04/09/2015

Requirements for Delivery of the Closing Disclosure

For loans that require a Loan Estimate, which include most closed-end mortgage loans secured by real property) and that proceed to closing, creditors must provide a new Closing Disclosure reflecting the actual terms of the transaction.

The creditor is required to provide the consumer Closing Disclosure at least three business days before consummation. The CFPB says that “business day” for purposes of the Closing Disclosure is the rescission-based business day definition, and means all calendar days except Sundays and legal public holidays.

According to the CFPB, creditors may estimate fees using the best information reasonably available when the actual cost is not available at the time the Closing Disclosure must be delivered.

“However, creditors must act in good faith and use due diligence in obtaining the information,” the CFPB states in its examination procedure manual. “The creditor normally may rely on the representations of other parties in obtaining the information, including, for example, the settlement agent.”

A corrected Closing Disclosure containing the actual terms of the transaction must be provided at or before consummation. If the creditor provides a corrected disclosure, it must provide the consumer with an additional three-business-day waiting period prior to consummation if:

  • the annual percentage rate changes 1/8 of a percent
  • the loan product changes
  • a prepayment penalty is added to the transaction

The creditor is responsible for ensuring that the Closing Disclosure meets the content, delivery and timing requirements. If the Closing Disclosure 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 the Closing Disclosure three business days after it is delivered or placed in the mail.

If the creditor mails the disclosure six business days prior to consummation, it can assume that it was received three business days after sending, and therefore three business days prior to consummation, according to the CFPB. Creditors may contract with settlement agents to provide the Closing Disclosure to consumers, provided the settlement agent complies with all relevant requirements.

The rule does not indicate that any specific proof is needed to show the Closing Disclosure was placed in the mail. Similar to contract law, if the sender places the Closing Disclosure in the mail, has it addressed to the consumer properly and has proper postage, it is assumed to be received by the consumer three business days later. The sender could always mail the Closing Disclosure certified or require a signature upon receipt if they wanted to have proof it was delivered properly, but that is not required by the rule. This highlights the importance of having documented policies and procedures. Title production systems should be able to create records of when the Closing Disclosure was generated. Having policies showing when a company places documents in the mail can go a long way to showing a strong pattern of compliance. Also, some postal services allow customers to generate postage (instead of stamps) and create a log of each envelope that is post marked.

Creditors and settlement agents also may agree to divide responsibility with regard to completing the Closing Disclosure, with the settlement agent assuming responsibility to complete some or all the Closing Disclosure. In these situations, the creditor must maintain communication with the settlement agent to ensure that the Closing Disclosure and its delivery satisfy regulatory requirements, The creditor is legally responsible for any errors or defects.

In transactions involving a seller, the settlement agent is required to provide the seller with the Closing Disclosure reflecting the actual terms of the seller’s transaction no later than the day of consummation.  

Multiple consumers

In transactions that are not rescindable, the Closing Disclosure may be provided to any consumer with primary liability on the obligation. In rescindable transactions, the creditor must provide the Closing Disclosure separately and meet the timing requirements for each consumer who has the right to rescind under TILA.

The consumer may waive the three-day period if there is a bona fide personal financial emergency. Bona-fide personal financial emergencies are extremely rare. Determining whether one exists is fact intensive. The only example provided by the Bureau is the imminent sale of the consumers home through foreclosure where the proceeds of the new mortgage can save the home from foreclosure.

04/07/2015

Online Tool Can Help Improve Title Shop Efficiency

Evernote Business   Evernote for your company   Evernote

Evernote Business Notebook in iOS 8

In part one, I introduced the basics of Evernote.  In part two, we will look closely at Evernote Business and the opportunities available for title industry professionals. 

