using the encompass compliance service - ellie...

Using the Encompass Compliance Service

For use with Encompass Broker & Banker Editions

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Using the Encompass Compliance Service - Encompass Broker and Banker Editions

Rev. 08/22/2019

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Table of Contents

Chapter 1: Introduction ................................................................ 1

Chapter 2: Compliance Review Setup ...................................... 2Compliance Review Setup: User Access ................................... 2Accessing Compliance Review Setup ....................................... 2Report Types .......................................................................... 3What is Included in Each Review? ............................................ 3

TILA/TILA-RESPA Review ............................................... 3

TILA-RESPA Review ...................................................... 3

TILA Right of Rescission Review ...................................... 3

HOEPA Review .............................................................. 3

Higher Priced Mortgage Review ....................................... 3

GSE .............................................................................. 4

Consumer Credit Review ................................................ 4

Home Mortgage Disclosure Act (HMDA) Review ................ 4

Rate Spread Review ....................................................... 4

FHA .............................................................................. 4

Citi Mortgage Rules ........................................................ 4

OFAC Review ................................................................ 4

VA Review ..................................................................... 4

LO Compensation Review ............................................... 5

NMLS Registration Review .............................................. 5

Ability to Repay/Qualified Mortgage Review ...................... 5

Flood Zone Enterprise Rule ............................................. 5

Licensing Tests .............................................................. 5

Completing the Compliance Review Setup Wizard ...................... 5Report Tab ..................................................................... 6

License Tab ................................................................. 13

Automatic Ordering Tab ................................................ 14

Users Tab .................................................................... 15

Fee Mapping Tab ......................................................... 16

Starting and Stopping Compliance Reviews ............................. 16Granting Permission to Use the ECS Data Viewer .................... 17

Chapter 3: Fee Mapping ............................................................. 18Managing Standard Fees ....................................................... 18How Does the Compliance Audit Interpret and Treat Fees? ........ 18

Specific Fees ............................................................... 19

Fee Mapping Procedures ....................................................... 20Adding Fees ................................................................. 20

Restricting Entry of Free-Form Fees ........................................ 21Encompass Compliance Service Default Fees Table ................. 22

Chapter 4: Encompass Compliance Service......................... 38Ordering a Compliance Report ................................................ 38Viewing the Fields That Are Assessed During a Loan Check ...... 38Viewing the Report ................................................................ 39

Status Results .............................................................. 42

Viewing a List of Compliance Issues ............................... 43

View a List of Loan’s Fees ............................................. 43

Compliance Review Log Alert ......................................... 43

Chapter 1

Introduction

The Encompass Compliance Service enables you to perform a loan check (i.e., order a compliance report) at any point during the loan process. During a loan check, loans are reviewed for compliance issues based on Truth in Lending (TIL), HOEPA, State and Local High Cost, State Consumer Credit, and other industry regulations and mandates. Once the check is complete, a compliance report is generated indicating the loan's compliance issues and exceptions, as well as data within the loan that successfully passed the review.

An individual with an Encompass admin user ID can use the Compliance Review Setup to configure the Encompass Compliance Service. This tool provides an instant loan file check and determines if a loan complies with selected state and federal regulations.

The following chapters provide detailed information about configuring and using your Encompass Compliance Service:

• Chapter 2, “Compliance Review Setup”, provides detailed instructions for completing the Compliance Review Setup. These settings determine the reviews that are included in a loan check, when loan checks are performed, and the users who are permitted to manually order a compliance report.

• Chapter 3, “Fee Mapping”, steps you through setting up your fees using the Itemization Fee Management tool. A description of each fee used by the Encompass Compliance Service is provided, as well as tips and best practices for managing your closing fees.

• Chapter 4, “Encompass Compliance Service”, discusses how to order an Encompass Compliance Service report, view a completed report (complete with a list of returned alerts, errors, and pass/fail messages), and go to a field where data has not passed the review.

To access all of the features described in the guide, you must be logged in to Encompass as the admin user.

Chapter 1: Introduction 1

Chapter 2

Compliance Review Setup

Prior to using the Encompass Compliance Service, Encompass admins must complete the Compliance Review Setup where they can:

• Specify the type of compliance report your company will use.

• Specify the types of reviews that will be included in the compliance report.

• Identify your company’s lending classification and lending and broker licenses.

• Enable the automatic ordering of compliance reports when selected loan milestones are completed.

• Specify loan criteria to determine when the specified compliance review should be included in the compliance report.

• Identify users who can manually order compliance reports.

• Use the Itemization Fee Management tool to map closing fees on the 2010 Itemization form to matching fields in the Encompass Compliance Service.

• Start or stop automatic report ordering.

• Make changes to the Compliance Review Setup.

Users with an Encompass admin User ID can also grant other users access to Compliance Review Setup, based on their persona.

Compliance Review Setup: User Access

To Grant Users Access to Compliance Review Setup:

1 On the menu bar, click Encompass, and then click Settings.

2 On the left panel, click Company/User Setup, and then click Personas.

3 Click to select a persona in the left panel, and then click the Settings tab.

4 In the Company Settings section, select Compliance Review Setup.

5 Click the Save icon.

Accessing Compliance Review Setup

To Access Compliance Review Setup:


2 On the left panel, click Additional Services, and then click Compliance Review Setup.

3 If this is the first time you are accessing Compliance Review Setup, click the Get Setup button in the upper-right corner.

4 If you have already completed the setup but want to change the settings, click the Change Setup button in the upper-right corner.

Chapter 2: Compliance Review Setup 2

Report TypesThe following report types are available from the Report tab:

NOTE: The Standard Report (Subscription) option is still provided in the Compliance Review Setup wizard however this report type is a legacy product and not available to new Encompass Compliance Service customers. For more information please contact your Ellie Mae sales representative.

• Premium - The Premium reports (Subscription and Closed Loan Pricing) contain:

• Federal Truth-In-Lending Act (TILA) Tolerance and TILA-RESPA tests

• Federal Home Ownership and Equity Protection Act (HOEPA) State and Local High Cost Thresholds tests

• Approved Fannie Mae Points & Fees and “HUD-HOEPA” Mortgage Thresholds tests

• Higher Priced Mortgage review

• State Consumer Credit Law review

• Home Mortgage Disclosure Act (HMDA) review

• Rate Spread review

• Custom - All Custom reports are set up by Ellie Mae based on your company's configuration and loan volume. All of the Premium reviews can be included in a Custom report, plus Licensing reviews and custom business rules to enforce internal compliance policies or investor-specific program requirements.

Custom reports cannot be used unless you obtain a custom service code (e.g., excluding Saturdays from a report) from Ellie Mae Technical Support.

What is Included in Each Review?

TILA/TILA-RESPA ReviewThis review includes comparisons, tests, functions and calculations based on the Truth In Lending Act and Mortgage Disclosure Improvement Act (MDIA). Specifically, the Encompass Compliance Service recalculates the finance charge amount, amount financed, APR, total of payments, payment schedule, and the amortization schedule. The MDIA test validates that the loan's disclosure dates are in compliance with the “3-7-3 rules” set forth in the MDIA. Note that the MDIA test is optional and you can choose to exclude it from your compliance reports. The results of the review display in the TILA-Tolerance and TILA-Payment sections of the compliance report.

TILA-RESPA ReviewThe TILA-RESPA review applies to closed-end loans secured by 1-4 unit dwellings attached to real property, where the application is taken on or after October 3, 2015.

NOTE: This review does not apply to open-end HELOCS (field ID 1172 equals HELOC) or loans not made primarily for personal, family, or household purposes (field ID QM.X110).

If the Encompass Compliance Service does not receive enough information to determine whether the loan is secured by real property, it will apply the TILA-RESPA Rules to all closed-end loans secured by 1-4 unit dwellings, made primarily for personal, family, or household purposes, where the application date is on or after October 3, 2015 and where the Encompass Form Version (field ID 3969) is RESPA-TILA 2015 LE and CD.

For more information about the TILA-RESPA Review, refer to the Encompass Compliance Service TILA-RESPA Review Integration Guide.

TILA Right of Rescission ReviewThe TILA Right of Rescission review tests a non-purchase money closed-end loan secured by a 1-4 unit primary dwelling to determine whether it is in compliance with TILA rescission timing requirements. The Right of Rescission test compares the disclosed right to cancel expiration date and the loan disbursement date to the compliance review's calculated right to cancel expiration date and returns an exception if either date is earlier than the earliest allowable date.

NOTE: When working with dates for this review, input the last day of the RTC expiration regardless of the funding date.

HOEPA ReviewThis review checks for compliance with HOEPA and applicable state and local jurisdictions. The Encompass Compliance Service calculates the high cost thresholds as defined in HOEPA and by applicable state and local jurisdictions to determine if a loan is considered a high cost loan. The federal, state, and local APR and Points and Fees threshold calculations ensure proper classification of fees by ascertaining to whom the fee is paid (for example, lender, affiliate, originator, or provider) and by whom the fee is paid. The results of the review display in the High Cost section of the compliance report.

Higher Priced Mortgage ReviewThis review calculates thresholds and ensures critical regulatory requirements are met with respect to “higher priced mortgage loans” (HPML). HPML thresholds are calculated according to Section 12 C.F.R. § 226.35(a)(1) of the Regulation Z. Effective October 1, 2009, Regulation Z defines HPMLs to include loans with an APR above a specified threshold. The threshold for a first-lien loan is 1.5% or more above the average prime offer rate for a comparable loan (which is not an


http://help.elliemae.com/mavent/documents/ECS/TILA-RESPA_ECSIntegrationGuide.pdf

http://help.elliemae.com/mavent/documents/ECS/TILA-RESPA_ECSIntegrationGuide.pdf

unusual interest rate). The threshold for a second lien is 3.5% or more. If the loan is classified as an HPML, the Encompass Compliance Service analyzes the loan's prepayment penalties to determine if they are prohibited under Regulation Z. The results of the review display in the Higher Priced section of the compliance report.

GSEThe Government Sponsored Enterprise (GSE) review includes the following:

• Fannie Mae Points & Fees - The review calculates the allowable Fannie Mae points and fees thresholds as defined in the Fannie Mae Lender Letter 03-00, issued April 11, 2000 (and codified in Fannie Mae’s Selling Guide Part VII, Section 104.11), as updated and amended based upon loan data.

• Freddie Mac Points & Fees - The review calculates the allowable Freddie Mac points and fees thresholds as defined in the Freddie Mac Industry Letter, issued December 28, 2000 (and codified in Freddie Mac’s Seller/Servicer Guide Section 22.32), as updated and amended based upon loan data.

• GSE HUD-HOEPA Mortgage High Cost Thresholds - The review calculates the high cost thresholds as defined in the Fannie Mae Selling Guide Part VII, Section 104.15, as updated and amended, and the Freddie Mac Single-Family Seller/Servicer Guide Chapter 22, as updated and amended, based upon loan data.

The results of the review display in the GSE section of the compliance report.

Consumer Credit ReviewThe State Rules review applies the requirements of over 340 US state laws for consumer residential mortgage loans secured by real property. It enforces the laws as they relate to:

• Usury rate ceilings percentage caps

• Prohibited fees

• Fee percentage or dollar amount limits

• Higher-rate, higher-risk, higher-priced, sub-prime, non-prime, and rate spread loans

• Prepayment penalty prohibitions and limitations

• Late fee dollar amount limits and length of late fee grace periods

• Interest accrual start dates

• Negative amortization prohibitions

• Balloon payment prohibitions or term limitations

• Payment and term limitations

The results of this review display in the State Rules section of the compliance report.

Home Mortgage Disclosure Act (HMDA) ReviewThis review evaluates the pertinent loan data to HMDA requirements. The FFIEC Validity and Quality edits are processed against the HMDA fields. The results of the review display in the HMDA section of the compliance report.

Rate Spread ReviewThis review provides an alert advising the lender of the HMDA Rate Spread on a Higher-Priced Mortgage Loan. The Encompass Compliance Service uses the greater of the Disclosed APR, Encompass APR, or calculated APR as the loan’s APR for comparison purposes. The HMDA-LAR Rate Spread reporting requirement occurs when the difference between the loan's APR and the average prime offer rate for a comparable transaction is equal to or greater than 1.5% for first liens or 3.5% for subordinate liens. The results of this review display in the HMDA Rate Spread Loan Enterprise Review section of the compliance report.

FHAThe FHA review evaluates FHA loans and identifies certain issues in the following areas: Seller Contribution Limit, Tax Service Fee Prohibition, Late Charge and Grace Period Limits, ARM Adjustment and Rate Restrictions, MSA Loan Limits, and Loan Term Limits. The results of this review display in the FHA Enterprise Rules Reviewer section of the compliance report.

Citi Mortgage RulesThis review includes certain CitiMortagage® policies available to approved correspondents. The results of this review display in the Citi Enterprise Rules Review section of the compliance report.

OFAC ReviewThe OFAC review compares all of the loan's borrower names and aliases against the Office of Foreign Assets Control's (OFAC) Specially Designated Nationals, Blocked Persons and Countries List (i.e., the “SDN” list), Bureau of Industry and Security Denied Persons list maintained by the U.S. Department of Commerce, as well as similar lists established by the Canadian and British governments. In addition, the Encompass Compliance Service may validate the format for the borrower's and the co-borrower's Social Security numbers and verifies the Social Security number against the government’s Death Master File list and the “pocket book” numbers list. The results of this review display in the OFAC Review section of the compliance report.

VA ReviewThe VA Enterprise Review contains rules to test for some of the prohibited terms on VA loans. This review contains the following enterprise rules:

• Federal - Late Charge Limitation (VA)

• Federal - Grace Period Limitation (VA)


• Federal - Discount Points May Not Be Financed in a Purchase Money Loan (VA)

• Federal - Discount Points May Not Be Financed in a Cash-Out Refinance Loan (VA)

• Federal - Discount Points Limitation in a Rate and Term Refinance Loan (VA) (Warning)

• Federal - Loan Origination Fee 1% Limitation (VA)

• Federal - Unallowable Itemized Fees (1% Maximum) (VA)

• Federal - Loan Origination Fee and Unallowable Itemized Fees Charged (VA)

• Federal - Rate and Term Refinance Itemized Fees Charged (VA) (IRRL Warning)

LO Compensation ReviewThis review provides a Warning message on a closed-end loan secured by a 1-4 unit dwelling with an Application Date on or after April 1, 2011 that includes the Mortgage Broker (loan originator) receiving any of the following fees from someone other than the Borrower:

• Loan Discount

• Yield Spread Premium

• RESPA - Your Charge/Credit (Points) amount

• Prepaid Interest

• Interest Rate Buydown Fee

The Encompass Compliance Service provides a Warning message on a closed-end loan secured by a 1-4 unit dwelling with an Application Date on or after April 1, 2011 that includes the Mortgage Broker (loan originator) receiving compensation directly from the Borrower and from another person.

