
an official Loan Estimate before choosing a loan.”
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Loan Estimate (LE)
Changes to Fee Tolerance
Fees That Cannot Change:
•
Creditor Fees
Fees That Can Change:
•
Broker Fees
•
Fees paid to an affiliate of creditor/broker
•
Fees paid to an unaffiliated third party if the
creditor does not permit the consumer to
shop for the third party service provider
•
Transfer Taxes
(As long as the original estimate
was done in good faith)
• Prepaid interest
• Property insurance premiums
• Amounts placed into escrow
(impound) accounts
• Charges to third party service
providers selected by the
consumer that were not on
the creditor’s service provider
list
• Charges for third party
services that are not required
by the creditor
Fees That Can Increase by 10%:
•
Recording Fees
•
Third Party Fees (as long as they are not paid to
an affiliate and creditor permitted consumer to
shop for third party service provider)
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Loan Estimate (LE)
Lender Credits
• Cannot decrease from the Loan Estimate to the Closing
Disclosure
• Exception for interest rate dependent charges when the
rate is locked
• Only one place for lender credits on new documents.
Pricing related and “nice guy” credits are no longer
separated
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Loan Estimate (LE)
Timing Requirements for Revised Estimates
• Provided within three business days of the changed
circumstance
• Consumer must receive the revised Loan Estimate no
later than four business days before consummation
• Cannot be provided on or after the day on which the
creditor provides the Closing Disclosure
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Closing Disclosure(CD)
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Closing Disclosure (CD)
HUD1
Final TIL
Closing Disclosure
A New 5/6 Page
Document
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Closing Disclosure (CD)
No more HUD1! No more final TIL!
Introducing the NEW Closing Disclosure:
• Provides disclosures that will be helpful in understanding
all of the costs of the loan
• Either the Creditor or the Closing Agent may provide (but
creditor responsible for accuracy)
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Closing Disclosure (CD)
NEW Timing Requirements:
• Consumer must receive the Closing Disclosure no later
than three business days before consummation
• Disclosures considered received three business days after
email or placed in mail. 3 day clock can be started if
confirmation of receipt is received. This means that in
some instances the CD will need to be sent 6 days prior
to closing
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Closing Disclosure (CD)
Changed Circumstance
New 3-Day Waiting Period - Required:
WHEN?
• APR becomes inaccurate
• Loan product is changed
• Prepayment penalty is added
New 3-Day Waiting Period - NOT Required:
WHEN?
• Any change other than an inaccurate APR,
change to loan product, or addition of
prepayment penalty
The Revised Closing Disclosure is provided prior to
or at consummation (but must be available for
inspection 1 business day prior to consummation)
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Closing Disclosure (CD)
Restrictions:
• Amounts charged to the customer cannot exceed the amount
received by the settlement service provider
• No fee may be charged for preparing or delivering the Closing
Disclosure
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Summary
• New disclosures for closed-end consumer loans secured by real property
o
•
•
•
•
•
Detailed, transaction-specific disclosure
Changes to good faith analysis (fee tolerances)
New application definition
New requirements for “pre-qualifications”
Significant timing change for the Closing Disclosure
Revised record-keeping requirements
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Next Steps…
• April 2015
– Loan Estimate(LE) - general review of the new document
• May 2015
– Closing Disclosure(CD) - general review of the new document
• June & July
– The NEW PENN PROCESS for the new disclosures
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