TILA-RESPA Integrated Disclosure (TRID) Rule a.k.a. Know Before You Owe with New Haven Middlesex Association of REALTORS July 16, 2015 Jeremy Potter, General Counsel and Chief Compliance Officer, Norcom Mortgage 1 What We’ll Cover: • Basics: Why We’re Here • Final Rule • The New Forms • Evaluating the Rule • Challenges for banks and its attorneys • Questions 2 CFPB Authority in our Industry • Alternative Mortgage • Home Ownership and Equity Transaction Parity Act Protection Act of 1994 • Consumer Leasing Act of 1976 • Real Estate Settlement • Electronic Fund Transfer Act* Procedures Act of 1974 • Equal Credit Opportunity Act • S.A.F.E. Mortgage Licensing • Fair Credit Billing Act Act of 2008 • Fair Credit Reporting Act* • Truth in Lending Act • Home Owners Protection Act • Truth in Savings Act of 1998 • Omnibus Appropriations Act • Fair Debt Collection Practices of 2009* Act • Federal Deposit Insurance • Interstate Land Sales Full Act* Disclosure Act • Gramm-Leach-Bliley Act* • Mortgage Reform and Anti- • Home Mortgage Disclosure Predatory Lending Act* Act of 1975 *Indicates that portions of this Act transferred to the CFPB 4 while other portions did not. Basics: • Applicable Loans o Final rule applies to most consumer mortgages, EXCEPT: • Home-equity lines of credit • Reverse mortgages • Mortgages secured by a mobile home or dwelling not attached to land • No-interest second mortgage made for down payment assistance, energy efficiency or foreclosure avoidance • Lenders who make 5 or fewer loans in a year • Consumer instead of Borrower • Creditor instead of Lender • Variances reference changes to fees • Tolerances reference the thresholds on fees 5 The New Forms: • Loan Estimate • Closing Disclosure o 3 pages long o 5 pages long • Combines early two-page TIL • Combines three-page HUD-1 and three-page GFE and final two-page TIL o Who provides? o Who provides? • Two options: lender or • Two options: lender or mortgage broker combination of lender and o When? settlement agent • Within three days of o When? application • Three days before closing o Still subject to tolerances • Exceptions 6 LOAN ESTIMATE • The New Forms Must Be Used with Respect to Any Applications Received for a Covered Transaction on or after October 3, 2015 • No change for the following: o Cannot Impose Lender Fees (except for credit report) before consumer Receives LE and indicates Intent to Proceed o Cannot Require Submission of Verification Documents prior to issuing the LE • You Cannot Use New Forms Before Effective Date 7 LOAN ESTIMATE – Timing • Must Be Provided Within Three (3) Business Days (open for substantially all business) of Receiving an Application o Delivered o Or Placed in Mail • That Delivery Date (or Date Placed in Mail) Must Also Be no Later Than Seventh (7th) Business Date Before Consummation • Trigger Date is Date When “Application” Received o By Creditor o Or by Mortgage Broker 8 LOAN ESTIMATE - • Loan Estimate Must be Completed in “Good Faith” o Based on Actual Information if Known • Must Use “Good Faith” and Exercise “Due Diligence” to Try to Obtain Information o Estimate Must be Based on “Best Information Reasonably Available” • Using Good Faith • Due Diligence • CFPB has not addressed the scope of due diligence o You Can Rely on Third Parties for Information • Including Consumer 9 10 11 12 Consumer Shopping • A creditor permits a borrower to shop for third party settlement services when they: o Inform borrowers on Loan Estimate o Provide them with a written list of settlement service providers • The creditor may still impose reasonable qualifications for providers. o Example: • Provider must be licensed – Impact on closed list • Creditor is not indemnifying “the list” 13 Summary of when new LE is possible The exceptions include situations when: 1) The consumer asks for a change; 2) The consumer chooses a service provider that was not identified by the creditor; 3) Information provided at application was inaccurate or becomes inaccurate; or 4) The LE expires. When an exception applies, the creditor generally must provide an updated LE form within 3 business days. 14 Closing Disclosure (CD) • Required form used by lenders • Three business days before closing • Provided by: o Lender o Lender may rely on Settlement Agent, but Lender remains responsible for accuracy • Contents covered by § 1026.38 15 Closing Disclosure Page 1 § 1026.38(a)-(d) (a) General Information (b) Loan Terms (c) Projected Payments (d) Costs at Closing 16 Closing Disclosure Page 5 § 1026.38(o)-(q) (o) Loan Calculations (p) Other Disclosures (q) Questions Notice 17 Closing Disclosure Page Five (cont.) § 1026.38(r)-(s) (r) Contact Information (Sale) (r) Contact information (Refinance) Contact information for: Contact information for: 1. Lender 1. Lender 2. Mortgage Broker 2. Mortgage Broker 3. Real Estate Broker (B) 3. Settlement Agent 4. Real Estate Broker (S) 5. Settlement Agent (s) Signature Statement 18 Sale – Closing Date Delivery By Hand: SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 1 2 3 4 5 6 7 Hand Disclosure Delivery = Day 1 Receipt 8 9 10 11 12 13 14 Sunday Disclosure Disclosure doesn't count Day 2 Day 3 - OK to close Delivery By Mail: SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY 1 2 3 4 5 6 7 Closing Mail Day 1 Mail Day 2 Mail Day 3 = Disclosure Disclosure Receipt Day 1 MAILED 8 9 10 11 12 13 14 Sunday Disclosure Disclosure doesn't count Day 2 Day 3 - OK to close 19 .