NMLS Registration ReviewThe NMLS (Nationwide Mortgage Licensing System) Registration Review review verifies an individual loan originator’s NMLS information against NMLS data using NMLS B2B Access. The review may be used to test for the applicable individual loan originator’s NMLS registration information on seasoned loans, with the applicable data and information at the time the loans were closed.

The Encompass Compliance Service returns Warning or Failure messages if the loan originator's NMLS unique identifier, name, or license number does not match the NMLS registration data provided by NMLS B2B Access. The service also returns the name and license(s) associated with the individual loan originator’s NMLS unique identifier for easy reference.

Ability to Repay/Qualified Mortgage ReviewThis review checks loans to for compliance with the Consumer Financial Protection Bureau’s (CFPB) amendment to Regulation Z (taking effect on applications on or after January 10, 2014) that implements sections 1411, 1412, and 1414 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and prohibits creditors from making most residential mortgage loans against a closed end first or junior lien secured by a 1 - 4 unit dwelling unless the creditor makes a reasonable, good faith determination of the consumer's ability to repay the loan. In addition, the rule establishes certain protections for creditors who make a “qualified mortgage”.

Once the Ability to Repay/Qualified Mortgage review is run on a loan file, a report is provided that details rate thresholds, fee assessments and discount points that count towards the 3% QM ceiling. This will be reflected under the Ability-to-Repay/Qualified Mortgage Review heading in the report.

Flood Zone Enterprise RuleThis review checks whether the subject property is in a flood zone. If the subject property is in a flood zone, (field ID 2366), an exception message will be returned if a Flood Insurance Reserve (i.e., a charge mapped to "Insurance Impound - Flood" in the Itemization Fee Management) is not included in the loan.

Licensing TestsEllie Mae maintains a nationwide database of over 450,000 licensed mortgage entities, including lenders and brokers, that is updated as frequently as state regulatory agencies make new licensing information available. The custom License review uses this database to determine the following:

• The lender assigned to the loan is licensed in a particular jurisdiction.

• The license is active and in good standing.

• The license authorizes the lender to originate this transaction type.

• The results of the review display in the License section of the compliance report.

Completing the Compliance Review Setup WizardUse the Compliance Review Setup wizard to select a compliance report type, configure the types of reviews to include in the loan check, specify your company's lending licenses, set up automatic reporting, enable users to manually run a report, and map closing cost fees to the appropriate fields in the Compliance Service. Use the five tabs in the setup wizard to configure the settings for the Compliance Service.


Report Tab1 On the Report tab, select a report type from the Report drop-down list.

NOTE: The Standard Report (Subscription) option is still provided in the Report drop-down list however this report type is a legacy product and not available to new Encompass Compliance Service customers. For more information please contact your Ellie Mae sales representative.

2 Select the check box to authorize the report purchase.

3 The Channel option (field ID 2626) selected on the Borrower Summary form indicates how your company is handling a specific loan, such as Brokered or Banked. l, and as you proceed through the Compliance Review Setup wizard, you will indicate how the loan's channel will be used to trigger certain compliance tests, to determine which milestone will be used to trigger compliance reports, and to determine which conditions to apply before running a compliance report. Use the Default Channel drop-down list to select the channel to use for loans where a channel has not been selected on the Borrower Summary.

NOTE: If necessary, the Automatic Ordering tab provides a Loan Channel option where you can indicate that you do not want the system to run a compliance review if a loan channel has not been selected on the Borrower Summary form.

4 Using the Configuration Options section, you can set up the review so that geocode data is automatically populated to the HMDA Information form, control the company name that is printed on the Customer line at the top of the compliance report, display expanded fee details in the compliance report, and automatically add comments to new compliance report results in the TQL Services tool.

• To import geocode data to the HMDA Information input form, select Import Geocode Data. Data from the report will be added to the appropriate fields on the HMDA Information form - MSA Number (field ID 699), County Code (field ID 1396), State Code (field ID 1395), and Census Tract (field ID 700) — only if the field is blank. Select Overwrite Existing Field Data to automatically import data from the report into the loan fields even if the field contains data. The existing data will be overwritten.

• To print the company name that is entered in the Company Name field (field ID 315) on the 1003 - Page 3 input form, select the Use Company Name from 1003 Page 3 check box.

• If you want the company name entered on the 1003 - Page 3 to print to the compliance report only for loans going through specific loan origination channels, select the check box (or check boxes) for the desired channel. For example, if you want this name to print to the compliance report for all loans going through the Banked - Retail or Brokered origination channels, select the Banked - Retail and Brokered check boxes.

• To print the company name entered in the Name field on the Company Information page in Encompass Settings to print to the compliance report, do not select the Use Company Name from 1003 Page 3 check box. This name will print to all compliance reports, regardless of their origination channel. (If the Use Company Name from 1003 Page 3 check box is currently selected, clear the check box.)

• To display expanded fee details in the compliance report, select the Display Expanded Fee Details in Compliance Report check box.

• To automatically add comments to new compliance report results in the TQL Services tool, select the Automatically add comments to new compliance report results in the TQL Services tool check box.

5 In the Reviews to include section, select your reviews, based on your selection in Step 1.

NOTE: Companies using the Subscription option agree to pay for Encompass Compliance Service fees as set forth in the Encompass Compliance Service contract. Click the Terms & Conditions link on the Report tab in the Setup Wizard for details about each agreement.


Standard Report (Subscription)

The Standard Report (Subscription) is a legacy product and not available to new Encompass Compliance Service customers. For more information please contact your Ellie Mae sales representative.

This option includes the following reviews:

• TILA/TILA-RESPA Review

• HOEPA Review

• Higher Priced Mortgage Review

• GSE Review

• Consumer Credit Review

• Home Mortgage Disclosure Act (HMDA) Review

• Rate Spread Review

• FHA Review

• Citi Mortgage Rules

• OFAC Review

• VA Review

• LO Compensation Review

• NMLS Registration Review

• Ability to Repay/Qualified Mortgage Review

• Flood Zone Enterprise Rule

For information on setting up these reviews, refer to the Premium Report (Subscription) or Premium Report (Closed Loan Pricing) section.

Premium Report (Subscription) or Premium Report (Closed Loan Pricing)

1 Clear the TILA/TILA-RESPA Review check box if you do not want to include the TILA/TILA-RESPA review in the loan check.

If you are including the TILA/TILA-RESPA Review:

• Click the Edit icon to designate required channels, milestones, fields that must be satisfied before the TILA/TILA-RESPA Review will run, manage which components of the review is run, when the finance charge tolerance portion of the review will run, how a rebate will be treated, select whether the Loan Estimate or Closing Disclosure preview will be run, or select whether investment properties will be included in the TILA-RESPA rules.

Review Requirements Tab

• In the Required Channel Types section, if you want the TILA/TILA-RESPA Review to be included in the loan check only for loans in a specific loan channel, select the Channel check box, and then select the check box for each loan channel you want to specify.

• Select No additional condition from the drop-down list if you do not want to apply any conditions to the review.

• To restrict the review from being performed until a specific milestone has been finished, select Run Review only when a certain Milestone is reached from the drop-down list, and then select the milestone from the appropriate drop-down list. Select a milestone for each loan channel as needed.

NOTE: For loans where a loan channel (field ID 2626) has not been selected on the Borrower Summary, the system uses the Default Channel you selected on the Report tab when determining the starting milestone for the TILA Review.

• To restrict the review from being performed until specific fields are populated, select Run Review only when certain Fields are filled in from the drop-down list, and then select the desired fields from the Required Fields list.

Components Tab

Each component of the TILA-RESPA Review can be configured to either be applied or suppressed for an individual loan review. You must select whether to run a component of the review at all, and at what point (milestone) the component should be run.

• Select Run component only when a specific Milestone is reached if you want a component to be run when a specific milestone is reached. A list of components is displayed.

• In the Milestone column, select which milestone will trigger each component to run.

• By default, the Enable check box will be selected and the component will run when the specified milestone is reached. If the Enable check box is cleared, that component will be disabled.

Additional Settings Tab

• In the TILA Finance Charge Run Conditions section, if you want the finance charge tolerance portion of the review to run, select Run Review only when a certain Milestone is reached from the


drop-down list, and then select the milestone from the appropriate drop-down list. Select a milestone for each loan channel as needed.

NOTE: The Select Additional Condition applies to the entire TILA/TILA-RESPA Review.

• The available milestones under each corresponding TILA Review finance charge run condition channel are ones that are equal to or later than the milestones selected in the TILA/TILA-RESPA Review run condition channels.

• The milestone selected in the corresponding channel under the TILA/TILA-RESPA Review run conditions is the default channel selected under the TILA Finance Charge run conditions for that channel.

• In the Prepaid Finance Charge Credit Settings section, if you want to indicate how a rebate should be treated, select an option from the drop-down list and then one of the radio button options. For more information on the available options, see Prepaid Finance Charge Credit Settings.

NOTE: If you select Apply rebate until Amount Financed equals the Note Amount (Default), only the For all Negative Prepaid Finance Charges option is available.

• Apply rebate until Amount Financed equals the Note Amount (Default) - A fee submitted as a negative prepaid finance charge offsets a fee submitted as a positive prepaid finance charge. ECS allows this until the Calculated Federal Amount Financed equals the note amount.

NOTE: ECS will not allow the sum of all fees characterized as a prepaid finance charge to go below $0.00.

• Apply rebate even if the Amount Financed exceeds the Note Amount - For all Negative Prepaid Finance Charges - A fee submitted as a negative prepaid finance charge offsets a fee submitted as a positive prepaid finance charge. If the sum of all prepaid finance charge fees is less than $0.00, ECS allows that negative amount to increase the Calculated Federal Amount Financed above the note amount.

• Apply rebate even if the Amount Financed exceeds the Note Amount - For Negative Prepaid Interest Only - A fee submitted as a negative prepaid finance charge offsets a fee submitted as a positive prepaid finance charge. If the sum of all prepaid finance charge fees is less than $0.00, ECS allows only negative prepaid interest fee to increase the Calculated Federal Amount Financed above the note amount.

• Apply rebate even if the Amount Financed exceeds the Note Amount - For all Negative Prepaid Finance Charges excluding Negative Prepaid Interest - A fee submitted as a negative prepaid finance charge offsets a fee submitted as a positive prepaid finance charge. If the sum of all prepaid finance charge fees is less than $0.00, ECS allows all negative prepaid finance charge fees, except the negative prepaid interest, to increase the Calculated Federal Amount Financed above the note amount.

NOTE: ECS will not allow the prepaid interest to be less than $0.00.

• In the TILA-RESPA Preview Settings section, if you want to indicate which preview (Loan Estimate or Closing Disclosure) should be performed for a specific loan channel, select the milestone from the appropriate drop-down list.

NOTE: You should only consider this setting when there is one or more Loan Estimates included within Disclosure Tracking but no included Closing Disclosures.

• In the Investment Property Applicability section, if you want to include investment properties in the TILA-RESPA (Know Before You Owe) rules, select one or both of the check boxes.

• Select Apply TILA-RESPA Rules to Investment Properties if you want to include investment properties in the TILA-RESPA rules.

• Select Apply TILA-RESPA Rules to Owner-Occupied Rental Properties if you want to include owner-occupied rental properties in the TILA-RESPA rules.

• When finished, click Save.

• Select the tolerance to apply to loan reviews using the APR and Finance Charge Tolerance options.

• Select 0.125% for all loans to set up the report to note a violation if there is a difference between the disclosed APR and the current APR greater than .125% when reviewing any type of loan.

• Select the 0.125% for regular loans... option to set up the report to note a violation if there is difference between the disclosed APR and the current APR greater than 125% when reviewing a loan or if there is a difference between the disclosed APR and current APR greater than .25% when reviewing an irregular loan

More Information About APR and Finance Charge Tolerances


When the APR and Finance Charge Tolerance option is included in the TILA/TILA-RESPA Review, the Encompass Compliance Service does not test for APR over disclosure unless it is configured as part of a Custom Report. In addition, the Encompass Compliance Service does not receive sufficient information to determine whether the APR is closer to the "actual APR" and therefore does not test for tolerances pursuant to 12 C.F.R. § 226.22(a)(5).

Regulation Z defines the "accuracy" of the closed-end APR in 12 C.F.R. § 226.22. As a general rule, the disclosed APR is considered accurate if it is not more than .125% above or below the APR determined in accordance with 12 C.F.R. § 226.22(a)(1). In an "irregular transaction", the APR is considered accurate if it is not more than .25% above or below the APR. An "irregular transaction" is one that includes one or more of the following features (as defined in 12 C.F.R. § 226.22(a)(2) and (3)):

• Multiple advances

• Irregular payment periods, or

• Irregular payment amounts (other than an irregular first period or an irregular first or final payment)

Because most creditors and secondary market purchasers prefer a more conservative test, you have the option of using the more restrictive 0.125% for all loans option or applying "the benefit of the quarter" to irregular transactions (i.e., the 0.125% for regular loans and 0.25% for irregular loans option). If you chose to apply the more liberal test to irregular transactions, the Encompass Compliance Service uses the following criteria to determine the loan's status as irregular:

• A closed-end loan secured by a 1-4 unit dwelling that has:

• More than one advance in the payment stream

• More than three payment streams

• Payments that are not equal in amount (except for the first and/or last payment), or

• Payment periods that are not equal (the first payment period can be different).

• Select the tolerance to apply to the Closing Disclosure Total of Payments to loan reviews either generally or for purposes of a consumer’s right of rescission:

• $100 Disclosure and Rescission Tolerances - Checked by default. If checked, the following rules will be applied to the loan:

• For rescindable refinance transactions, Disclosed Total of Payments is considered accurate if it: (1) is understated by no more than ½ of 1% of the face amount of the note or $100, whichever is greater; or (2) is greater than the amount required to be disclosed.

• For rescindable refinance transactions, Disclosed Total of Payments is considered accurate, after the initiation of foreclosure on a consumer’s principal dwelling, if it: (1) is understated by no more than $35; or (2) is greater than the amount required to be disclosed.

• $100 Disclosure Tolerance - If checked, the following rule will be applied to the loan:

• Disclosed Total of Payments considered accurate if it: (1) is understated by no more than $100; or (2) is greater than the amount required to be disclosed.

• Clear the MDIA check box if you do not want to include the MDIA review in the loan check.

