or how not to get tripped up by TRID
Enter Congress
Major Components Created Financial Stability
Oversight Council Reformed mortgage,
securitization and derivative markets
Established Consumer Financial Protection Bureau
“Sweeping overhaul of the United States financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.“ – President Barack Obama
Consumer Financial Protection Bureau
Purpose: “Protect consumers by carrying out Federal consumer financial laws.”
Protecting the Consumer is Everything
CFBP Complaint ProcessComplaint Portal on www.consumerfinance.gov Homepage
First Order of Business
Replace the existing disclosures required by RESPA and TILA with a single disclosure.
The New Forms
Starting point
10
CFPB’s GoalsImproved consumer understanding
○ Risk factors○ Short-term and long-term costs○ Monthly payments
Better comparison shopping○ Comparisons of competing loan offers○ Shopping for closing costs
Avoiding costly surprises at the closing table○ Easier comparisons of the estimated and final loan terms of the
loan○ More time to consider choices○ Limits on closing cost increases
When do you use TRID
Most consumer mortgages, EXCEPT: home-equity lines of creditReverse mortgagesMortgages secured by a mobile home or
dwelling not attached to landNo-interest second mortgage made for
down payment assistance, energy efficiency or foreclosure avoidance
The Name of the Game
How do we get there?1. Importance of Communication and Collaboration among Lenders
and Title/Closing Agent.
a) Managing and sharing transactional information
b) How will you get provider fees?
2. Managing the CD delivery and receipt calendar
a) Delivery method
b) Timing
c) Evidence of compliance
3. How will to the closing or signing ceremony flow?
a) How will last minute changes work
b) The sellers side of the transaction
4. Some Lenders will not want to/be able to take on creation and delivery of the CD. How will Title/Closing Agent handle different lender requirements?
• TRID places two requirements on the Lender related to the Borrower's Closing Disclosure:
1. Produce the Closing Disclosure (CD) and ensure accuracy of the information. [§ 1026.38(t).]
2. Ensure the CD is received by the consumer at least 3 business days before Consummation. [§ 1026.19(f)(1)(ii).]
While the lender can partner with the title/closing agent to perform these tasks, it is at lender’s discretion and the lender is ultimately responsible
Who will produce the Closing Disclosure
Collaboration Will Be Key• While RESPA and TILA Information is combined on a single
form, the underlying information is still located in two separate systems:• Loan-centric information – lender’s loan origination
systems (LOS)• Property – centric information: settlement agent’s system
• Key Questions:– When will data be moved?– How will data be moved?– Who decides when data is “final”?– Pre-closing v. Post-closing collaboration
• No Matter What – Consumer must get a single complete CD from someone
Loan Estimate Similar but different than today
EarlierMore accurate
How will creditors and brokers obtain data to meet this goal?Many costs are transaction specific (like title)Past data may not reliableProcess to capture changes to fees
Tip: learn about changed circumstances
Three-Day RulePolicy: Consumers must receive their Closing Disclosure
at least three business days before closing .– Business day = Every day but Sundays and Federal Holidays
Proposal: Must re-disclose and restart three business day clock if something changes. Some limited exceptions.
Final: Only have to re-disclose and restart clock in limited circumstances.– APR changes– Product changes– Addition of prepayment penalty
How to Count the Three Days
How Will CD Get To Consumer?
1. What Are The Potential Methods Of Delivery?– Hand Delivery– Courier/Express Mail– Electronic – Must Comply With Consumer Consent And Other
Applicable E-sign Provisions– Postal Service
2. What Does Evidence Of Delivery Look Like?– Optional Confirm Receipt Line On Cd– Mailbox Rule - Presumption Of Receipt Three Business Days After
They Are Delivered Or Placed In The Mail– Evidence Of Actual Receipt– Audit Trail
Getting CD to Consumer
3. Can the consumer waive?– Bona fide personal financial emergency
– Example: imminent sale of home at foreclosure auction
4. What about multiple borrowers/obligors?– Who is the “consumer”? In general and in rescission
situations. Different rules for spouses/tenants in common vs. guarantors/obligors
– Multiple consumer situations—primary liability concept
Disclosure of Title Fees Lenders policy:
Services you can shop for categoryHow to calculate: Full premium without any
adjustment that might be made for the simultaneous purchase of an owner’s title insurance policy.
Can use enhanced policy or endorsements if the lender knows that these products will be purchased.
Owners policyOther category Must be listed as “optional”How to calculate: 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.
What does it mean to allow consumer shopping• Shopping = Choosing
someone not on the lenders list
• This matters for tolerances– On list: 10% bucket– Off list: no limit– If affiliate of creditor or
broker: 0% bucket
• RESPA & state Law put limits on prohibiting shopping
Written Provider List The written list must identify:
At least one available provider of that service
Include a clear statement that the consumer may choose a different provider for that service
Provide sufficient information for the consumer to contact an identified provider such as the name under which the provider does business and the provider's address and telephone number.
How will QC work for shopping?
The Other Consumer What about the
SELLER!• Separate disclosure - Model
H-25(i)
Delivered by the settlement agent
Lender(creditor) must be given a copy!
Does NOT contain a signature line!
Final Disbursement
• Rule does NOT prohibit a separate form from being used
• Lenders have expressed concern regarding too many different forms!
but
Acknowledgment and acceptance of final figures and disbursement is CRITICAL
ALTA Settlement Statement• Developed to serve as a template
• Provides actual buyers/sellers debits and credits
• Authorizes final settlement
• Adaptable for all markets
Post Consummation Room• Corrected Disclosure (not redisclosure)
changes that actually affect the amount paid by a consumer( including seller)
i.e. taxes, HOA fees, recording fees just to name a few! Including tolerance
violations
Must be made within 30 days of consummation!
CONSUMER IMPACT
Loss of earnest money Back to Back closing failures Inaccurate disclosure of costs Delay in closing EXTREME FRUSTRATION with all real
estate professionals Collaboration is Critical with all RE
professionals
How Will TRID Change Your Market
Where do you get your Where do you get your business?business?
Big BanksBig Banks Credit Unions/Community Credit Unions/Community
BanksBanks Non-Bank lendersNon-Bank lenders
TRID Prepare, Ask Questions, Train
Have you set expectations for all involved (consumers, lenders, title, real estate agents)?
How will lenders get title rates before the LE is delivered? Owner’s Title Insurance is listed as “Optional” on the LE;
what are you doing to get to consumers before they come to closing?
Who (lender/settlement agent) will prepare the CD? How will information on the CD be exchanged? How are you demonstrating evidence of compliance? How will simultaneous issue title rates be disclosed? Are your Closers trained on what to say about the value of
title insurance? Are your Closers trained on what to say to various
versions of the CD? How are you providing lenders actuals for a final CD?
Our Biggest TRID Challenges TILA Liability Rest with Creditor
Includes Private Right of Action
Inaccurate Disclosure of Title Policy Fees We Can Figure Out How to Handle the Calculation Will the Consumer Understand? Do You Have a Plan to Get to the Consumer in
Time? ALTA Created a Model “ALTA Settlement
Statement” We are preparing our case for a post-
implementation change
Owner’s Title Insurance is Optional
Its all about salability
Keys to a good Compliance Management SystemConsistencyDocumentationTesting
Tip: Only vary from your process if you really love the loan, because odds are you’ll be holding it on your books
And staying out of CFPB jail
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