Evernote Business creates a collaborative, shared workspace for an organization. Unlike Evernote Basic or Evernote Premium, Evernote Business incorporates an admin component that controls users within the account. The admin feature allows the company to maintain control of the data no matter how the team changes. Billing is also handled from a single point of contact. Evernote Business costs $10/month per user. Notes can contain 100MB of data, four times the amount allowed in Evernote Basic, allowing for high-res images and large files.  Evernote Business also comes with upgraded support designed to accelerate adoption.

One of my favorite Evernote uses is as a mobile distribution channel. Evernote allows for easy sharing of content in notes from phones/tablets to customers. Compare this to attempting to access a network marketing folder while in the field, and there’s no contest. Evernote wins.

IMG_2248

A few examples of items to distribute are marketing flyers, articles of industry interest and videos. These items do not need to be protected behind secured firewalls. This does not mean Evernote takes security lightly, however. Data is protected by industry-standard TLS/SSL encryption and two-step verification.

As Evernote becomes the resource for information storage and creation, team members will be notified of similar content in other company notes. Forget re-inventing the wheel. Evernote Business simplifies collaboration among staff. Annotation and editing are available in notes as well. Also, Evernote has a built-in presentation mode. This allows team members to share content within the team or with clients without leaving Evernote for a presentation program.

Evernote is building a one stop workspace. No more attaching documents to emails for review or revision. No more creating presentations in another program.  Evernote makes it easy to add content to new or existing notes. 


Evernote communicate

Chat is built-in to Evernote Business. Productivity goes up when more can be done within one program.  

With the cloud-based capabilities of Evernote Business, it becomes a viable solution for smaller agency operations instead of expensive, cumbersome CRM products. It does not have all of the functionality of SalesForce or InfusionSoft. It does easily share content out to the sales team in the field, control access, add reminders to relevant notes and quickly collect business card information by snapping a picture.

Finally, becoming proficient with Evernote has an added benefit for any title operation.  In my experience, many clients and potential clients are hungry for help with Evernote implementation.  Adding value to the relationship by sharing a bit of knowledge is easy and cost effective. Improving your organization’s productivity and becoming a valuable resource for your customers is a no brainer. 

For more information, visit evernote.com/business.


RisserBill Risser is vice president of new media and education for Chicago Title Agency. He can be reached at 602-667-1000 or
 billrisser@gmail.com. Risser spoke at ALTA’s 2015 Social Media Summit in Philadelphia, on how to manage your online reputation.

 

 

 

 

 

03/12/2015

Tolerances with the TILA-RESPA Integrated Disclosures

Similar to existing law, the Consumer Financial Protection Bureau’s final TILA-RESPA rule restricts the circumstances in which consumers can be required to pay more for settlement services than the amount stated on their Loan Estimate.

Generally, good faith requires the closing cost estimate on the initial Loan Estimate to equal the final amount charged on the Closing Disclosure. Here's a look at which fees can and can't change:

  Variances

In today’s current practices, many providers add a cushion for costs on the HUD-1 to account for items that can vary between the signing and when the transaction is settled after recording, such as recording fees, pro-rations and prepaid interest. The overage is then refunded after the final disbursements are made. Under the new rule, lenders and settlement agents must make more rigorous good-faith efforts to provide estimates that are more accurate. However, the delay between consummation and settlement in escrow states is likely to increase the need for post-closing corrected disclosures.

If the Closing Disclosure becomes inaccurate before consummation, the creditor shall send corrected disclosures so that the consumer received the corrected version at or before consummation. The changes are still subject to good faith requirements. Once the initial Closing Disclosure is issued, all changes should be made with an updated Closing Disclosure. The creditor may not provide a revised Loan Estimate on or after the date the creditor provides the consumer with the Closing Disclosure.

Under the new rule, if a lender allows a consumer to shop for a settlement service, the lender will be required to provide the consumer with a written list identifying available providers of that service and clearly stating that the consumer may choose a different provider for that service. The CFPB has provided a blank model form for the written list of settlement service providers, a sample of written list of providers consumers can shop for and a sample of written list of providers consumers cannot shop for.

What About Title Insurance?