NOTE: When the MDIA check box is selected, the MDIA review will be performed on all loans, including investment properties.

2 Select the TILA Right of Rescission check box to include the TILA ROR review in your loan check.

If you are including this review, click the Edit icon to designate required channels or milestones that must be satisfied before the review will be performed on the loan.

• To indicate that you want the TILA ROR to be included in the loan check only for loans in a specific loan channel, select the Channel check box, and then select the check box for each loan channel you want to specify.

• To restrict the review from being performed until a specific milestone has been finished, select Run Review only when a certain Milestone is reached from the drop-down list, select the milestone from the appropriate drop-down list, and then select a milestone for each loan channel as needed.

NOTE: For loans where a loan channel (field ID 2626) has not been selected on the Borrower Summary, the system uses the Default Channel you selected on the Report tab when determining the starting milestone for the TILA ROR.

• When finished indicating required loan channels or milestones, click Save.

• When working with dates for this review, input the last day of the RTC expiration regardless of the funding date.


3 Clear the GSE Review check box if you do not want to include the GSE HUD-HOEPA Mortgage High Cost Thresholds review in the loan check.

If you are including the GSE Review, click the Edit icon to designate required channels, milestones, or loan types that must be satisfied before the GSE Review will run.

• To indicate that you want the GSE Review to be included in the loan check only for loans in a specific loan channel, select the Channel check box, and then select the check box for each loan channel you want to specify.


• To restrict the review from being performed until a specific milestone has been finished, select Run Review only when a certain Milestone is reached from the drop-down list, select the milestone from the appropriate drop-down list, and then select a milestone for each loan channel as needed.

NOTE: For loans where a loan channel (field ID 2626) has not been selected on the Borrower Summary, the system uses the Default Channel you selected on the Report tab when determining the starting milestone for the GSE Review.

• To restrict the review from being performed based on loan type, select Run Review only when certain Fields are filled in from the drop-down list, and then select the type of loans you want to be reviewed from the Required Loan Types list.


4 Clear the HMDA Review check box if you do not want to include the HMDA review in the loan check.

If you are including the HMDA Review, click the Edit icon to designate required channels, milestones, or fields that must be satisfied before the HMDA Review will run.


• To indicate that you want the HMDA Review to be included in the loan check only for loans in a specific loan channel, select the check box for each loan channel you want to specify, or select the Channel check box to select all channels.

• Select an additional condition from the drop-down list:

• No additional condition - This selection will not apply any conditions to the review.

• Run Review only when a certain Milestone is reached - This selection restricts the review from being performed until a specific milestone has been finished. Select a milestone for each loan channel (default setting is “Submittal”) as needed.

NOTE: For loans where a loan channel (field ID 2626) has not been selected on the Borrower Summary, the system uses the Default Channel you selected on the Report tab when determining the starting milestone for the HMDA Review

• Run Review only when certain Fields are filled in - This selection restrict the review from being performed until specific fields are populated. Select the desired fields from the Required Fields list.


• Select the Do not run HMDA Review option if the Exclude loan from HMDA report check box (field ID HMDA.X24) is checked for the loan on the HMDA Information input form.

• Select the Display expanded HMDA details in Compliance Reports option to display expanded HMDA details in the Compliance Report. Selecting this option will display all the HMDA data points utilized in running the HMDA review


5 Select the Rate Spread Review check box to include the Rate Spread review in your loan check. If you are including this review, click the Edit icon to designate the rate spread run conditions that must be satisfied before the review will be performed on the loan.

• To automatically populate the Rate Spread (field ID HMDA.X15) on the HMDA Information form during a loan check, select Import Rate Spread Data. Data from the report will be added to the Rate Spread field only if the field is blank.

• Select Overwrite Existing Field Data to automatically import data from the report into the Rate Spread field even if the field currently contains data, and then select an option for the Rate Spread value:

• Round Rate Spread - The rate spread is rounded to two decimal places, based on the value in the third decimal place. If the third decimal place is 0 to 4, the value is round down. If the third decimal place is 5 to 9, the value is round up.For example, if the rate spread is 10.254, then it should be round down to 10.25. If the rate spread is 10.299, then it should be round up to 10.30.

NOTE: This is the default option.


• Truncate Rate Spread - The rate spread is truncated to two decimal places.For example, if the rate spread is 10.254, then it should be truncated to 10.25. If the rate spread is 10.299, then it should be truncated to 10.29.

Regardless of which option is selected, if the rate spread has less than two decimal places, zeros are added so the rate spread has two decimals. If the rate spread is a number less than 10.0 (e.g., 9.99), a leading zero is added so the ten's place always has a digit.

6 Clear the NMLS Registration Review check box if you do not want to include the NMLS review in the loan check.

If you include the NMLS Review, click the Edit icon to indicate if the review is performed as of the application date, consummation date, or both.

• In the NMLS Review Date section, select the milestones at which the NMLS review should be run.

NOTE: You can select either the Application Date, Consummation Date, or both.

• If only the Application Date is selected, the NMLS Review only checks the loan’s current finished milestone as of the application date.

• If only the Consummation Date is selected, the NMLS Review only checks the loan’s current finished milestone as of the consummation date.

• If you select both the Application and Consummation date for a milestone, select whether registration is required as of BOTH the Application Date AND Consummation Date or as of EITHER the Application Date OR Consummation Date in the drop-down field.

• If both the Application Date and the Consummation Date are selected and the drop-down selection is “Application Date AND Consummation Date”, the NMLS Review checks the loan’s current finished milestone as of the application date and the consummation date, and returns a failure if the loan officer is not registered/sponsored as of either date.

• If both the Application Date and the Consummation Date is selected and the drop-down selection is “Application Date OR Consummation Date”, the NMLS Review checks the loan’s current finished milestone as of the application date and the consummation date, and returns a failure if the loan officer is not registered/sponsored as of both dates.


7 Clear the Ability to Repay/Qualified Mortgage Review check box if you do not want to include the ATR/QM review in the loan check.

If you are including the Ability to Repay/Qualified Mortgage Review, click the Edit icon to designate required channels that must be satisfied, as well as conditions that must be met, before the review will be performed on the loan.


• To indicate that you want the Ability to Repay/Qualified Mortgage Review to be included in the loan check only for loans in a specific loan channel, select the check box for each loan channel you want to specify or select the Channel check box to select all channels.


• To restrict the review from being performed until a specific milestone has been finished, select Run Review only when a certain Milestone is reached from the drop-down list, and then select the milestone from the appropriate drop-down list. Select a milestone for each loan channel as needed.

NOTE: For loans where a loan channel (field ID 2626) has not been selected on the Borrower Summary, the system uses the Default Channel you selected on the Report tab when determining the starting milestone for the Ability to Repay/Qualified Mortgage Review.

Components Tab

Each component of the Ability to Repay/Qualified Mortgage Review can be configured to either be applied or suppressed for an individual loan review. You must select whether to run a component of the review at all, and at what point (milestone) the component should be run.

• Select Run component only when a specific Milestone is reached if you want a component to be run when a specific milestone is reached. A list of components is displayed.

• In the Milestone column, select which milestone will trigger each component to run.

• By default, the Enable check box will be selected and the component will run when the specified milestone is reached. If the Enable check box is cleared, that component will be disabled.



• The Ability-to-Repay Loan Type field (field ID QM.X23) on the ATR/QM Management tool’s ATR/QM Eligibility tab is automatically populated based on specific data in the loan file. The value populated to this field determines what type of ATR review the Encompass Compliance Service performs. In the Default Ability to Repay Loan Type section, select a default ATR loan type. For loans where the Ability-to-Repay Loan Type field (field ID QM.X23) on the ATR/QM Management tool’s ATR/QM Eligibility tab is blank, the compliance review will run the ATR/QM rules that apply to the ATR loan type selected here.

• The Qualified Mortgage Loan Type field (field ID QM.X24) on the ATR/QM Management tool’s ATR/QM Eligibility tab is automatically populated based on specific data in the loan file. The value populated to this field determines what type of QM review you want the Encompass Compliance Service to perform. In the Default Qualified Mortgage Loan Type section, select a default QM loan type. For loans where the Qualified Mortgage Loan Type field (field ID QM.X24) on the ATR/QM Management tool’s ATR/QM Eligibility tab is blank, the compliance review will run the ATR/QM rules that apply to the QM loan type selected here.


8 Select any additional reviews to include in the loan check.

9 Click Next.

Custom Reports

Custom reports are set up by Ellie Mae based on your company's configuration and loan volume. Contact your sales representative to determine the reviews to include the report. Custom reports cannot be used unless you obtain a custom service code (e.g., excluding Saturdays from a report) from Ellie Mae Technical Support.

For information on setting up the reviews, refer to the Premium Report (Subscription) or Premium Report (Closed Loan Pricing) section.

6 In the Compliance Deviations section, select the New Jersey First Lien Third Party Fee Position or Washington First Lien Fee Position check box to deviate from the standard Encompass Compliance Service rules and apply modified rules to certain New Jersey first lien third party fee exceptions or certain Washington first lien fees.

New Jersey First Lien Third Party Fee Position

Select this check box to deviate from the standard Encompass Compliance Service rules and apply modified rules to certain New Jersey first lien third-party fee exceptions.

• After selecting the check box, read the Ellie Mae, Inc. Amendment to Agreement Governing the Use of the Encompass Compliance Service.

• If you agree with the terms, select the I have read, fully understand, accept and agree... check box, and then click I Accept.

• If you do not agree to the terms, click I Decline, and then click Yes to confirm your decision. The position will not be in effect when compliance reports are run.

NOTE: If you do not apply this New Jersey First Lien Third Party Fee position, a Failure message The New Jersey Licensed Lenders Act (N.J. Rev. Stat. 17:11C-23; N. J. ADC 3:1-16.2) does not allow {(Fee Name) (Fee ID:__)} to be charged to the Borrower in NJ. will be included in the State Rules section of compliance reports run on first lien New Jersey loans if the borrower pays any of the following fees: Administration Fee, Annual Assessments-Impound, Assignment Fee, Assumption Fee, Bankruptcy Monitoring Fee, Bond Fee, Bond Review Fee, Broker Fees, CLO Access Fee, Closing Protection Letter, Compliance Testing Fee, Document Assembly Fee, Escrow Account Servicing Fee, Escrow Waiver Fee, Funding Fee, HOA Certification Handling Fee, Interest Rate Buy Down Fee, Loan Tie In Fee, MERS(R) Registration Fee, Modification/Amendment Fee, Mortgage Insurance Application Fee, Office Expenses, Other Impound, Processing Fee, Program Participation Fee, Recording Fees-Assignment, Reinspection Fee, RESPA-Our Origination Charge RESPA-Title Services and Lender's Title Insurance, RESPA- Your Charge/Credit (Points), Rush Fee, Servicing Release Premium, Signing Agent Fee, Yield Spread Premium, Subordination Fee, Underwriting Fee, Unknown Fee-Finance Charge, VA Funding Fee, Verification Fee, Wire Transfer Fee, Appraisal Desk Review Fee, Appraisal Field Review Fee, Appraisal Review Fee, Document Preparation Fee, Document Redraw Fee, Notary Fee, Payoff Demand Fee, Settlement or Closing Fee, Subordination Preparation Fee, and Unknown Fee-Non Finance Charge.

Washington First Lien Fee Position

Select this check box to deviate from the standard Encompass Compliance Service rules and apply modified rules to certain Washington first lien fees.

• After selecting the check box, read the Ellie Mae, Inc. Amendment to Agreement Governing the Use of the Encompass Compliance Service.

• If you agree with the terms, select the I have read, fully understand, accept and agree... check box, and then click I Accept.

• If you do not agree to the terms, click I Decline, and then click Yes to confirm your decision. The position will not be in effect when compliance reports are run.

By selecting this option, you are requesting two modifications to the standard compliance rules. See below for a definition of the standard rules and the requested modifications.


• Standard Rule:

The Encompass Compliance Service applies the Consumer Loan Act (“CLA”) to all loans made by a CLA licensee secured by real property located in Washington. The CLA regulator advised outside counsel that only fees expressly authorized under the CLA are permitted. RCW 31.04.105(2); WAC 208-620-555; WAC 208-620-560(6). As the regulator interprets this requirement strictly, and the Loan Origination Fee, Loan Discount Fee, and Commitment Fee are the only fees that a lender is expressly permitted to charge as of January 1, 2010, the Encompass Compliance Service will fail the loan if any fee other than a Loan Origination Fee, Loan Discount, or Commitment Fee is charged to the Borrower and paid to the Lender. The Encompass Compliance Service applies the CLA lender fee restriction to both first and subordinate lien loans.

Requested Modification:

The Encompass Compliance Service user has requested the modification that all first lien Processed Loans be excluded from the Standard Rule. Pursuant to this request, a Modified Rule will be created that will exclude all first lien Processed Loans submitted by the user from the Standard Rule described above. The Modified Rule will not fail a first lien Processed Loan when any fee other than a Loan Origination Fee, Loan Discount, or Administration Fee is charged to the Borrower and paid to the Lender. Therefore, the user will not receive a failure message on first lien Processed Loans that would otherwise trigger the above Standard Rule.

• Standard Rule:

The Encompass Compliance Service applies the Consumer Loan Act (“CLA”) to all loans made by a CLA licensee secured by real property located in Washington. The CLA regulator advised outside counsel that only fees expressly authorized under the CLA are permitted. RCW 31.04.105(2); WAC 208-620-555; WAC 208-620-560(6). The Revised Code of Washington provides: “Every licensee may...In connection with the making of a loan, charge the borrower a nonrefundable, prepaid, loan origination fee not to exceed four percent of the first twenty thousand dollars and two percent thereafter of the principal amount of the loan advanced to or for the direct benefit of the borrower, which fee may be included in the principal balance of the loan;” RCW § 31.04.105(2). The Encompass Compliance Service applies this CLA maximum lender fee restriction to both first and subordinate lien loans.

Requested Modification:

The Encompass Compliance Service user has requested the modification that all first lien Processed Loans be excluded from the Standard Rule. Pursuant to this request, Modified Rules will be created that will exclude all first lien Processed Loans submitted by the user from the Standard Rule

described above. The Modified Rules will not fail a first lien Processed Loan when the total of all fees, except for Loan Discount, paid by the Borrower and paid to the Lender, exceeds 4% of the first $20,000 or 2% percent thereafter of the principal amount of the loan. Therefore, the user will not receive failure messages on first lien Processed Loans that would otherwise trigger the above Standard Rule.

License TabNOTE: State rules and licensing reviews are not included in Custom Reports. When you reach this point in the Custom Report setup, click Next to proceed to the Automatic Ordering tab.

