21 posts categorized "Integrated Mortgage Disclosures"

02/18/2014

When Does the Three-day Rule Start to Run?

According to the Consumer Financial Protection Bureau’s final rule for integrated mortgage disclosures, the borrower must RECEIVE their Closing Disclosure at least three business days prior to the date of consummation of the transaction. This means that if the closing is set for Thursday, the Closing Disclosure can be hand delivered on Monday. You could also deliver the disclosure by courier or other shipping or postal service so long as you get a signature from the borrower showing receipt on Monday. If a company does not use a service that provides evidence that the disclosure was received on Monday (ie: US Postal Service first class mail), then it must send the disclosure by the prior Thursday.

Some quick definitions can be helpful when understanding this rule. First, the starting point for determining when the three-day period starts is the day of consummation. Consummation is the day the consumer becomes contractually obligated on the loan (i.e., the day they sign the note). This is typically the same day as closing (12 C.F.R. §§ 1026.2(a)(13) & 1026.38(a)(3)(ii)). Once you have the right starting point then you need to count backwards. The three-day rule requires the counting of “business days,” which are “a day on which the creditor’s offices are open to the public for substantially all of its business functions.” (12 C.F.R. § 1026.2(a)(6)). It is not a 72-hour requirement, but rather a day requirement so you do not need to know the time that closing will take place.

Lastly, while the examples the CFPB provides in the rule all focus on physical delivery of the disclosure, electronic delivery is allowed in accordance with the E-SIGN or Uniform Electronic Transaction Act laws. The timing requirements are the same as for physical delivery and would require obtaining some evidence of receipt (i.e., an email confirmation, system log or other indicia) or complying with the mailbox rule for presuming receipt three days after placing the documents in the mail.

For more information about the integrated disclosures, go to www.alta.org/cfpb.

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.

 

 

11/22/2013

Watch Recording of Webinar on CFPB's New Mortgage Disclosures

We had a huge turnout of 1,000 attendees for Thursday's webinar "A New Era in Closings," which addressed the Consumer Financial Protection Bureau's final rule for integrated mortgage diclosures. Since we exceeded our attendee limit, many could not attend the webinar. Below is a recording, so please share with others. We plan to hold many more webinars over the next year to help members implement the new disclosures and educate customers and consumers.

Participating on the call were:

  • Michelle Korsmo, ALTA
  • Steve Gottheim, ALTA
  • Ben Olson, BuckleySandler
  • Ruth Dillingham, First American Title Insurance Co.
  • Mary Schuster, op2 and RamQuest
  • Leslie Wyatt, SoftPro
The webinar touched on why the CFPB created new integrated mortgage disclosures, the goals of the CFPB's "Know Before You Owe Project," basics of the final rule, the forms, impact the rule will have on the industry and next steps. The panelists answered attendee questions for about 20 minutes and discussed who provides the Closing Disclosure to the consumer and role of the settlement agent, the three-day rule, the need for clear guidance and the use of the word "optional" to describe Owner's Title Insurance on the forms.

A new Loan estimate will replace the current Good Faith Estimate and early Truth-in-Lending (TIL) disclosure, while a new Closing Disclosure will replace the HUD-1 Settlement Statement and the final TIL disclosure. The new forms go into effect Aug. 1, 2015.

You can also download a copy of the presentation.


11/21/2013

Copy of presentation from webinar titled "A New Era in Closings"

We had more than 1,400 people register for today’s webinar "A New Era in Closings," which addressed the Consumer Financial Protection Bureau's final rule for integrated mortgage disclosures. Our provider, however, has a limit of 1,000 attendees. If you could not access the webinar, please know that is was recorded. After it’s edited, you will be able to watch the prese
ntation on our YouTube channel at www.youtube.com/altavideos or on our blog.

The webinar focused on top-level analysis of the final rule, which is 1,888 pages long. This was only the first of many educational opportunities we will provide about the integrated mortgage disclosures.