According to the CFPB, owner’s title insurance that is not required by the creditor is not subject to the 10 percent variance. The CFPB said it is aware that the preamble to the final rule contains potentially conflicting language, but advises that the final rule text is what should be followed.

The 10 percent variance category includes recording fees and charges paid to unaffiliated third-party service providers when the consumer is permitted to shop for a settlement service provider, but chooses a provider from the creditor’s written list of providers (§ 1026.19(e)(3)(ii)).

Owner’s title insurance is not a charge that is assigned to a particular variance category. Therefore, the applicable variance category depends on other factors, including whether the creditor requires the insurance and, if so, whether the consumer may shop for the provider of the insurance.

To the extent owner’s title insurance is not required by the creditor and is disclosed as an optional service, under the rule the insurance is not subject to any percentage variation limitation, even if paid to an affiliate of the creditor.

02/19/2015

Home Equity Loans Excluded from Integrated Disclosure Rule

The Consumer Financial Protection Bureau’s final rule for integrated mortgage disclosures applies to most closed-end consumer mortgages secured by real property.

However, the rule does not apply to home equity lines of credit (HELOCs), reverse mortgages or chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property.

Conversely, certain types of loans that are currently subject to the Truth-in-Lending Act but not the Real Estate Settlement Procedures Act are subject to the rule’s requirements. Such loans include construction-only loans, loans secured by vacant land or by 25 or more acres and credit extended to certain trusts for tax or estate planning purposes.

Meanwhile, various disclosures may be used for cash transactions. TILA and RESPA only apply to mortgage or credit transactions. Federal law does not require the use of the HUD-1 or the new Closing Disclosure in all cash transactions. While some states have laws requiring the use of a state promulgated form in cash transactions, in general the HUD-1, the Closing Disclosure or any other settlement statement can be used for these deals.

02/11/2015

Get Familiar with the Other Three Day Rule Related to Appraisals

A lot has been written (including by us) about the RESPA-TILA rules new three-day requirement and its potential to cause pauses and delays in the closing process. However, there is another new federally required three-day rule that settlement and real estate agents should be aware of that could make it even more difficult for you to meet your customers closing expectations.

On Jan. 18, 2014, industry implemented the Consumer Financial Protection Bureau's (CFPB) new rules for appraisals, including new requirements for consumers to receive copies of their appraisal. This rule was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and amended the Equal Credit Opportunity Act (ECOA).

Under the Appraisal Rule, creditors (aka lenders) must provide borrowers with a copy of any and all appraisals and other written valuations developed in connection with a mortgage or deed of trust. These copies must be provided to the borrower promptly upon the earlier of their completion, or three business days prior to consummation. Here in lies the rub.

Generally, an appraisal report includes comments and other scoring based on the condition of the real property and any improvements. It is also common for real estate agents and buyers and sellers to conduct a walk through of the property the day of settlement. If that walk through shows any changes to the condition of either the interior or exterior of the property, it may trigger the need for the appraiser to review the change and comment on those changes in an update appraisal report. This could trigger a new three-day waiting period under the Appraisal Rule.

Now, there is some good news. Unlike the RESPA-TILA three-day rule, the Appraisal Rule does include a waiver provision. This means that the borrower can waive this timing requirement and agree to receive the updated copy at or before consummation. In the event that an applicant waives the timing requirement and the transaction is not consummated, the creditor must provide the copies no later than 30 days after the creditor determines that the transaction will not be consummated. However, the waiver must be received by the creditor at least three days prior to consummation. This means a creditor cannot obtain a waiver after-the-fact or even at the time of discovering the need for a new appraisal report at walk through.

02/10/2015

Evernote Aids in Collaboration, Data Sharing

Bill Risser

With the impending changes in our industry, whether regulatory or technology driven, it is more important than ever to be connected as a company—important to be connected in a way that makes it easy to share and collaborate. Email and it’s “back and forth” nature is not effective enough. A simple, secure. cloud based tool is required. Evernote fits the bill perfectly.

