23 posts categorized "Consumer Financial Protection Bureau"

08/13/2015

How to Disclose Survey Fees on TRID

The proper placement and naming convention for a survey related charge is one of the most complex in the new TILA-RESPA Integrated Disclosures (TRID) rule. Lenders and settlement agents should work closely together to understand the reason a survey is being ordered to ensure its proper placement on the new disclosures. Here are some examples of different circumstances and how they could impact the placement of the survey charge.

  1. Lender instructions require removal of survey exception on title policy: In this scenario, the most likely course of action is that the survey charge will appear in the “Services you did/did not shop for” bucket and the fee should use the title related naming convention. Under the rule, any fee “required for the issuance of title insurance policies to the creditor in connection with the consummation of the transaction or for conducting the closing” must be proceeded by “Title – ”. The comment to 1026.37(f)(2) lists a number of examples of costs that must be listed per this requirement including any costs for the “resolution of underwriting issues and taking the steps needed to satisfy any conditions for the issuance of the policies.” In this example, the reason the survey is being obtained is to serve as a basis for an underwriting decision on whether to provide survey related coverage under the title policy and it would most likely be a title related fee.
  2. Buyer requests for personal reasons or required under real estate sales contract: In this scenario, the most likely course of action is that the survey charge will appear in the “other” bucket since it is not a loan related cost. On the disclosures, loans are broke down into loan and other costs depending on whether the fee is required as a condition of receiving the loan. When fees are “part of the real estate closing but not required by the creditor,” they are disclosed as “other” costs. In this example, the buyer (or the buyer and seller through their negotiations) is requesting the survey and thus it is not a cost the lender is requiring as a condition of the loan.
  3. Buyer requests to obtain coverage under the owner’s policy: A tricky scenario occurs when the lender does not require a survey, but the buyer requests one. Since the buyer is the instigator of purchasing the survey, it is reasonable to include the survey charge in the “other” bucket with the “Title – ” designation since the buyer is obtaining survey for a title related purpose.
  4. Lender requires survey for non title insurance related reason: While it is extremely rare, a lender may require a survey for purposes not related to title insurance such as appraisal, homestead or loan program reasons. In these instances, the survey would likely appear in the “Services you did/did not shop for” bucket and not include the “Title – ” label since it is a lender-related charge and is not required for purposes of making a title-related determination. The CFPB suggests this possibility in its comment to 1026.37(f)(3), where it lists “survey fee” as an example of a fee separate from title related fees.  

Since the facts of the situation will influence the appropriate placement and naming protocol of the survey fee, it is important for lenders and settlement agents to get on the same page about the reason the survey is being purchased and the proper placement on the disclosure. It is better to have the conversation before closing then to resolve a mistake post closing during the quality review process.

08/06/2015

Completing TRID Old School: Can Disclosures Be Completed By Hand?

The Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) rule significantly impacts the closing process and how data will need to be exchanged to complete the forms. While new online platforms and software programs have been developed to aid data sharing, the rule does allow for the Loan Estimate and Closing Disclosure to be completed by hand if specific requirements are met. Seller CD page 1

Answering common TRID questions during a webinar earlier this year, CFPB staff indicated that under the rule there is no requirement that the settlement agent or creditor use a computer, typewriter or other word processor to complete the forms. The rule says that information and amounts required to be disclosed may be hand printed, “provided the person produces clear and legible text” and complies with the required formatting, including replicating bold font where required.

CFPB staff said there is no specific font size requirement, but noted that the rule requires the disclosures be completed “clearly and conspicuously.” The font sizes and labels on the Loan Estimate and Closing Disclosure may not be changed, however.

Here’s what the rule specifically says about manually filling out the forms:

Comment 37(o)(5)-2 (for Loan Estimate)

Section 1026.37(o) does not require the creditor to use a computer, typewriter, or other word processor to complete the disclosure form. The information and amounts required to be disclosed by § 1026.37 on form H–24 of appendix H to this part may be filled in by hand printing or using any other method, provided the information is clear and legible and complies with the formatting required by form H–24, including replicating bold font where required.