1 On the License tab, select a Broker Type from the drop-down list.

2 If your company is a depository institution, select the company's Home State from the drop-down list.

• The home state is the state where the company's main (or home) office is located. The applicable laws of the home state are applied to the loan.

• If State Licensed Lender - Non Depository Institution (STLIC) was selected in step 1, the Home State drop-down list is disabled.

3 To display only licenses for a specific state, select the state from the License Type in drop-down list.

4 Specify each license that your company has by selecting the corresponding check box in the Select column.


• When you select a license, the Exempt check box displays. Select the Exempt check box if you do not want the Encompass Compliance Service to apply any license or compliance rules associated with that license in the property state.

• State Licensed Lender - Non Depository Institutions must be licensed in every state in which it lends unless it is exempt from licensing.

5 Select a statutory election for first lien, subordinate lien, junior, closed-end, and open-end loans in Maryland and Kansas.

Statutory Election in Maryland

Maryland law permits a lender to elect to make a loan under the Maryland Credit Grantor Law if the choice to do so is specified in the loan documents [MD COML §12-913.1 and §12-1013.1]. If this election is not made and documented in writing, then other laws in Maryland govern the loan.

• No Statutory Election - If you select this option, the Encompass Compliance Service will apply the Maryland Interest and Usury Provisions to all first lien loans and apply the Maryland Second Mortgage Loan Law to all subordinate lien loans secured by a 1-4 unit dwelling on real property located in Maryland.

• Credit Grantor Law Election (Junior Liens Only) - If you select this option, the Encompass Compliance Service will:

• Apply the Maryland Interest and Usury Provisions to all first lien loans.

• Apply the Credit Grantor Closed End Credit Provisions to all closed-end subordinate lien loans secured by a 1-4 unit dwelling on real property located in Maryland.

• Apply the Credit Grantor Revolving Credit Provisions to all open-end subordinate lien loans secured by a 1-4 unit dwelling on real property located in Maryland.

Important: DO NOT select this option unless you have confirmed that the loan documents contain a written election to use the Credit Grantor Law for subordinate lien loans. If you are electing to use the Credit Grantor Law for first lien loans, Ellie Mae must create a custom profile to accommodate this practice. Please contact your Ellie Mae sales representative for more information.

Statutory Election in Kansas

Kansas law specifies the loan types subject to the Kansas Usury Law and to the Kansas Uniform Consumer Credit Code (UCCC). However, the Kansas Usury Law permits the parties to a loan to agree in writing to make the transaction subject to the UCCC for loans that would otherwise be subject to the Usury law. (See Kan. Stat. Ann. §16-207(i)(3).)

• No Statutory Election - If you select this option, the Encompass Compliance Service will apply the Kansas Usury Law to all first lien loans with a loan-to-value (LTV) of 100% or less and apply the Kansas Uniform Consumer Credit Code (UCCC) to all subordinate lien loans and all fixed rate first lien loans with a LTV of more than 100%.

• Kansas UCCC Election For All Loans - If you select this option, the Encompass Compliance Service will apply the Kansas UCCC to all loans secured by real property in Kansas.

6 The Channel option selected on the Borrower Summary form indicates how your company is handling a specific loan, such as Brokered or Banked. Use the Default Channel drop-down list to select the channel to use for loans where a channel has not been selected on the Borrower Summary.

7 Click Next.

Automatic Ordering TabBy default, reports will be run automatically at the completion of the selected milestones.

1 On the Automatic Ordering tab, select No to disable automatic ordering.

• If you select No after configuring and saving report settings, automatic ordering is disabled, but the configuration settings are saved for future use.


2 If automatic ordering is enabled, select the Run an Audit Before Ordering check box to display the Compliance Review Audit Results window before a report is run.

• If errors occur when the report is run, this window opens with a list of the errors (typically due to inconsistent data). You can select a list item, and then click Go to Field to open a form with the field highlighted for entry.

3 In the Trigger Milestone section, click the Banked-Retail, Banked-Wholesale, Brokered, or Correspondent tab, and then select at least one milestone from the Milestone list. The report will run automatically at the completion of each selected milestone.

• Using the tabs provided, you can set up different trigger milestones for loans based on the loan's origination channel.

• To select a milestone, select the type of report to run: Preview or Review.

NOTE: Preview reports enable you to test for compliance issues before ordering a full compliance review report or disclosing to the borrower. With a preview, the final loan data is not reviewed. The results are based on the loan's current APR and finance charge amounts, not the disclosed values.

• Click Copy these settings to all Channel tabs to copy the milestone selections you have made on the channel tab you are currently viewing to the other three channel tabs.

• For loans where a loan channel (field ID 2626) has not been selected on the Borrower Summary, the system uses the Default Channel you selected on the Report tab when determining trigger milestones.

• A report can be run on the same loan multiple times at no additional charge.

4 Optionally, select loan criteria to apply to the report. Reports will only be run on loans that match the selected criteria.

• If you do not select any criteria, the report will be run on all loans.

• If you do not want compliance reports to be run on loans that do not have a loan channel selected, select Loan Channel, and then ensure that the No Channel Selected check box is clear (i.e., not selected). Then select the check box for each loan channel in which the Automatic Ordering settings will apply.

5 Click Next.

Users TabUse this tab to enable users to manually order a report for a loan (all selected users will be allowed to manually order a report at any point during the loan process) and to clear alerts.

NOTE: If you do not want any users to have rights to manually order reports or clear alerts, clear all selected check boxes. Click Yes when asked if you want to continue to the next tab in the wizard.

1 On the Users tab, select the Order Report check box for each user to whom you want to grant manual ordering rights.

• To grant manual ordering rights to all users, select the Order Report check box at the top of the Order Report column so that each user’s check box is selected.

• If you do not want a user to be able to order a compliance report, clear the user’s check box.

2 To enable a user to clear a “Compliance Review - Did Not Pass” alert that is returned after ordering a compliance report for a loan, select the Clear Alert check box for the user.

• Enabled users are provided with a Clear Alert button on the Compliance Review screen. When viewing a completed compliance report, these users can click this button to remove the “Compliance Review - Did Not


Pass” alert that is added to the Log every time a loan does not pass a loan check. Note that even though the alert is removed, the loan's compliance issues remain until they are corrected.

• To enable all users to have access to the Clear Alert button, select the Clear Alert check box at the top of the Clear Alert column so that each user’s check box is selected.

• To hide this button from a user, clear the Clear Alert check box for the user.

3 Use the Search options to filter the Users list or search for users:

• Select an option from the drop-down list to display only users with the selected persona in the Users list.

• Enter a user's name or other search criteria in the text box and then click Search. User names matching the search criteria are displayed.

• Click Clear to remove all search criteria.

4 Click Next.

Fee Mapping TabUse this tab to select the option to Use Encompass Finance Charge Indicator for Unmapped Fees and to enter email addresses for error notifications.

NOTE: All of your Itemization fees must be mapped to specific fields in the Encompass Compliance Service so that compliance reports contain complete and accurate results. Use the Itemization Fee Management setting in Encompass Settings to map these fees. The Itemization Fee Management help topic provides detailed instructions for using the Itemization Fee Management setting to map your fees to the corresponding Encompass Compliance Service fees. It also describes how fees are treated and interpreted by the Encompass Compliance Service and includes a description of each default fee used by the service.

1 On the Fee Mapping tab, select the Use Encompass Finance Charge Indicator for Unmapped Fees check box to enable the loan's APR setting to determine how unmapped fees are categorized by the Encompass Compliance Service.

• When selected, an unmapped fee will be categorized as Other - Non-Finance Charge (Fee ID 998) if the fee's APR indicator check box (field ID SYS.X17) on the 2010 or 2015 Itemization form is not selected.

• An unmapped fee will be categorized as Other - Finance Charge (fee ID 999) if the fee's APR indicator check box on the 2010 or 2015 Itemization form is selected.

2 Optionally, enter one or more email addresses in the Admin Email Address text box. If a processing error occurs during the loan review due to a fee that was not mapped or was mapped incorrectly, an email alert message will be sent to these email addresses.

• When adding multiple email addresses, separate each one using a comma or semicolon.

3 Click Finish.

NOTE: For detailed information about how the Encompass Compliance Service interprets and treats specific fees, as well as tips and best practices for managing and mapping fees, refer to Chapter 3, “Fee Mapping”. This chapter also provides a description of each mapped compliance field available in the Encompass Compliance Service.

Starting and Stopping Compliance ReviewsThe Encompass Compliance Service starts automatically after you have completed all of the steps in the setup wizard. If you have stopped the service, follow these steps to restart it.

NOTE: The Encompass Compliance Service performs compliance reviews based upon a specifically defined list of fees. In order for the review to return accurate results, you must use the Itemization Fee Management tool in Encompass Settings to map Itemization fees to specific fields in the Encompass Compliance Service. If you have not mapped these fees, be sure to do so immediately after completing the Compliance Review Setup wizard.

To Start Compliance Reviews:

1 Click the Start Service button in the upper-right corner.

2 Click OK.

NOTE: Before the service can begin analyzing loans, you must exit Encompass, re-open it, and then log back in.


To Disable Compliance Reviews:

1 Click the Stop Service button in the upper-right corner.

2 Click Yes in response to the confirmation message.

3 Click OK.

NOTE: Your Compliance Review Setup settings are saved and will be available for use the next time you start the service.

Granting Permission to Use the ECS Data ViewerThe ECS Data Viewer tool enables users to view the fields that are exported to the Encompass Compliance Service and assessed based on the type of loan check being performed. The administrator can allow or deny access to the viewer based on persona.

To Configure Persona Permissions:


2 On the left panel, click Company/User Setup, and then click Personas.

3 In the Create a persona section, select a persona with access to the Forms/Tools tab.

4 Click the Forms/Tools tab.

5 In the Tools section, select the ECS Data Viewer check box to grant the persona access to the tool.

• To deny access, clear the ECS Data Viewer check box.

6 Click the Save icon to save your changes.


Chapter 3

Fee Mapping

One of the most valuable features of the Encompass Compliance Service is that it provides a consistent review of loans based on consistent criteria. In order to maintain such consistency, the service uses a carefully analyzed, standardized list of fees which are specifically defined. In order for you to take advantage of this analysis and approach, you must maintain a consistent set of fees and then map each fee to the corresponding fee using the Itemization Fee Management tool.

Managing Standard FeesIt is highly recommended that you maintain a consistent list of fees used by your company and review it on a regular basis to ensure the list does not include redundant fees.

Create a Standard Fee List

You can develop your own standard list of fees used by your company or simply use the default fee list available in the Itemization Fee Management tool. This fee list has been used for over 28 million loan reviews by a wide variety of lenders and investors, so it should be comprehensive enough to meet your needs.

Review your Standard Fee List

If your fee list has not been reviewed recently, now is a good time to make sure the list does not contain redundant fees or use similar names or different variations for the same fee, such as Loan Processing, Processing, or process.

Once your list has been thoroughly reviewed, compare it to the Encompass Compliance Service fee definitions. Pay particular attention when there are two fees with similar names in this fee list.

For example, be sure you understand the difference between the Flood Certification Fee and a Flood Determination Fee. The Flood Certification Fee includes the life of loan monitoring, while the Flood Determination Fee does not, which means one is a finance charge and the other is not. Similarly, Recordation Tax/Mortgage Tax and Recording Fees - Mortgage/Deed of Trust have very similar definitions, but one is a tax and the other is a fee. As with all taxes, in certain jurisdictions there may be no tax of that variety so it will be included in the High Cost and State Consumer Credit Rule calculations because, if it is not a tax that exists, it cannot be bona fide and reasonable.

How Does the Compliance Audit Interpret and Treat Fees?This section discusses assumptions the Encompass Compliance Service makes about the fees included in the loan being reviewed, as well as how it manages these fees.

• When a Standard report is ordered, fees used in finance charge calculations under Regulation Z and high cost threshold calculations under various federal, state and local laws, are properly classified by analysis of the definition and, to the extent it is relevant, ascertaining to whom the fee is paid (e.g. lender, affiliate, originator, or provider) and by whom the fee is paid. When a Premium Report is ordered, the Encompass Compliance Service uses this same method-ology to determine compliance with state consumer credit fee limitations and restrictions.

• All fees entered into Encompass are treated as non-financed (POC /PTC) by default. Many of the Encompass Compliance Service's high cost and state consumer credit rules take into account whether or not each loan fee is “financed”. Use the POC/PTC pop-up window (for loans using 2010 Itemization form) or a Fee Details window (for loans using 2015 Itemization form) to indicate whether or not each loan fee is financed to ensure accurate treatment of each fee by the Encompass Compliance Service. To indicate the fee or a portion of the fee is “financed”, select the Financed check box. For purposes of the Encompass Compliance Service, “financed” means the fee amount is paid from the loan proceeds; it is not paid outside of closing or paid separately in cash or by check at closing.

• The Encompass Compliance Service assumes, but does not verify, that all fees included in the loan are reasonable and necessary. Many state laws and regula-tions deem any amount in excess of the actual cost for a service “unreasonable and unnecessary.” Therefore, the Encompass Compliance Service assumes that the dollar amount of any fee submitted in the loan represents the “actual cost” of the service related to that fee and does not verify that there is no up-charge or surcharge included in the fee amount. The Encompass Compliance Service will not review the amount of the fee or percentage for “reasonableness” or “necessity”.

Chapter 3: Fee Mapping 18

• In general, the Encompass Compliance Service assumes all fees are allowed when a law is silent with regard to particular fees. If a law provides that all fees are prohibited except those specifically permitted by the statute, the Encompass Compliance Service will fail a loan that includes any fee not specifically itemized as a permitted fee in that law.

• If special disclosures, elections, waivers, or other documentation is needed in order to charge a particular fee, or to exclude such a fee from a calculation, the Encompass Compliance Service assumes, but does not verify, that the disclosure and documentation requirements have been met. Examples of some fees that fall within this assumption are:

• Property Insurance Premiums (hazard, flood, earthquake, windstorm, etc.)

• Credit Insurance Premiums

• Attorney's Fees - Borrower Chosen

• Services Performed By An Attorney - The Encompass Compliance Service assumes that fees for specific services performed by an attorney relating to the loan closing (such as document preparation or settlement services) will be included in the loan under those specific fee names. For example, if an attorney prepares the loan documents, the Encompass Compliance Service assumes the fee for that service will be reflected in the loan as a Document Preparation Fee rather than as an Attorney's Fee. The Encompass Compliance Service treats all fees designated as Attorney's Fees in the loan file as fees for general legal services performed by the attorney rather than fees attributable to a particular service.