 Evernotelogo

Evernote has been around since 2008. I first explored Evernote in 2010. Like many others, I had a start, stop, start again, stop again relationship with the green elephant. I felt like I was “forcing” myself to use Evernote because it was cool. I didn’t see the value of conquering the learning curve for a simple note taking app.

A dance with cancer in 2012 opened my eyes to the power of Evernote.  Every single scan, report, EOB, appointment reminder, etc. is still in my account in a notebook labeled “C.”

I share my story because it resonates with many people that have the same love/hate relationship with Evernote.  You are not alone. My mission is to explain the features that are useful in our industry as well one’s personal productivity.

Evernote’s motto is “Remember Everything.” It is excels at that. In the last year or so, there has been a diligent effort at Evernote to build a business tool that redefines how employees collaborate. Evernote is striving to create “one work space” instead of the multiple programs we currently navigate. Evernote Business is the latest iteration, and I will cover that in part two.

Evernote makes it drop dead simple to gather data into “notes” which are further organized into “notebooks” within the program. There are numerous ways to get information into a note. These include typing, recording audio, dictating, clipping from the web, taking photos, dragging files, emailing and even tweeting. Notes are shared via email or social networks from any device.  Notes are assigned to a notebook and can be further identified with “tags.” The final level of organization is the Note Stack, which are a collection of notebooks. The organization within Evernote may seem limited to long-time Outlook users that have folders nested within folders that are nested within folders that are ... well, you know what I mean. Evernote relies on a superb search feature  to help users find content.  

Evernoteimage1

Search in Evernote is powerful.  In the free version of Evernote, search scans all text and text within images added to notes. So, a photo of a broker sign can be found by searching for the name of the company found on the sign.  In the example below, searching through my business card notebook for Jeremy, you can see how Evernote search works.

 Evernoteimage2

Let’s discuss the types of Evernote accounts. There is a free version, and it is powerful enough for a new user. The free account allows 60 MB of data uploaded/month and a maximum note size of 25 MB.  The premium version costs $5/month or $45/year. At this level, the upload per month is 4GB/month, and maximum note size is 100MB. Each version allows 100,000 notes and 250 notebooks. One big advantage for premium is upgraded search. This allows for searches within pdf’s. Evernote Business is the last level. $10/user/month gets you even more upload capability, corporate data ownership, centralized user management and SalesForce integration.

Uses for Evernote in the title industry vary from clipping industry content from the web using the Evernote Web Clipper to recording a meeting with a potential customer. 

  Evernoteimage3

 INSERT Evernote Web Clipper

I also have all of our marketing flyers in a business account notebook, and they can be easily viewed and shared by the entire team. Travel confirmations, meeting agendas and conference schedules are easily accessed on the run. Evernote is not a tool for secure escrow/title file information storage, but it is outstanding for storing and sharing non-secure information with team members/customers.

Many smaller agents do not use an expensive CRM solution for the sales operation. Evernote is an inexpensive alternative for sharing information amongst the Sales/Marketing/Admin teams that is accessible via every platform. Windows, Mac, Android, iOS, even Blackberry’s have an Evernote solution.  The Evernote Premium account is required to make this effective. Premium allows Note and Notebook sharing, and the content is editable. 

If you found this blog informative, don’t miss Part two, which will focus on specific uses Evernote Business provides for our industry, especially smaller agencies looking for an online, collaborative solution.

RisserBill Risser is vice president of new media and education for Chicago Title Agency. He can be reached at 602-667-1000 or billrisser@gmail.com. Risser will speak at ALTA’s 2015 Social Media Summit, March 18 in Philadelphia, on how to manage your online reputation.

01/20/2015

Is Owner’s Title Insurance Subject 10 Percent Tolerance?

Is owner’s title insurance not required by the creditor subject to the 10 percent cumulative tolerance?

