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3 posts from December 2013

12/05/2013

May a Borrower Waive His/Her Right to View Closing Disclosure 3 Days Before the Loan Closes

According to the Consumer Financial Protection Bureau's final rule, the creditor must give the Closing Disclosure to the consumer at least three business days before the loan closes. As an example, if settlement is scheduled for Thursday then the consumer must receive the disclosures by Monday.

Generally, if changes occur between the time the Closing Disclosure form is given and the closing, the consumer must be provided a new form. When that happens, the consumer must be given three additional business days to review that form before closing.

The CFPB listened to ALTA concerns here and limited the instances that would require issuance of a new Closing Disclosure. Limiting the instances of delays in real estate transactions will help to ensure a positive experience for the consumer at the closing table.

Changes that require creditors to provide a new Closing Disclosure and an additional three-business-day waiting period after receipt include:

  • changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods)
  • changes the loan product
  • addition of a prepayment penalty to the loan

In addition, consumers may waive their right to receive the Closing Disclosure three days prior to consummation only if they have 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.

Remember, follow our blog for more analysis of the CFPB's final rule for integrated mortgage disclosures.

 

Disclaimer: This information is for your reference only and not a not a substitute for legal, financial or business advice or binding interpretation of any law or regulation. Users should consult legal counsel and subject-matter experts to obtain advice with respect to any particular issue or problem. Use of and access to the information contained on this page or any of the email links contained within the site do not create an attorney-client relationship between American Land Title Association or any of the individual authoers and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of that authors firm or any individual attorney.

According to the regulations, the creditor must give the Closing Disclosure to the consumer at least three business days before the loan closes. As an example, if settlement is scheduled for Thursday then the consumer must receive the disclosures by Monday.

Generally, if changes occur between the time the Closing Disclosure form is given and the closing, the consumer must be provided a new form. When that happens, the consumer must be given three additional business days to review that form before closing.

The CFPB listened to ALTA concerns here as well and limited the instances that would require a new Closing Disclosure to be issued. Limiting the instances of delays in real estate transactions will help to ensure a positive experience for the consumer at the closing table, Korsmo said.

Changes that require creditors to provide a new Closing Disclosure and an additional three-business-day waiting period after receipt include:
  • changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods)
  • changes the loan product
  • addition of a prepayment penalty to the loan
- See more at: http://www.alta.org/news/news.cfm?newsID=23207#sthash.UnetWyO6.dpuf

Do the CFPB's Integrated Mortgage Disclosures Apply to Cash Transactions?

While the Consumer Financial Protection Bureau’s new integrated mortgage disclosures, which the industry must start using Aug. 1, 2015, only apply to most consumer mortgages, we've received questions about whether the HUD-1 will remain applicable for cash transactions.

The CFPB's final rule combines the disclosures required under the Truth in Lending and Real Estate Settlement Procedures acts. Both of these laws apply only 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 in cash transactions.

Additionally, the final rule for integated mortgage disclosures, does not apply to these transactions:

  • Commercial
  • Home-equity lines of credit
  • Reverse mortgages
  • Mortgages secured by a mobile home or dwelling not attached to land

Keep following ALTA's blog for answers to other questions about the CFPB's integrated mortgage disclosures. Please share this information your own social media outlets.

 

Disclaimer: This information is for your reference only and not a not a substitute for legal, financial or business advice or binding interpretation of any law or regulation. Users should consult legal counsel and subject-matter experts to obtain advice with respect to any particular issue or problem. Use of and access to the information contained on this page or any of the email links contained within the site do not create an attorney-client relationship between American Land Title Association or any of the individual authoers and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of that authors firm or any individual attorney.

12/03/2013

Owner's Title Described as 'Optional,' But Not Other Fees Such as Homeowner's Insurance

In an effort to help title professionals understand various parts of the CFPB's final rule and disclosures, we will post answers to questions we receive. Today, we answer why homeowner's insurance, as well as other charges for surveys and pest inspections, is not listed as optional in the same manner as owner's title insurance on the Loan Estimate and Closing Disclosure.

According to the CFPB's rule, the parenthetical description “(optional)” is required at the end of the label for items disclosing any premiums paid for separate insurance, warranty, guarantee, or event-coverage products that are not required by the lender as a condition of the mortgage loan.

Along with Owner’s Title Insurance, other items listed as “(optional)” include credit life insurance, debt suspension coverage, debt cancellation coverage, warranties of home appliances and systems, and similar products. Homeowners insurance is not listed as “(optional)” because the mortgage or deed of trust requires the consumer to obtain and maintain this coverage.

Other items that are not loan related but that the consumer must purchase pursuant to another agreement such as the real estate agent commission, homeowners association fees and fees for inspections would not be listed as “(optional)”. See the yellow-shaded section of page two of the five-page Closing Disclosure for treatment of Owner's Title Insurance.

201311_cfpb_kbyo_closing-disclosure

ALTA has warned the CFPB that telling consumers that owner’s title insurance is "optional" will mean that homebuyers may be dissuaded from purchasing the same protection that lenders receive from a title insurance policy. ALTA will continue to work with the CFPB on this issue. CFPB staff said its testing showed that the use of the word “optional” did not impact consumers’ decision to purchase title insurance.

ALTA will continue to work with the CFPB on this issue. During ALTA’s roundtable, Horn said the use of the word “optional” did not impact consumers’ decision to purchase title insurance. - See more at: http://www.alta.org/news/news.cfm?newsID=23207#sthash.RQgme9Qi.dpuf
ALTA will continue to work with the CFPB on this issue. During ALTA’s roundtable, Horn said the use of the word “optional” did not impact consumers’ decision to purchase title insurance. - See more at: http://www.alta.org/news/news.cfm?newsID=23207#sthash.RQgme9Qi.dpuf

Disclaimer: This information is for your reference only and not a not a substitute for legal, financial or business advice or binding interpretation of any law or regulation. Users should consult legal counsel and subject-matter experts to obtain advice with respect to any particular issue or problem. Use of and access to the information contained on this page or any of the email links contained within the site do not create an attorney-client relationship between American Land Title Association or any of the individual authoers and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of that authors firm or any individual attorney.