• Fees Paid To A Provider - Unless information is included in the loan showing that a particular fee is being paid to an affiliate of the lender or broker, the Encompass Compliance Service assumes that fees paid to a third party provider are paid to individuals or companies that are not owned by, and that do not have directors, stockholders, or employees in common with the lender or broker. Although this assumption applies to all fees, some instances in which it is particularly relevant concern differing treatment of such fees as Appraisal Fee or Title Charges in some jurisdictions dependent upon whether the fees are paid to an affiliate of the lender or the broker.

Specific Fees• Application Fee and Application Deposit - The Encompass Compliance

Service assumes that the Application Fee or Application Deposit is refunded to the borrower if the loan is funded and therefore is not charged to all borrowers regardless of whether or not credit is extended. Thus, the Encompass Compliance Service will treat these fees as finance charges.

• Attorney's Fees - Borrower Chosen - Some jurisdictions will permit Attorney's Fees to be excluded from interest rate or high cost points and fees calculations (or be charged when Attorney's Fees are otherwise prohibited) if the borrower has the right to choose the attorney and that right has been disclosed to the

borrower. If the Attorney's Fees - Borrower Chosen fee is included in the loan, the Encompass Compliance Service assumes, but does not verify, that the proper disclosures have been provided and that the borrower has made the choice of attorney. If the disclosures and choice have not been provided, the general Attorney's Fees fee selection or mapping should be used.

• Courier Fee - The Encompass Compliance Service assumes that the lender, not the borrower, has required the use of the courier for all Courier Fees. Thus, the Encompass Compliance Service will treat this fee as a finance charge.

• Settlement/Closing Fee - The Encompass Compliance Service assumes that it is the lender, not the borrower, who requires the use of the closing agent in performing the settlement services and that it is the lender who has selected the closing agent to be used. Thus, the Encompass Compliance Service will treat this fee as a finance charge.

• Discount Fees - The Encompass Compliance Service assumes that all Discount Fees or Discount Points included in the loan are not bona fide with regard to high cost threshold tests and assumes they are bona fide as used in various state laws. In order for the Encompass Compliance Service to determine whether Discount Points should be treated as “bona fide” for certain high cost thresholds tests, a user also must check the “Bone Fide” box associated with the Discount Points and provide an Undiscounted Rate.

• Flood Certification Fee and Tax Service Contract Fee - The Encompass Compliance Service assumes these fees include life of loan monitoring as well as initial determination.

• Credit Insurance Premiums - The Encompass Compliance Service assumes, but does not verify, that if a credit insurance premium is included in the loan, the credit insurance policy is in compliance with any limitations or restrictions provided by law. For example, if a state law requires that for credit life insurance, only decreasing term life insurance in an amount not exceeding the loan amount and a period not exceeding the term of the loan may be provided, the Encompass Compliance Service assumes the credit life insurance plan for which a credit life insurance premium is included in the loan does comply with this requirement.

• Escrow Account - Other than reviewing the loan to determine whether the laws applicable to it permit a fee for setting up or maintaining the account, the Encompass Compliance Service does not address issues relating to the estab-lishment or ongoing maintenance of an Escrow Account. For example, the Encompass Compliance Service does not address requirements to segregate funds in escrow accounts or to accrue interest on the account in favor of the borrower (although the compliance report may include warnings concerning some of these issues.)


Fee Mapping ProceduresUse the Itemization Fee Management tool to set up and manage the fees used by the Encompass Compliance Service.

Access the Itemization Fee Management Tool:

1 Log in to Encompass as the admin user, or a user who has been assigned rights to the Itemization Fee Management tool.


3 On the left panel, click Tables and Fees, and then click Itemization Fee Management.

Adding FeesYou can add fees by importing a standard list of compliance default fees or fees from closing cost templates. You can also manually create individual fees and map them to the appropriate compliance fee.

Import Compliance Default Fees

This is the quickest method of setting up your fees and mappings. The Fee List is populated with the entire list of compliance fees from the “Encompass Compliance Service Default Fees Table” (beginning on page 22 of this guide).

The imported fees are mapped to the appropriate fee on the Compliance Fees list and are associated with the sections of the 2010 Itemization and 2010 HUD-1 or the Closing Disclosure in which they can be selected from a drop-down list.

NOTE: All existing entries on the Fee List are cleared before importing the default list is of fees.

1 Click the Import Fees button, click Import Compliance Default Fees, and then click Yes in response to the confirmation message.

2 Click the Save icon.

Import Fees from Closing Cost Templates

This option populates the Fee List with the fees from a selected Closing Cost Template. The imported fees are added to any existing entries on the Fee List and are associated with the sections of the 2010 Itemization, 2010 HUD-1, or Closing Disclosure in which they can be selected from a drop-down list.

NOTE: The imported fees are not automatically mapped to a fee on the Compliance Fees list. You must manually map each entry to the appropriate fee.

1 Click the Import Fees button, and then click Import Fees from Closing Cost Templates.

2 Select a template, and then click Select.

3 Back on the Itemization Fee Management main window, select a fee from the Compliance Fees list (select the Show All check box to display all available compliance fees) or the UCD Fees list (select the Show All check box to display all available UCD fees) and drag it to one of the newly imported fees.

The red broken-link icon will change to a black closed-link icon and the Not Mapped text will be replaced with the name of the linked Compliance or UCD fee.

4 When finished, click the Save icon.

Add Individual Fees

This option allows you to add individual fees to the list of entries on the Fee List as needed. You must manually map each new fee to the appropriate compliance fee and manually associate each fee with the sections of the 2010 Itemization and 2010 HUD-1 or Closing Disclosure in which they can be selected from a drop-down list.

1 Click the New icon, type the Encompass Fee Name, and then click OK.

2 Back on the Itemization Fee Management main window, select a fee from the Compliance Fees list (select the Show All check box to display all available compliance fees) or the UCD Fees list (select the Show All check box to display all available UCD fees), and drag it to one of the newly imported fees.

The red broken-link icon will change to a black closed-link icon and the Not Mapped text will be replaced with the name of the linked compliance or UCD fee.

3 Select check boxes for the sections of the 2010 Itemization and HUD-1 or Closing Disclosure in which the new fee will be available for selection from a drop-down list.

4 When finished, click the Save icon.


Restricting Entry of Free-Form FeesBy default, the Itemization and HUD-1 input forms allow users to either select pre-defined fee names from a drop-down list or type a fee name into a free-form text field. If a fee name is entered that is not already mapped, the Encompass Compliance Service will automatically treat the fee as a Regulation Z finance charge, possibly increasing the calculated finance charge amount as well as any applicable high cost points and fees amounts.

To force users to select fees from the pre-defined drop-down lists, select the Apply to Itemization check box at the top of the Itemization Fee Management screen. This will prohibit entry of free-form fee names in text boxes.

You can also grant specific personas the ability to overwrite the restriction as needed. This allows the specified persona to enter free-form fee names in designated section of the 2010 Itemization forms.

1 With the Apply to Itemization check box selected, click the Persona Overwrite tab.

2 Select the name of a persona, and then select check boxes for the specific Itemization sections in which the persona is permitted to enter free-form fees.


Encompass Compliance Service Default Fees Table This table lists the standard fees used by the Encompass Compliance Service, as well as a description of each fee. Consult these descriptions when determining which field you should map the fees on the 2010 Itemization and HUD-1 forms to using the Itemization Fee Management tool in Encompass. This table is for use with the fields on the 2010 Itemization form and the Compliance fees provided in the Itemization Fee Management tool. For UCD field mapping information for the Closing Disclosure input form, refer to the table starting on page 32.

Mapped Compliance Field Description

HUD Section 800 – Items Payable in Connection with the Loan

203(k) Architectural and Engineering Fee Fee paid for architectural and engineering designs, services, review, and costs associated with an FHA 203(k) mortgage loan. It includes amount(s) for original design and review and ongoing supervision performed after closing.

203(k) Consultant Fee Fee paid to a consultant for visiting the property and other services to ensure compliance with FHA 203(k) mortgage loan program requirements. Includes amounts paid to the consultant for initial consultation and for ongoing services during construction.

203(k) Discount on Repairs The amount of discount points paid on the rehabilitation, repair, and (when applicable), the refinance portion of the mortgage.

203(k) Supplemental Origination Fee Fee collected by a Lender as compensation for making an FHA 203(k) mortgage loan when it involves insurance of advances. The supplemental origination fee is collected in addition to a loan origination fee.

Administration Fee Fee to cover the administrative costs of processing a loan request. This fee is expressed as a flat dollar amount.

Application Deposit A deposit paid in advance for taking a loan application, which may be credited against closing costs at loan closing for an approved loan.

Application Fee Fee paid in advance for taking a loan application.

Appraisal Desk Review Fee Fee charged for reviewing an appraisal report and performing some basic research on value without going out to the field to view the property or the comparable properties included in the appraisal report.

Appraisal Fee Fee paid to an appraiser for appraising and preparing an appraisal report for the property securing the loan.

Appraisal Field Review Fee Fee charged for performing an appraisal review in the field – actually inspecting the property and comparable properties.

Appraisal Review Fee Fee charged to review the appraisal report.

Assumption Fee Fee paid by borrower in the current loan to allow the loan to be assumed by another borrower in the future under the same loan terms.

Attendance/Pickup Fee Fee charged by title agent or escrow company for the service of taking the payoff funds and delivering them to the existing lien holder.

Bond Fee Fee paid to a state or local housing agency to participate in a special lending program.

Broker Fee General points or fees paid to a broker.

CLO Access Fee Fee charged to access a computer loan origination system.

Commitment (Rate Lock) Fee Fee charged for locking in a rate for the loan.

Compliance Testing Fee Fee paid for use of an automated compliance system for compliance testing on a loan.


Courier Fee Fee paid for courier, messenger, or expedited delivery services.

Credit Report Fee Fee paid to a provider of a credit report for the cost of the report.

Document Assembly Fee Fee charged to prepare documents for review by someone else (such as an attorney); also may be a fee for redrawing documents when the need to redraw was due to no fault of the borrower; also may be a fee to prepare documents that are desired but not essential to the closing of the transaction (such as an amortization schedule).

Document Preparation Fee Fee charged for preparing the loan documents.

Document Redraw Fee Fee charged because loan documents were required to be redrawn due to some action or inaction by the borrower.

Electronic Document Delivery Fee Fee for transmitting or receiving the loan documents through email or by some other electronic means.

Escrow Account Servicing Fee Fee to set up and service the escrow account for the loan.

Escrow Waiver Fee Fee charged because the borrower waives the establishment of an escrow account.

Flood Certification Fee Fee charged to perform and provide flood certification for the property securing the loan. Flood Certification includes both the original flood hazard determination and the ongoing monitoring of the property for flood hazard designations.

Flood Determination Fee Fee charged to perform and provide initial flood zone determination for the property securing the loan. Includes the original flood hazard determination, but DOES NOT include the ongoing life of loan monitoring of the property.

Funding Fee Fee charged by the lender for making the loan. This fee is expressed as a flat dollar amount.

HOA Certification Handling Fee Fee charged to prepare and submit to the Home Owner’s Association, Condominium Association, or Co-Op Association a Certification for the property securing the loan.

Homeowner’s Dues Amount of initial payment (paid at closing) for dues for the homeowner’s association for the property securing the loan.

Inspection Fee Fee charged for an inspection of the property securing the loan.

Interest Rate Buy Down Fee Charge to reduce the interest rate on the loan for a given period.

Loan Discount Fee charged to reduce (buy down) the market rate of the note for the life of the loan.

Loan Origination Fee Fee charged by lender (or paid to the broker) as compensation for making (or brokering) the loan. This fee is expressed as a percentage of the loan amount.

Loan Warehousing Fee Fee charged for the use of a Warehouse line of credit to fund the loan.

MERS® Registration Fee Fee charged for registering/transferring the loan onto the Mortgage Electronic Registration System.

Mortgage Insurance Application Fee Application fee required by a private mortgage insurance company for mortgage insurance included in the loan.

Mortgage Insurance Premium Credit Mortgage Insurance Premiums refunded from a prior loan.

Office Expenses Fee charged for general expenses such as fax fees, copy fees, and postage.



Our Origination Charge All charges received by the loan originator (lender or mortgage broker), except for any charge for the specific rate chosen (points). Includes but is not limited to amounts received for origination, administrative, and processing services performed by or on behalf of the loan originator. There is insufficient information to determine this amount's true purpose/use; so the System ALWAYS treats it as a finance charge under TILA, as a point and fee for high cost thresholds, and as a prohibited/limited fee in jurisdictions which prohibit or limit certain fees.

Processing Fee Fee charged for processing the loan request. This fee is expressed as a flat dollar amount.

Program Participation Fee Fee paid to the lender as the result of the loan being part of a special lending program operated by state or local agency or authority.

Rebate to Borrower A rebate or credit to the Borrower.

Recording Service Fee Service fee related to sending documents to be recorded.

Rush Fee Fee charged to rush the loan process to obtain a quick closing.

Servicing Release Premium Premium, usually paid by the Lender to the broker or correspondent lender, for the value of the servicing on the loan.

Signing Agent Fee Fee charged for the services of a signing agent who, as an accommodation to the borrower, conducts the loan closing at a specific time or at a location requested by the borrower (such as the borrower’s home or office).

Subordination Fee Fee paid to a lien holder with an existing lien on the property to subordinate its lien position to the lender in the current loan.

Subordination Preparation Fee Fee charged for the preparation of a subordination agreement to subordinate an existing loan to the new loan being created.

Tax Related Service Fee Fee charged to research and monitor property tax payments. Includes both up front payment research and life-of-loan monitoring. For upfront payment research only, see Tax Status Research Fee, below.

Tax Status Research Fee Fee charged for to research the status/currency of property tax payments for the property securing the loan. Includes upfront tax payment status research only and DOES NOT include ongoing life of loan monitoring of the tax payments. For upfront payment research and life-of-loan monitoring, see Tax Related Service Fee, above.

Underwriting Fee Fee charged by an underwriter to underwrite a loan file.

USDA/RHS Upfront Guarantee Fee In a loan guaranteed by the USDA Rural Development, Rural Housing Service (RHS), the fee the borrower must pay to help defray the costs of the USDA Rural Housing Service home loan program.

Verification Fee Fee for verifying such things as borrower’s income, employment, tax returns, etc.

Village Property Tax/County Property Tax Taxes on the property, due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Wire Transfer Fee Fee for wiring funds in connection with the loan.

Yield Spread Premium/Rebate Premium, usually paid by Lender to the broker, for obtaining a higher rate for the loan.