Comment 38(t)(5)-2 (for Closing Disclosure)

The creditor, or settlement agent preparing the form, under § 1026.19(f)(1)(v) is not required to use a computer, typewriter, or other word processor to complete the disclosure required by § 1026.38. The creditor or settlement agent may fill in information and amounts required to be disclosed by § 1026.38 on form H–25 of appendix H to this part by hand printing or using any other method, provided the person produces clear and legible text and uses the formatting required by § 1026.38, including replicating bold font where required.

06/24/2015

CFPB Indicates How to Disclose Title Insurance Premiums in Seller-Pay Scenarios

Since announcing the TILA-RESPA Integrated Disclosure rule in 2013, the Consumer Financial Protection Bureau has hosted a series of webinars to address frequently-asked questions regarding the new rule’s requirements. On May 26, the CFPB hosted its fifth TILA-RESPA Integrated Disclosures webinar. Click here to listen to a recording of the webinar and to download a copy of the presentation.

In this webinar, the CFPB addressed implementation challenges and questions, including a question that many ALTA members have been struggling to understand: how to disclose the owner’s and lender’s title insurance premiums on the Closing Disclosure form in a simultaneous issue scenario. Below is the text of the rule addressing how to disclose simultaneous issue rates:

Simultaneous Title Insurance Premium Rate in Purchase Transactions. The premium for an owner's title insurance policy for which a special rate may be available based on the simultaneous issuance of a lender's and an owner's policy is calculated and disclosed pursuant to § 1026.37(g)(4) as follows:

  1. The title insurance premium for a lender's title policy is based on the full premium rate, consistent with § 1026.37(f)(2) or (f)(3).
  2. The owner's title insurance premium is calculated by taking the full owner's title insurance premium, adding the simultaneous issuance premium for the lender's coverage, and then deducting the full premium for lender's coverage.” § 1026.37(g)(4)-2.

During the webinar, the bureau emphasized its rationale behind its mandated calculation method for disclosing title insurance premiums when there is a discounted title insurance premium. The CFPB realizes that its calculation method will render inaccurate disclosures of the lender’s and owner’s title insurance premiums on the disclosure forms. However, the bureau feared that by disclosing the discounted rate of the lender’s policy and showing the owner’s policy at the full premium, consumers would not understand the incremental cost of purchasing an owner’s title insurance policy. Additionally, if the consumer opted not to purchase an owner’s title insurance policy, the cost of the lender’s policy would then increase substantially, resulting in a higher cost to close than anticipated by the lender and the consumer. However, despite the inaccurate disclosures of the individual costs of the premiums, the sum of the premiums under the rule’s mandated calculation will equal the sum actually charged to the consumer when the consumer pays for both the owner’s and lender’s title insurance policies.

The CFPB recognized that in situations in which the seller pays for the owner’s title insurance policy on behalf of the buyer, the Cash to Close figure on the Loan Estimate and Closing Disclosure form will be inaccurate. In this webinar, the bureau addressed how to allocate the seller’s contribution for title insurance the when the seller has agreed to pay for the owner’s title insurance cost as part of the purchase and sale contract with the consumer. In a seller-pay situation, the bureau indicated that there are at least three ways in which the additional credit between the seller and the consumer may be disclosed on the Closing Disclosure:

  1. The remaining credit could be applied to any other title insurance cost, including the lender’s title insurance cost. (See § 1026.38(f)&(g))
  2. The remaining credit can be considered to be a general seller credit and disclosed as such in the Summaries of Transactions table on page 3 of the Closing Disclosure. (See § 1026.38(k)(2)(vii))
  3. Use of a credit specifying the remaining amount for the owner’s title insurance cost in the Summaries of Transactions table on page 3 of the Closing Disclosure. (See § 1026.38(k)(2)(viii)). This credit could be disclosed as a “simultaneous issue credit” in the Summaries of Transactions.

The bureau stated that any one of these three methods for disclosing the remaining amount of the seller’s credit for the owner’s title insurance premium is permissible under the final rule.