Integrated_disclosures_112113 1

11/20/2013

CFPB Provides Seven-page Summary of Mortgage Disclosure Rule

201311_cfpb_tila-respa_detailed-summary_Page_1If you don't have time to read all 1,888 pages of the Consumer Financial Protection Bureau's final rule for integrated mortgage disclosures, the Bureau has provided this great summary document, which addresses the scope of the rule, highlights the new Loan Estimate and Closing Disclosure, limits on closing cost increases and proposals not adopted in the final rule.

The CFPB listened to ALTA concerns and gave the industry plenty of time to implement the new forms as the final rule becomes effective Aug. 1, 2015.

You can download a PDF of the summary here.

ALTA CEO Testifies during CFPB Field Hearing on Integrated Mortgage Disclosures

Michelle Korsmo, ALTA’s chief executive officer, testified Wednesday during a field hearing in Boston as the Consumer Financial Protection Bureau addressed its “Know Before You Owe” project and released its final rule for integrated mortgage disclosures. Check out video of her testimony:

Submit Your Questions/Comments About the CFPB's Integrated Mortgage Disclosures

Please send your questions or comments about the Consumer Financial Protection Bureau's final rule for integrated mortgage disclosures to respacomments@alta.org. We will post answers and analysis to the final rule and forms here on our blog. We encourage title professionals to follow the blog as we will continue to provide analysis and information about implementing the new mortgage disclosures. The CFPB set an effective date of Aug. 1, 2015 for the industry to begin using the new disclosures.

Here are links to the final rule, Loan Estimate and Closing Disclosure:

The CFPB also has provided some additional information, including a factsheet about the integrated mortgage disclosures and information about the testing process used to arrive at the final rule.

11/08/2013

Three Things to Prepare Now for New Integrated Mortgage Disclosures

It’s been several months since the comment period to the Consumer Financial Protection Bureau’s proposed rule to integrate mortgage disclosures required under the Real Estate Settlement Procedures Act and the Truth In Lending Act.

The Bureau has proposed a new Loan Estimate and Closing Disclosure that will replace the current Truth in Lending (TIL), Good Faith Estimate (GFE) and HUD-1 Settlement Statement.

The industry is now in a waiting period before the CFPB issues its final rule, which is expected to happen sometime before the end of the year. In the meantime, there are several things can title professionals do now to prepare, according to Leslie Wyatt, director of industry relations for SoftPro.

Wyatt said that it’s not likely much will change from the proposed rule to when the CFPB issues its final rule. Title professionals should start training and educating staff on the proposed regulations and guidelines, as well as the proposed Closing Disclosure. As an aid, starting on page 839 of the 1,099-page rule, the CFPB provides examples of how to fill out the Closing Disclosure for different loan products.

Currently, settlement agents are required to provide the HUD-1, while lenders are required to provide the revised Truth-in-Lending disclosure. The CFPB is proposing two alternatives for who is required to provide consumers with the new Closing Disclosure form:

  1. Under the first option, the lender would be responsible for delivering the Closing Disclosure form to the consumer.
  2. Under the second option, the lender may rely on the settlement agent to provide the Closing Disclosure form. However, under this option, the lender would also remain responsible for the accuracy of the Closing Disclosure form.

Either option will impact a company’s workflow. Assuming settlement agents produce the Closing Disclosure, settlement agents will need to start working with lenders earlier in the process to get final numbers and approvals. If the lender provides the disclosure, settlement agents will need to provide final settlement numbers to lender earlier in the process and alert the lender of changes in those numbers and reasons for them.

In addition to educating staff on the rule and Closing Disclosure, Wyatt encourages title professionals to start talking with software vendors.

Wyatt said title professionals should be asking their software vendor these questions:

  • How do they plan to handle the proposed changes?
  • How involved are they with the CFPB and industry trade associations?
  • Will there be any costs to your company for any software updates?
  • Will your current operating system be able to accommodate the updated software?
  • Will they be offering any training on the upcoming final rule?

Additional Resources