Your Credit for the Interest Rate Chosen A credit to the Borrower for the interest rate chosen, represented as a lump sum amount.

HUD Section 900 – Items Required by the Lender to be Paid in Advance



Credit Disability Premium Cost of credit disability insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Credit Life Premium Cost of credit life insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Credit Unemployment Premium Cost of credit unemployment insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Insurance Premium - Earthquake Cost of earthquake insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Insurance Premium - Flood Cost of flood insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Insurance Premium - Hazard Cost of property hazard insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Insurance Premium - Windstorm Cost of windstorm insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Interest Due on Prior Loan The amount of interest due on the prior loan that will be paid off by the current refinance transaction.

Mortgage Insurance Premium Cost of mortgage insurance premium due at closing; this reflects the amount due at closing only and does not include amounts put into an escrow account for future payment.

Prepaid Interest Amount of interest collected at settlement for the period between the disbursement date and the date from which accrued interest will be included in the first regular monthly payment.

USDA/RHS Upfront Guarantee Fee In a loan guaranteed by the USDA Rural Development, Rural Housing Service (RHS), the fee the borrower must pay to help defray the costs of the USDA Rural Housing Service home loan program.

VA Funding Fee In a loan guaranteed by the Department of Veterans’ Affairs (VA), the fee the veteran must pay to help defray the costs of the VA home loan program.

HUD Section 1000 – Reserves Deposited with the Lender

203 (k) Contingency Reserve An amount to be placed into a separate escrow account that is specifically held for unforeseen circumstances during the rehabilitation/construction period on an FHA 203(k) mortgage.

203(k) Repairs An amount for the cost of repairs and rehabilitation, including materials, labor, overhead and construction on an FHA 203(k) mortgage loan.

Aggregate Adjustment An adjustment equal to the difference between the deposit required under aggregate accounting and the sum of the deposits required under single-item accounting for deposits itemized in the 1000 series of the HUD-1. The adjustment will always be a negative number or zero. The amount of the adjustment is entered on a final line in the 1000 series of the HUD-1.



Annual Assessments - Impound Amount collected and held in an escrow, impound, or trust account for future payments of amounts that are due annually in connection with the property, but which are not specifically identified. The Encompass Compliance Service treats all amounts included as Annual Assessments as finance charges under TILA.

City Property Taxes - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of city property taxes.

County Property Taxes - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of county property tax.

Credit Disability Insurance - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of credit disability insurance premiums.

Credit Life Insurance - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of credit life insurance premiums.

Credit Unemployment Insurance - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of credit unemployment insurance premiums.

Homeowner's Association - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of homeowner association dues.

Insurance Impound - Earthquake Amount collected and held in an escrow, impound, or trust account for the future payment of earthquake insurance premiums.

Insurance Impound - Flood Amount collected and held in an escrow, impound, or trust account for the future payment of flood insurance premiums.

Insurance Impound - Hazard Amount collected and held in an escrow, impound, or trust account for the future payment of hazard insurance premiums.

Insurance Impound - Windstorm Amount collected and held in an escrow, impound, or trust account for the future payment of windstorm insurance premiums.

Mortgage Insurance - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of mortgage insurance premiums.

Other Impound Amount collected and held in an escrow, impound, or trust account for future payments of amounts that are not identified specifically. Often, this is used as a catch-all impound itemization on the HUD-1. The Encompass Compliance Service treats all amounts included as Other Impounds as finance charges under TILA.

School Taxes - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of school taxes.

State Property Taxes - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of state property taxes.

USDA/RHS Annual Fee Monthly Premium - Impound

Amount collected and held in an escrow, impound, or trust account for future payments of the USDA/RHS premium (paid monthly) and due annually in connection with the property.

HUD Section 1100 – Title Charges

203(k) Permits Fee paid for building and other government permits associated with an FHA 203(k) mortgage loan.

203(k) Title Update Fee Fee charged by a title company to protect the validity of the mortgage position from mechanic’s liens on the property on an FHA 203(k) mortgage loan. Includes both upfront and post-closing monitoring.

Abstract or Title Search Fee Fee charged to search an abstract of title or to perform a title search.




Attorney’s Fees General uncategorized fees paid to an attorney for services rendered in connection with closing the loan. It is assumed that attorney’s fees for specific services will be entered under the specific category for which the services are performed (i.e., services for preparing loan documents will be entered as Document Preparations Fees; services for performing title work will be entered as appropriate title fees; and fees for closing or settlement services will be entered as Settlement or Closing Fees).

Attorney’s Fees - Borrower Chosen The same type of fee described in the Attorney's Fees description, but for which a borrower has been provided with a choice of the attorney to use and for which all necessary disclosures concerning such a choice have been provided to the borrower.

Closing Protection Letter Fee charged for a statement or document issued by title insurance underwriters that sets forth an underwriter's responsibility for negligence, fraud, and errors in closings performed by the underwriter's agents and approved attorneys.


Document Preparation Fee Fee charged for preparing the loan documents.

Document Redraw Fee Fee charged because loan documents were required to be redrawn due to some action or inaction by the borrower.

Flood Determination Fee Fee charged to perform and provide initial flood zone determination for the property securing the loan. Includes the original flood hazard determination, but DOES NOT include the ongoing life of loan monitoring of the property.

Lender’s Title Policy Fee for the cost of a title insurance policy covering the lender.

Loan Tie-in Fee Fee charged by the settlement/escrow agent either to tie together the closing of a purchase of the property with the closing of the buyer’s loan for that property or to tie together a 1st lien closing and a 2nd lien closing for a combined (piggyback) transaction.

Municipal Lien Fee Fee charged to obtain a municipal lien certificate from a municipality showing all taxes and assessments on the property being secured by the loan.

Notary Fee Fee charged by a notary public to authenticate the execution of the loan documents.

Owner’s Title Policy Fee for the cost of a title insurance policy covering the owner of the property securing the loan.

Settlement or Closing Fee Fees paid to settlement or closing agents for their services.

Subordination Preparation Fee Fee charged for the preparation of a subordination agreement to subordinate an existing loan to the new loan being created.

Tax Status Research Fee Fee charged for to research the status/currency of property tax payments for the property securing the loan. Includes upfront tax payment status research only and DOES NOT include ongoing life of loan monitoring of the tax payments.

Title Endorsement Fee Fee charged for obtaining a title endorsement (for which the original lender and/or borrower are the beneficiaries) that relates to the closing of the mortgage loan.

Title Examination Fee charged to examine the title and create a title report or opinion.

Title Insurance Fee for the cost of a title insurance policy.

Title Insurance Binder Fee to obtain a title insurance binder – a written commitment of a title insurance company to insure title to the property).

Title Search Fee charged to perform a Title Search.



Title Services and Lender's Title Insurance Amount for services involved in the provision of title insurance, including but not limited to: title examination and evaluation, preparation and issuance of commitment, clearance of underwriting objections, preparation and issuance of polices, processing and administrative services (e.g., document preparation or delivery, copying, wiring, endorsements, notary), and conducting a settlement. This amount does not itemize the specific service it covers, so the System ALWAYS treats it as a finance charge under TILA, as a point and fee for high cost thresholds, and a prohibited/limited fee in jurisdictions which prohibit or limit certain fees.


HUD Section 1200 – Government Recording and Transfer Charges


Doc Tax Stamps for Note Fee or tax imposed by certain state or local governments on a promissory note.

Doc Tax Stamps/Transfer Taxes - City/County Fee or tax imposed by certain local governments upon recording a document to either transfer title to the property or to obtain a security interest in the property. This may be either a documentary tax stamp or a transfer tax.

Doc Tax Stamps/Transfer Taxes - State Fee or tax imposed by certain states upon recording a document to either transfer title to the property or to obtain a security interest in the property. This may be either a documentary tax stamp or a transfer tax.

Filing Fees Filing fees, such as UCC filing fees, paid to a public official. Does not include recording fees or recordation taxes.

Intangible Tax Fee or tax imposed in certain states on instruments relating to real property secured loans.

Municipal Lien Certificate Recording Fee Fee charged to record a municipal lien certificate.

Reconveyance Fee Recording Fee to record the reconveyance, cancellation, or release of lien for a mortgage that is being paid off with funds from the current loan.

Recordation Tax/Mortgage Tax Fee or tax imposed by certain state or local governments upon recording a mortgage or deed of trust.

Recording Fees - Assignment Fees paid to a public official for recording an assignment of a mortgage or deed of trust.

Recording Fees - Mortgage/Deed of Trust Fees paid to a public official for recording mortgages or deeds of trust.

HUD Section 1300 – Additional Settlement Charges

203(k) Architectural and Engineering Fee Fee paid for architectural and engineering designs, services, review, and costs associated with an FHA 203(k) mortgage loan. It includes amount(s) for original design and review and ongoing supervision performed after closing.

203(k) Consultant Fee Fee paid to a consultant for visiting the property and other services to ensure compliance with FHA 203(k) mortgage loan program requirements. Includes amounts paid to the consultant for initial consultation and for ongoing services during construction.

203 (k) Contingency Reserve An amount to be placed into a separate escrow account that is specifically held for unforeseen circumstances during the rehabilitation/construction period on an FHA 203(k) mortgage.

203(k) Initial Draw The initial amount drawn at loan closing in an FHA 203(k) mortgage loan.




203(k) Architectural And Engineering Fee

203(k) Consultant Fee

203(k) Discount On Repairs

203(k) Inspection Fee

203(k) Permits

203(k) Supplemental Origination Fee Fee collected by a Lender as compensation for making an FHA 203(k) mortgage loan when it involves insurance of advances. The supplemental origination fee is collected in addition to a loan origination fee.

203(k) Title Update Fee charged by a title company to protect the validity of the mortgage position from mechanic’s liens on the property on an FHA 203(k) mortgage loan. Includes both upfront and post-closing monitoring.

AK Program Administration Fee A $10 program administration fee that the mortgage lender submits to the Alaska Department of Commerce for each mortgage loan transaction closed by the mortgage lender.

AL Interest Surcharge Fee permitted in Alabama but required to be separately itemized as a unique charge.

Application Fee

Appraisal Desk Review Fee

Appraisal Fee

Appraisal Field Review Fee

Appraisal Management Company Fee

Assessment Tax

Assignment Fee Fee charged to cover the costs associated with the transfer or assignment of the loan to another lender, servicer, or purchaser.


Bankruptcy Monitoring Fee Monitoring or Proof of Claim Fee charged as a result of a bankruptcy filing by the Borrower.

Bond Fee Fee charged for review of the terms of the bond documents relating to a federal, state, or local agency to qualify for a special lending program.

CLO Access Fee Fee charged to access a computer loan origination system.


Down Payment Assistance Credit A credit in an amount equal to the funds supplied by a third party to assist the borrower with the down payment on the property securing the loan.



Escrow Holdback - Impound Amount collected and held in an escrow, impound, or trust account for the future payment of holdbacks for improvement or construction.

GA Residential Mortgage Act Per Loan Fee Fee, imposed by the state of Georgia, on every mortgage loan closed in Georgia (to be paid by the borrower).

Homeowner’s Dues Amount of initial payment (paid at closing) for dues for the homeowner’s association for the property securing the loan.

IA Title Guaranty Fee Fee, imposed by the state of Iowa, going toward the funding and administrative costs for the Iowa Title Guaranty program administered by the Iowa Finance Authority.

IN Title Insurance Enforcement Fund Fee Fee, imposed by the state of Indiana, going toward the funding and administrative costs for the Indiana Title Insurance Enforcement Fund.

Inspection Fee Fee charged for an inspection of the property securing the loan.

Lump Sum Lender Credit A credit from the lender to the borrower represented as a lump sum amount.

Lump Sum Seller Credit A credit from the seller to the borrower in a purchase-money transaction represented as a lump sum.

Modification/Amendment Fee Fee charged for modifying, amending, or extending the terms of the loan or renewing the loan under the same terms.

Municipal Lien Fee Fee charged to obtain a municipal lien certificate from a municipality showing all taxes and assessments on the property being secured by the loan.

Payoff Demand Fee In refinances, fee paid to prior lender to prepare and provide a bookkeeping statement of how much is owed on the loan being refinanced.

Pest Inspection Fee Fee paid to have a pest inspection performed on the property securing the loan.

Promotional Coupon Credit A promotional credit provided to the borrower by the lender or the broker to offset the total amount of fees paid by the borrower in the loan.

Reinspection Fee Fee charged for a reinspection of the property securing the loan. This fee is generally charged to reinspect a home after construction or improvements are completed and differs from an Inspection Fee in that the reinspection is performed after loan closing.

Relocation Assistance Credit A credit in an amount equal to funds supplied by the borrower's employer or another third party to assist the borrower in relocating to a new residence.

Subordination Fee Fee paid to a lien holder with an existing lien on the property to subordinate its lien position to the lender in the current loan.

Survey Fee Fee paid for a survey of the property securing the loan.

TN Service Charge Fee allowed to Tennessee Industrial Loan & Thrift licensees in lieu of other expenses directly incident to the loan.

Water Allotment Payment Amount of initial payment (paid at closing) for irrigation reserve or other water allotment if the property securing the loan is subject to such a reserve.


Other Fees



Other - Finance Charge Fee for which there is insufficient information to determine the true purpose/use of the fee. These fees are ALWAYS treated as finance charges, points and fees for high cost thresholds, and prohibited fees in jurisdictions.

Other - Non-Finance Charge Any fee that is not mapped to one of the existing compliance fees but that is NOT A FINANCE CHARGE and NOT A HIGH COST POINT AND FEE under ANY Federal or State law. THIS FEE SHOULD BE USED WITH GREAT CAUTION! All fees mapped to this field will be excluded from ALL finance charge and high cost calculations. However, they will be included in any prohibited fee rules or as part of any limited fee calculations in jurisdictions that prohibit or limit certain fees.



This table lists the UCD fees used by the Encompass Compliance Service, as well as a description of each fee. Consult these descriptions when determining which fee you should map the UCD fees to using the Itemization Fee Management tool in Encompass. This table is for use with the fields on the Closing Disclosure input form and the UCD fees provided in the Itemization Fee Management tool.

Mapped Compliance Field - UCD Description

Closing Disclosure Input Form

ApplicationFee Fee paid to broker or lender to receive loan application for mortgage financing

AppraisalDeskReviewFee Fee paid for a professional review of an appraisal, performed in an office setting without visual inspection of the actual premises of the subject property or the comparable properties cited in the appraisal report.

AppraisalFieldReviewFee Fee charged for performing an appraisal review in the field actually inspecting the property and comparable properties.