04/30/2015

ALTA Survey Finds 92% of Title Professionals will be Ready for TRID Implementation

The overwhelming majority of title professionals will be prepared for the Aug. 1, 2015, implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) rule, according to a survey conducted by ALTA.

The survey showed that 92 percent of respondents indicated that their companies will be prepared to handle the new forms and comply with the regulation. The survey polled more than 500 title professionals, including title agents, underwriters, attorneys and abstracters.


Prepared

CLOSING DELAYS

While most title professionals will be prepared for implementation, 87 percent believe TRID will delay closings or result in closings taking longer to complete. Only 5 percent believe the disclosures won’t affect closings, while 8 percent are unsure. The top reasons given as to why closing delays will occur include:

  • 3-Day Delivery Rule
  • Changes at the closing table
  • Walk-through issues
  • Issues with small lender/credit union readiness
  • Lender/Realtor Communication issues

  Delayed_closings


According to one person who took the survey, “lenders I've spoke with seem to have a timeline already in place for when the order comes in. The three-day rule cuts down a lot of the time lenders have to work on things. With the way business has always been conducted in this industry, a dramatic change like this will not happen overnight. There are too many hands in the cookie jar to make this go smoothly and to complete the assigned tasks on time.”

Some who took the survey believe the new regulations will cause transactions to take up to 60 days to close. Others believe the new forms will tack on an additional two or three weeks to the closing process. One person pointed out how this will impact REO sales and the strict closing deadlines. “The three-day rule will lengthen the lender's process, most likely delaying the closing from the seller's close-by date. This means the agents will need to get an addendum to extend the closing date, which takes additional time to get the seller's approval and signature. This could potentially become a vicious circle of delays,” the respondent said.

 

CONSUMER UNDERSTANDING

According to the survey, more than two thirds believe the TILA-RESPA forms will not help the CFPB meet its objective of helping consumers understand or be better prepared to understand the costs of buying a home. Meanwhile, only 15 percent believe TRID will help consumers better understand their transaction.

Some do believe the new Closing Disclosure will help consumers understand the costs associated with purchasing a home. According to one person, “The contents of the Closing Disclosure Form is great and I love the first page details. However, I believe the average consumer will choose to ignore the remainder. It is all about how much is my payment and how much do I bring to closing. Beyond that, most simply do not care.”

However, others said that while the forms may display fees in a more readable fashion, consumers will still want and need to read it and understand it.

“While the new forms are generally understandable, there will be confusion about the title premiums, just as one example. We will probably need to use a simple closing statement to help the borrower and seller understand,” according to one person who took the survey. (Read ALTA Board Approves Model Settlement Statements)

Consumers


TRAINING

In order to prepare for the new forms and rules, 43 percent of those polled will devote at least 26 hours to training staff. Another 33 percent will spend at least 11 to 25 hours training staff to handle the disclosures.

Training
 

SOFTWARE

More than half of those surveyed reported they have either viewed a test version of their software to produce the Closing Disclosure or that a demo has been scheduled. However, 39 percent indicated they have not viewed a demo of updated software and that nothing has been scheduled.

Software


TOP CONCERNS

Collaborating with lenders to exchange data and meet production and delivery requirements of the three-day rule is the top concern of those who took the survey. 

Top_concerns

ENFORCEMENT

Because there are many unknowns with how the disclosures will work in actual transactions, ALTA has asked that the CFPB follow a “hold harmless” period of restrained enforcement and liability through the end of 2015 following the Aug. 1 implementation of TRID. 

 

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.

02/11/2015

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.

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.

11/25/2014

CFPB Provides Analysis on How to Complete Closing Disclosure

The Consumer Financial Protection Bureau on Nov. 18 hosted its fourth in a series of webinars addressing frequently-asked questions regarding the RESPA-TILA integrated mortgage disclosures. This webinar focused on the details of the Closing Disclosure form, which will take the place of the current HUD-1 and final Truth in Lending disclosure. The rule goes into effect Aug. 1.

Click here to listen to a recording of the webinar and download a copy of the presentation.