According to the CFPB, owner’s title insurance that is not required by the creditor is not subject to the 10 percent tolerance.  The CFPB said it is aware that the preamble to the final rule contains potentially conflicting language, but advises that the final rule text is what should be followed.

The 10 percent tolerance category includes recording fees and charges paid to unaffiliated third-party service providers when the consumer is permitted to shop for a settlement service provider, but chooses a provider from the creditor’s written list of providers (§ 1026.19(e)(3)(ii)).

Owner’s title insurance is not a charge that is assigned to a particular tolerance category.  Therefore, the applicable tolerance category depends on other factors, including whether the creditor requires the insurance and, if so, whether the consumer may shop for the provider of the insurance.

To the extent owner’s title insurance is not required by the creditor and is disclosed as an optional service, under the rule the insurance is not subject to any percentage tolerance limitation, even if paid to an affiliate of the creditor.

12/23/2014

12/11/2014

Register for a RESPA-TILA Integration Forum and Network With Lenders

ALTA and the Mortgage Bankers Association are hosting five RESPA-TILA Integration Forums to help prepare for the Aug. 1, 2015 implementation date of the CFPB's new Loan Estimate and Closing Disclosure. At each Forum, a panel of legal, title, technology and operation experts will review the rule and offer guidance to help prepare you for the implementation deadline.

These one-day sessions will provide up-to-date information on how title and settlement agents, attorneys, lenders and software providers are navigating the new RESPA-TILA requirements.

Join us and network with lenders from across the country.

Register for a Forum Near You

Forums will be held around the country at convenient locations, including:

Several discounts are available to ALTA members. Register two weeks prior to a Forum date and receive a 10 percent discount. Register at least five people for a Forum and receive a 15 percent discount. Register at least 10 people for a Forum and receive a 20 percent discount.

12/09/2014

Conquering the Loan Estimate Part 2: Disclosing Points and Fees

In part one of this blog, we addressed the disclosure of interest rates on the Consumer Financial Protection Bureau’s Loan Estimate, which starting will replace the current GFE and early Truth-in-Lending Disclosure for loan applications received on or after Aug. 1, 2015.

Today in part two, we address disclosure of points and fees. Generally, the creditor decides how it wishes to itemize the origination charges section on the Loan Estimate. However, some charges are required to be itemized, including points and Loan-Level Price Adjustment (LLPA). To the extent the consumer will pay for these charges, they should be disclosed under the Services You Cannot Shop For section. (§ 1026.37(f)(2)).

When disclosing points and fees, creditors should determine whether the charge is associated with origination costs or whether it is a form of interest. If the charge is not intended to reduce the interest rate, then it is not a point and cannot be disclosed as such. This is the case even if the charge is a portion of the loan amount. Only points charged in connection with an interest rate reduction may be disclosed as points on the Loan Estimate. (§ 1026.37(f)(1)(i)). This requirement prohibits creditors from identifying origination fees as points as a means of preserving its tax deductibility for the consumer. Any charges other than points require clear and conspicuous terminology that describes the service. (Comment 37(f)(1)-3). If there are no charges that reduce the interest rate, creditors should leave the points line on the form blank rather than mark the line “N/A”. (Comment 37-1).

When a creditor pays a LLPA to the secondary market purchaser, the creditor may have to disclose the charge in certain situations. If the creditor does not charge the consumer an upfront fee, but rather passes the cost of the LLPA to the consumer through interest, the creditor does not need to disclose this charge as it is not considered a settlement charge under the rule. (See § 1026.37(f)).

However, if the creditor charges an upfront fee for the LLPA, the creditor should disclose the fee based on how it is charged. If the LLPA is charged at closing as a flat origination charge, the charge should be labeled an origination charge. Alternatively, if the creditor includes the cost of the LLPA in the interest rate, and then allows the consumer to pay a point to reduce the interest rate, the charge would be disclosed as a point on the Loan Estimate.