AppraisalManagementCompanyFee Fee paid to an external third party for coordinating assignment of qualified appraisers and supervising appraisers' work in completing opinion(s) of value.

AsbestosInspectionFee Fee for an inspection and/or testing for the presence of asbestos within a building.

AssumptionFee Fee paid for processing, approving and facilitating the assumption of an existing mortgage secured by the subject property to new borrower(s).

AutomatedUnderwritingFee Fee for use of an automated underwriting tool or system that assists the mortgage broker, correspondent lender, lender or lender's agent in making a decision to approve, deny or counteroffer a loan application submitted by the borrower(s).

AVMFee Fee paid for preparation of an automated estimate of value of the subject property, expressed in numerical and possibly descriptive terms.

CondominiumAssociationDues Fee payable to condominium association in which the subject property is located, which is intended to pay electricity bills for street lights, landscaping, and maintenance and repairs to community facilities like clubhouses, pools, and exercise rooms and may also cover insurance on community assets, the salaries of condominium association employees and/or third party management fees.

CondominiumAssociationSpecialAssessment Fee payable to condominium association in which the subject property is located for capital improvements, utility service upgrades, etc. that are assessed in addition to the regularly occurring condominium dues.

CooperativeAssociationDues Fee payable to cooperative in which the subject property is located, which is intended to pay common utilities, landscaping, and maintenance and repairs to cooperative facilities and may also cover insurance on cooperative assets, the salaries of cooperative employees and/or third party management fees.

CooperativeAssociationSpecialAssessment Fee payable to cooperative association or corporation in which the subject property is located for capital improvements, utility service upgrades, etc. that are assessed in addition to the regularly occurring dues, fees or debt service.

CopyOrFaxFee Fee for copies of documents and/or costs of faxes sent and/or received in conjunction with the loan application, loan processing or loan closing.

CourierFee Fee for delivery of loan application, loan processing and/or loan closing documents.

CreditDisabilityInsurancePremium Premium for insurance in which the lender is the beneficiary and proceeds payoff the unpaid principal balance in the event of the borrower's permanent disability and/or pay recurring mortgage payment during borrower's temporary disability.


CreditLifeInsurancePremium Premium for insurance in which the lender is the beneficiary and proceeds payoff the unpaid principal balance in the event of the borrower's death.

CreditPropertyInsurancePremium Fee payable for insurance that provides coverage from actions such as fire or theft of any personal property used to secure the loan.

CreditReportFee Fee for the credit report(s) used in assessing credit risk.

CreditUnemploymentInsurancePremium Premium for insurance in which the lender is the beneficiary and proceeds pay recurring mortgage payment during borrower's temporary unemployment.

DebtCancellationInsurancePremium Fee payable for insurance that provides for cancellation of some or all of the mortgage debt upon certain events, such as death or disability of the borrower(s).

DisasterInspectionFee Fee for a report that documents the condition of the property after a localized disaster.

DocumentPreparationFee Fee required by the Lender, title company and/or settlement agent for preparation of closing documents.

DryWallInspectionFee A fee that pertain to the inspection of the drywall within a building.

ElectricalInspectionFee A fee that pertain to the inspection of the electrical system within a building.

ElectronicDocumentDeliveryFee Fee for transmitting or receiving documents in conjunction with loan application, loan processing and/or loan closing by electronic means.

EnvironmentalInspectionFee A fee that pertain to the inspection of the Environmental aspects within a building.

EscrowWaiverFee Fee imposed for waiving the requirement for an escrow account to be established which would, had it been established, been held in reserve to pay periodic payments for homeowners insurance, property taxes and other recurring costs.

FilingFee Fee paid when submitting a document to the clerk of a court for the court's immediate consideration and for storage in the court's files.

FloodCertification Fee paid to obtain a certificate that verifies the flood zone, or special flood hazard area, status of a structure on a given property.

FoundationInspectionFee A fee that pertain to the inspection of the foundation of a building.

HomeInspectionFee Fee for inspection of subject property by professional (other than an appraiser) for an examination of the condition of a home. Items inspected may include but are not limited to electrical, plumbing, sewage disposal, HVAC systems, roof, foundation, permanently installed appliances, drainage and grading, exterior finishes, decks, porches, attics, basements, insulation, smoke and fire detectors, and ventilation.

HomeownersAssociationDues Fee payable to homeowners or neighborhood association for the planned unit development or neighborhood within which the subject property is located, which is intended to pay electricity bills for street lights, landscaping, and maintenance and repairs to community facilities like clubhouses, pools, and exercise rooms and may also cover insurance on community assets, the salaries of HOA employees or third party management fees.

HomeownersAssociationSpecialAssessment Fee payable to homeowners or neighborhood association in which the subject property is located for capital improvements, utility service upgrades, etc., that are assessed in addition to the regularly occurring association dues.



HomeWarrantyFee Fee for issuance of a warranty covering major systems within the subject property, usually (but not always) including the structure, electrical, plumbing, sewage disposal, HVAC systems, roof, foundation, permanently installed appliances, drainage and grading, exterior finishes, decks, porches, attics, basements, insulation, smoke and fire detectors, and ventilation systems.

LeadInspectionFee Identifies that the fee type being requested is for testing of the existence of Lead.

LendersAttorneyFee Fee for services provided by attorney or law firm representing or performing services on behalf of the lender.

LoanDiscountPoints A form of pre-paid interest, equaling a percentage of the loan amount, paid to reduce the interest rate on a mortgage for the life of the loan.

LoanLevelPriceAdjustment Loan-level pricing adjustments and/or delivery fees charged by mortgage investor or security issuer that is passed onto the borrower, expressed as a percent of loan amount or flat dollar amount.

LoanOriginationFee Fee charged by the lender or broker as compensation for providing origination services associated with the subject loan.

LoanOriginatorCompensation The amount of any compensation of a loan originator paid by the creditor, the borrower, the property seller or any interested party to the loan.

ManualUnderwritingFee Fee paid to mortgage broker, correspondent lender, lender or lender's agent to manually review loan processing documents, appraisal and disclosures and make a decision to approve the loan application.

MoldInspectionFee Identifies that the fee type being requested is for testing for the existence of mold. This Can be both Airborne and surface and will need to identify the number of samples to be taken for each.

MortgageSurchargeCountyOrParish Special assessment, surcharge or fee charged by the county or parish in which the subject property is located in conjunction with a mortgage loan, which is levied in addition to regularly assessed property and school taxes.

MortgageSurchargeMunicipal Special assessment, surcharge or fee charged by the municipality in which the subject property is located in conjunction with a mortgage loan, which is levied in addition to regularly assessed property and school taxes.

MortgageSurchargeState Special assessment, surcharge or fee charged by the state in which the subject property is located in conjunction with a mortgage loan, which is levied in addition to regularly assessed property and school taxes.

MunicipalLienCertificateFee Fee charged by a municipality to release a lien or injunction after payment of fines for property non-compliance have been completed.

Other Denotes that the action type is other than the ones listed above. When this option is selected, a description of the action type must be provided in the ActionTypeOtherDescription attribute.

PestInspectionFee Cost for inspection, testing and preparation of a report describing all infestations, past infestations and visible damage caused by termites, rodents, squirrels and other pests resulting from an inspection of the interior and exterior of the subject property structures by a qualified pest inspector.

PlumbingInspectionFee A fee charged to conduct an inspection of the plumbing system within a building.

PreclosingVerificationControlFee Fee to reimburse lender or mortgage broker for performing certain quality control or verification activities and/or using automated fraud detection tools, which may include identity verification, Social Security number or Individual Tax Identification Number validation, employment and/or income validation, Federal Income Tax return validation, etc.



ProcessingFee Fee charged by lender, mortgage broker or correspondent lender for processing of loan application.

PropertyInspectionWaiverFee Fee charged for waiving the requirement of a physical inspection of the subject property and preparation of an appraisal.

PropertyTaxStatusResearchFee Fee paid to a firm or individual who verifies the status of unpaid property taxes on the subject property and/or provides continuous monitoring of the tax status on behalf of the lender of record.

RadonInspectionFee Identifies that the fee type being requested is for testing the Level of Radon emissions in a residence.

RateLockFee Fee to establish that the lender and borrower have fixed (locked), for a specific period, certain terms of the loan to be closed at a later date.

RealEstateCommissionBuyersBroker Fee payable to licensed real estate broker representing the buyers' interests for professional activities related to the purchase of the subject property.

RealEstateCommissionSellersBroker Fee payable to licensed real estate broker representing the sellers' interests for professional activities related to the listing and/or sale of the subject property.

ReconveyanceFee Fees imposed for preparing and providing documents when a loan is paid in full, whether or not the loan is prepaid, such as a loan payoff statement, a reconveyance document, or another document releasing the creditorâ€™s security interest in the dwelling that secures the loan.

RecordingFeeForAssignment Fee assessed by a government authority to record and index an assignment as required under State or local law. Recording fees are assessed based on the type of document to be recorded or its physical characteristics, such as the number of pages. Unlike transfer taxes, recording fees are not based on the sales price of the property or loan amount.

RecordingFeeForDeed Fee for recording trust deed, deed of trust, or other security instrument with the appropriate government entity based on the nature of the physical document (typically number of pages) and not based on the sales price or value of the property or loan amount being extended to the borrower.

RecordingFeeForMortgage Fee for recording mortgage with the appropriate government entity based on the nature of the physical document (typically number of pages) and not based on the sales price or value of the property or loan amount being extended to the borrower.

RecordingFeeForMunicipalLienCertificate Fee assessed by a government authority to record and index a municipal lien certificate as required under State or local law. Recording fees are assessed based on the type of document to be recorded or its physical characteristics, such as the number of pages. Unlike transfer taxes, recording fees are not based on the sales price of the property or loan amount.

RecordingFeeForRelease Fee assessed by a government authority to record and index a release as required under State or local law. Recording fees are assessed based on the type of document to be recorded or its physical characteristics, such as the number of pages. Unlike transfer taxes, recording fees are not based on the sales price of the property or loan amount.

RecordingFeeTotal Fee total of all aggregated deed and mortgage taxes and government fees.

ReinspectionFee Fee for reinspection of the subject property after completion of construction, repairs or improvements.

RoofInspectionFee Identifies that the fee type being requested is for an detailed inspection of the roof.

SepticInspectionFee Identifies that the fee type being requested is for testing the operation of an installed septic system.



SettlementFee Fee paid for settlement service provider to conduct the loan settlement and/or real estate closing transaction.

SmokeDetectorInspectionFee Identifies that the fee type being requested is for inspection of Smoke Detectors.

SubordinationFee Fee paid to a holder of a lien secured by the subject property to subordinate its lien position to the new first lien.

SurveyFee Fee paid to a professional surveyor to perform an inspection of the physical boundaries of the land pertaining to the subject property and to prepare a drawing and description of the boundaries, improvements (such as buildings, fences, pools, etc.) and any encroachments and/or easements on the land.

TaxStampForCityMortgage Fee for a tax stamp to be affixed to a taxable lien to indicate that the appropriate tax has been paid to the city for the mortgage.

TaxStampForCountyMortgage Fee for a tax stamp to be affixed to a taxable lien to indicate that the appropriate tax has been paid to the county for the mortgage.

TaxStampForStateMortgage Fee for a tax stamp to be affixed to a taxable lien to indicate that the appropriate tax has been paid to the state for the mortgage.

TemporaryBuydownAdministrationFee Fee paid to lender or lender's agent to administer a temporary buydown.

TemporaryBuydownPoints A form of pre-paid interest, equaling a percentage of the loan amount, paid to temporarily reduce the interest rate on a mortgage for a specific period of the initial term of the loan.

TitleClosingFee Fee paid to title company for conducting the loan closing on the subject transaction.

TitleClosingProtectionLetterFee Fee charged for a statement or document issued by title insurance underwriters that sets forth the responsibility for negligence of an underwriter, fraud and errors in closings performed by the agents of the underwriter and approved attorneys.

TitleEndorsementFee Fee paid to title company for preparation of any necessary endorsements to the title policy/policies issued pertaining to the subject transaction.

TitleExaminationFee Fee paid to title company for conducting title search and preparing title abstract on subject property.

TitleInsuranceBinderFee Fee paid to title company for preparation of the title binder (title commitment).

TitleDocumentPreparationFee Fee paid to title company for preparation of documents for the loan closing, deed transfer and other documents needed to perfect the mortgage lien and complete ownership transfer of the subject property.

TitleLendersCoveragePremium Fee paid to title company for issuance of lender's title insurance policy that indemnifies the lender in the event that clear ownership of property is challenged by the discovery of faults in the title.

TitleNotaryFee Fee paid to the title company for the performance of notary services.

TitleOwnersCoveragePremium Fee paid to title company for issuance of owner's title insurance policy that indemnifies the owner of real estate in the event that his or her clear ownership of property is challenged by the discovery of faults in the title. (This coverage is optional.)

TitleUnderwritingIssueResolutionFee Fee paid to title company for research and resolution of title issues.

TransferTaxTotal Fee to jurisdictional government entity based on the sales price, value of the property or loan amount being extended to the borrower.

VerificationOfAssetsFee Fee paid for verification of assets disclosed by the borrower on the loan application.



VerificationOfEmploymentFee Fee paid for verification of employment disclosed by the borrower on the loan application.

VerificationOfIncomeFee Fee paid for verification of income disclosed by the borrower on the loan application.

VerificationOfResidencyStatusFee Fee paid for verification of residency status disclosed by the borrower on the loan application.

VerificationOfTaxpayerIdentificationFee Fee paid for verification of Social Security number or Individual Tax Identification number disclosed by the borrower on the loan application.

VerificationOfTaxReturnFee Fee paid for verification of financial information reported by the borrower on the tax returns provided in conjunction with the loan application.

WaterTestingFee Identifies that the fee type being requested is for testing the Water Quality.

WellInspectionFee Identifies that the fee type being requested is for a well inspection.

WireTransferFee Fee for wiring funds in connection with the loan.



Chapter 4

Encompass Compliance Service

The Encompass Compliance Service enables you to perform a loan check (i.e., order a compliance report) at any point during the loan process. During a loan check, loans are reviewed for compliance issues based on Truth in Lending (TIL), HOEPA, State and Local High Cost, State Consumer Credit, and other industry regulations and mandates. Once the check is complete, a compliance reports generated indicating the loan's compliance issues and exceptions, as well as data within the loan that successfully passed the review.

Using the Encompass Compliance Service, you can:

• Manually order a compliance report.

• View a completed report, complete with a list of returned alerts, errors, and pass/fail messages.

• Jump directly to a field where data has not passed the review.

• Clear the Compliance Review alert from the Log.