This webinar gave a detailed analysis of how to complete the Closing Disclosure form. Here are some points the CFPB discussed that may be particularly pertinent to members of the title insurance and settlement industry.

What date should be listed as the “Closing Date” under the rule?

  • The term “closing date” can refer to different times in the transaction for different regions. The bureau declared that “Closing Date” for the purpose of the rule refers to the date of consummation, meaning “the time that a consumer becomes contractually obligated on a credit transaction.” (§ 1026.2(a)(13))
  • The bureau’s Official Interpretation to the definition of “Closing Date” recognizes that “[w]hen a contractual obligation on the consumer's part is created is a matter to be determined under applicable law; Regulation Z does not make this determination.” (§ 1026.2(a)(13)-1)
  • When completing the Closing Disclosure form, use the  consummation date where the forms request the Closing Date

CD page 1

When should an item be disclosed as “Services Borrower Did Shop For” vs. “Services Borrower Did Not Shop For” on the Closing Disclosure form?

  • The Bureau stated that an item that was disclosed as “Services You Can Shop For” on the Loan Estimate (§ 1026.37(f)(3)) will move into the “Services You Cannot Did Not Shop For” category on the Closing Disclosure form when the consumer chooses a provider on the written list provided by the creditor with the Loan Estimate for that item. (1026.38(f)(2))
  • Alternatively, if an item is disclosed as “Services You Can Shop For” on the Loan Estimate was not on the written list provided by the creditor with the Loan Estimate for that item, such item will be disclosed as “Services Borrower Did Shop For” on the Closing Disclosure form. (§ 1026.38(f)(3))

CD page 2

How should recording fees and transfer taxes be disclosed on the Closing Disclosure?

  • The Bureau recognized that in some states, there will be several transfer taxes that will be part of the real estate transaction and the loan transaction
  • Transfer taxes should be itemized on the Closing Disclosure instead of aggregated together as required for the Loan Estimate. (Review §1026.37(g)(1) and its subparts for the Loan Estimate requirements and § 1026.38(g)(1) and its subparts for the Closing Disclosure Requirements)
    • Itemization is for each tax and for each governmental entity
    • Name of government entity should be disclosed on Closing Disclosure form
  • Similarly to the Loan Estimate, the Closing Disclosure form requires recording fees to be disclosed as one item. (§ 1026.37(g)(1)(i) and § 1026.38(g)(1)(i))
  • However, the Closing Disclosure also requires that the amount paid to record the deed and mortgage be itemized separately.
    • The itemized recording fees for the deed and the mortgage only need to include the amounts needed to record each of these documents
    • Recording fees for other documents, except for the deed and the mortgage, are just included as part of the total recording fees and do not need to be itemized
  • Creditors should disclose the name of the entity assessing the transfer tax, even if that entity is different from the payee of the check cut by the settlement agent. (§ 1026.38(g)(1)(ii))

CD item 3

Are creditors permitted to include additional forms if the information required to be disclosed does not fit in the space allotted on the form?

  • The answer to this question depends on the provision of the rule under which the creditor wishes to use such additional disclosure forms
  • Creditors must look to each provision of § 1026.38 to determine whether the use of addendums are permitted by the rule
  • The rule does permit the use of additional pages “for the purpose of including customary recitals and information used locally in real estate settlements.” (§ 1026.38(t)(5)(ix)) As examples of when an additional page may be used to disclose customary recitals and information used locally in real estate settlements, the Bureau listed “a breakdown of payoff figures, a breakdown of the consumer's total monthly mortgage payments, check disbursements, a statement indicating receipt of funds, applicable special stipulations between buyer and seller, and the date funds are transferred.” (§ 1026.38(t)(5)(ix)-1)
  • The Bureau has not created a model form or sample of an addendum. The Bureau has only indicated that the additional forms should be formatted similarly to the disclosure form itself and that creditors not use any more additional pages than are necessary. Any additional pages that may be included should “not affect the substance, clarity, or meaningful sequence of the disclosure.” (§ 1026.38(t)(5)-1)