Ordering a Compliance Report• There are two methods for ordering a compliance report.

• Automatic Ordering - An individual with an Encompass admin user ID can set up compliance reports to be run automatically at the completion of selected milestones using Compliance Review Setup. The latest report is displayed on the Compliance Review screen in Encompass.

• Ordering Manually - Use the Encompass Compliance Service to order a compliance report at any point during the loan process:

To Order a Compliance Report:

1 Open the loan to be checked, click the Tools tab, and then click Compliance Review.

2 Click Order.

Ordering a Preview Report

You can order a preview report in order to test for compliance issues before ordering a full compliance report or disclosing to the borrower. Click the Preview button to order a preview report.

• With a preview, the final loan data is not reviewed. The results are based on the loan’s current APR and finance charge amounts, not the disclosed values.

• The preview report that is returned features a message across the top that indicates that it is a preview report (and not a full compliance report).

Compliance Review Audit Results Window

If, when ordering a compliance report or preview report, compliance data is missing or inconsistent (and if enabled in Compliance Review Setup), the Compliance Review Audit Results window opens with a list of Fatal errors. For each error listed in the window, select the error, and then click Go to Field to open a form with the affected field highlighted for data entry. You can then enter a new value to correct the error.

• After correcting one or more items in the list, click the Refresh icon to update the list.

• Once all Fatal errors are corrected, you can click Order to order a compliance report.

• All Fatal errors must be corrected in order to order a compliance report. A compliance report can still be ordered without correcting Warning messages.

• Click Close to close the Compliance Review Audit Results window.

Viewing the Fields That Are Assessed During a Loan CheckThe ECS Data Viewer tool enables you to view the fields that are exported to the Encompass Compliance Service and assessed based on the type of loan check being performed. The fields on the tool are read-only and cannot be edited. The administrator can allow or deny access to the viewer based on persona.

Chapter 4: Encompass Compliance Service 38

To Access and Use the ECS Data Viewer Tool:

1 Open a loan file, click the Tools tab, and then click ECS Data Viewer.

2 Use the tool to view the data for the fields that are exported to the Encompass Compliance Service.

3 Click the Fee Details, MIP/USDA or HMDA button on the tool to view a read-only popup screen of the form or tool where the field data was entered.

Viewing the ReportEvery time a compliance report is ordered, an entry is added to the Log. The last report that was ordered is available to view on the Compliance Review screen. Reports ordered earlier are stored in the eFolder. To view an earlier report, click the entry in the Log. You can also click the eFolder icon to view a list of reports on the Documents tab.

To View the Latest Report on the Compliance Review Screen:

1 From the Pipeline, open the loan for which a compliance report was ordered.

2 Click the Tools tab, and then click Compliance Review.

Compliance reports contain separate sections for each review that was performed and provide the result of each review. When a compliance issue occurs, the data (or missing data) causing the issue is explained in the report.

The following reviews may be included in a report:

NOTE: Depending on the Compliance Review Setup configured by the administrator, certain reviews may not be performed during the loan check.

• ATR/QM - The ECS tests several areas of the loan file to determine ATR/QM Compliance:

• ATR Exempt Loan: Users can designate whether the loan is an ATR Exempt Loan exempt from ATR requirements because of the creditor type, loan type, unit count, or primary loan purpose using the ATR/QM Exemption Eligibility fields in the ATR/QM Management tool’s ATR/QM Eligibility input form. If a loan is designated as exempt from the ATR/QM Rules, the compliance review will not apply any Ability to Repay rules.

• ATR Standard: The ATR Standard Rule provides eight specific factors a creditor must consider including:

• Current or reasonably expected income or assets

• Current employment status

• Monthly payment on Covered loan, monthly payment on any simultaneous loan

• Monthly payment for mortgage-related obligations

• Current debt obligations, alimony, and child support

• Monthly Debt-to-Income (DTI) and Residual Income (RI)

• Credit history

NOTE: The compliance review will look at the relevant fields in the Underwriter Summary tool (available in Encompass Banker Edition only) to determine if these factors were evaluated.

• Qualified Mortgage: The compliance review will run rules to determine whether the loan is a Higher-Priced Covered Transaction, point and fee limitation rules, rules for prohibited loan terms and features, rules to ensure that the necessary underwriting factors were considered/evaluated, Debt-to-Income and/or Residual Income rules, and Agency/GSE eligibility rules, as applicable based on the type of Qualified Mortgage being made.

• QM: Safe Harbor/Presumption of Compliance: The ATR Rule provides a safe harbor for Qualified Mortgages that are not higher-priced. Loans that are higher-priced and meet the definition of a QM have a different protection, that of a rebuttable presumption that the creditor complied with the ATR requirements.


• QM: Loan Feature Limitations: The compliance review will determine whether the loan has a prohibited loan feature disqualifying the loan from QM eligibility. Depending on the QM Type, these loan features may include: an interest-only payment term, negative amortization, loan term greater than 30 years, or a balloon payment.

• QM: Points and Fees Limits: The compliance review will determine whether the loan exceeds the applicable points and fees threshold, disqualifying a loan from QM eligibility.

• “Bona Fide” Discount Points - Users may use either the new Starting Adjusted Rate (field ID NEWHUD.X1720) and the Points in Starting Adjusted Rate fields or the existing Undiscounted Rate field (field ID 3293) to designate whether the discount points are “Bona Fide” and to test whether to include them or exclude them as appropriate

• Underwriting: QM loans contain specific requirements around Payment Underwriting, Mortgage-Related Obligations, Income or Assets, Employment Status, Simultaneous Loans, Debt, Alimony, Child Support, DTI or RI, and Credit History. The existing system payment underwriting functionality has been revised to reflect the revised maximum payment underwriting requirements for loans eligible for General QM, Balloon-Payment QM, Small Creditor QM, or Small Creditor Balloon-Payment QM status. The compliance review will perform testing to ensure the DTI for a General QM does not exceed 43%. It will also perform DTI testing and/or Residual Income testing on other loan types, depending on the type of loan being made.

• QM: Agency/GSE Eligibility: The compliance review will use the AUS response and Risk Assessment information when determining the eligibility of Agency/GSE Qualified Mortgages to be sold to or guaranteed by government agencies and GSEs.

• Non-Standard to Standard Refinances: The ATR Rule contains special requirements for creditors refinancing their own customers into more affordable loans to help those customers avoid payment shock. The compliance review will run rules to determine whether the prior loan is eligible for a refinance into a Standard Loan Refinance and also to determine whether the Standard Loan meets the requirements under Ability to Repay.

• TILA/RESPA - The TILA/RESPA heading in the compliance report reflects the result of the TILA Tolerance Review (for loans made prior to October 3, 2015 and for loans that are exempt from the Integrated Disclosure requirements, TILA-RESPA Review (for loans with an application date on or after October 3, 2015 which are subject to the Integrated Disclosure requirements), and TILA-Right of Rescission Review. The most severe status will be reflected in the TILA/RESPA heading.

• TILA-RESPA Review: The TILA-RESPA review applies to closed-end loans secured by 1-4 unit dwellings attached to real property, where the application is taken on or after October 3, 2015.

NOTE: This review dos not apply to open-end HELOCS (field ID 1172 equals HELOC) or loans not made primarily for personal, family, or household purposes (field ID QM.X110).

If the Encompass Compliance Service does not receive enough information to determine whether the loan is secured by real property, it will apply the TILA-RESPA Rules to all closed-end loans secured by 1-4 unit dwellings, made primarily for personal, family, or household purposes, where the application date is on or after October 3, 2015 and where the Encompass Form Version is TILA-RESPA 2015 LE and CD.

• TILA Tolerance - This TILA review includes comparisons, tests, functions and calculations based on the Truth In Lending Act and Mortgage Disclosure Improvement Act (MDIA). Specifically, the Encompass Compliance Service recalculates the finance charge amount, amount financed, APR, total of payments, payment schedule, and the amortization schedule. The review will also validates that the loan's disclosure dates are in compliance with the “3-7-3 rules” set forth in the MDIA.

• TILA Right of Rescission Review - The TILA Right of Rescission review tests a non-purchase money closed-end loan secured by a 1-4 unit primary dwelling to determine whether it is in compliance with TILA rescission timing requirements. The Right of Rescission test compares the disclosed right to cancel expiration date and the loan disbursement date to the compliance review's calculated right to cancel expiration date and returns an exception if either date is earlier than the earliest allowable date.

NOTE: When working with dates for this review, input the last day of the RTC expiration regardless of the funding date.

• High Cost - This review checks for compliance with the Home Ownership and Equity Protection Act (HOEPA) and applicable state and local jurisdictions. The Encompass Compliance Service calculates the high cost thresholds as defined in HOEPA and by applicable state and local jurisdictions to determine if a loan is considered a high cost loan. The federal, state, and local APR and Points and Fees threshold calculations ensure proper classification of fees by ascertaining to whom the fee is paid (for example, lender, affiliate, originator, or provider) and by whom the fee is paid. Historical rules, indices, and information are preserved to enable a retrospective quality control audit.

• Higher Priced - This review calculates thresholds and ensures critical regulatory requirements are met with respect to “higher priced mortgage loans” (HPML). HPML thresholds are calculated according to Section 12 C.F.R. § 226.35(a)(1) of the Regulation Z. Effective October 1, 2009, Regulation Z defines HPMLs to include loans with an APR above a specified threshold. The


threshold for a first-lien loan is 1.5% or more above the average prime offer rate for a comparable loan (which is not an unusual interest rate). The threshold for a second lien is 3.5% or more. If a loan is classified as an HPML, the Encompass Compliance Service analyzes the loan's prepayment penalties to determine if they are prohibited under Regulation Z.

• State Rules - This review applies the requirements of over 340 US state laws for consumer residential mortgage loans secured by real property. It enforces the laws as they relate to:

• Usury rate ceilings percentage caps

• Prohibited fees

• Fee percentage or dollar amount limits

• Higher-rate, higher-risk, higher-priced, sub-prime, non-prime, and rate spread loans

• This review analyzes loans for compliance with state laws and regulations governing higher-rate, higher-risk, higher-priced, sub-prime, non-prime, and rate spread and similarly classified loans. Status messages in the report will explain why a loan triggered the applicable threshold and is classified as a state higher rate mortgage. The review will also determine compliance with critical aspects of higher rate mortgage regulations, including provisions relating to disclosures, foreclosure, predatory practices, and assignee liability.

• Prepayment penalty prohibitions and limitations

• Late fee dollar amount limits and length of late fee grace periods

• Interest accrual start dates

• Negative amortization prohibitions

• Balloon payment prohibitions or term limitations

• Payment and term limitations

• License - The Encompass Compliance Service maintains a nationwide database of over 450,000 licensed mortgage entities, including lenders and brokers, that is updated as frequently as state regulatory agencies make new licensing information available. The custom License review uses this database to determine the following:

• The lender assigned to the loan is licensed in a particular jurisdiction.

• The license is active and in good standing.

• The license authorizes the lender to originate this type of transaction.

• NMLS Registration Review - The NMLS (Nationwide Mortgage Licensing System) Registration Review review verifies an individual loan originator’s NMLS information against NMLS data using NMLS B2B Access. The review

may be used to test for the applicable individual loan originator’s NMLS regis-tration information on seasoned loans, with the applicable data and information at the time the loans were closed.

The Encompass Compliance Service will return Warning or Failure messages if the loan originator's NMLS unique identifier, name, or license number does not match the NMLS registration data provided by NMLS B2B Access. The service also will return the name and license(s) associated with the individual loan originator’s NMLS unique identifier for easy reference.

• GSE - The Government Sponsored Enterprise (GSE) review includes the following:

• Fannie Mae Points & Fees - The review calculates the allowable Fannie Mae points and fees thresholds as defined in the Fannie Mae Lender Letter 03-00, issued April 11, 2000 (and codified in Fannie Mae’s Selling Guide Part VII, Section 104.11), as updated and amended based upon loan data.

• Freddie Mac Points & Fees - The review calculates the allowable Freddie Mac points and fees thresholds as defined in the Freddie Mac Industry Letter, issued December 28, 2000 (and codified in Freddie Mac’s Seller/Servicer Guide Section 22.32), as updated and amended based upon loan data.

• GSE HUD-HOEPA Mortgage High Cost Thresholds - The review calculates the high cost thresholds as defined in the Fannie Mae Selling Guide Part VII, Section 104.15, as updated and amended, and the Freddie Mac Single-Family Seller/Servicer Guide Chapter 22, as updated and amended, based upon loan data.

• Enterprise Rules - Your Encompass administrator can work with your company's representative to develop and maintain custom business rules to enforce internal compliance policies or investor-specific program requirements. For example, your company could use enterprise rules to conduct a custom review for the following:

• Enforce lending programs and policies

• Evaluate borrower's ability to repay

• Manage broker compensation

• Analyze bona fide discount points

• Identify loans at risk of becoming high cost by changes to fees at closing

• Set over-disclosure tolerances

• Conform to investor and/or GSE requirements

• HMDA - This review evaluates the pertinent loan data to HMDA requirements. The FFIEC Validity and Quality edits are processed against the HMDA fields.


• Rate Spread - This review provides an alert advising the lender of the HMDA Rate Spread on a Higher-Priced Mortgage Loan. The Encompass Compliance Service uses the greater of the Disclosed APR, Encompass APR, or calculated APR as the loan’s APR for comparison purposes. The HMDA-LAR Rate Spread reporting requirement occurs when the difference between the loan's APR and the average prime offer rate for a comparable transaction is equal to or greater than 1.5% for first liens or 3.5% for subordinate liens.

• FHA Review - The FHA review evaluates FHA loans and identifies certain issues in the following areas: Seller Contribution Limit, Tax Service Fee Prohi-bition, Late Charge and Grace Period Limits, ARM Adjustment and Rate Restrictions, MSA Loan Limits, and Loan Term Limits.

• VA Enterprise Review - The VA Enterprise Review contains rules to test for some of the prohibited terms on VA loans. This review contains the following enterprise rules:

• Federal - Late Charge Limitation (VA)

• Federal - Grace Period Limitation (VA)

• Federal - Discount Points May Not Be Financed in a Purchase Money Loan (VA)

• Federal - Discount Points May Not Be Financed in a Cash-Out Refinance Loan (VA)

• Federal - Discount Points Limitation in a Rate and Term Refinance Loan (VA) (Warning)

• Federal - Loan Origination Fee 1% Limitation (VA)

• Federal - Unallowable Itemized Fees (1% Maximum) (VA)

• Federal - Loan Origination Fee and Unallowable Itemized Fees Charged (VA)

• Federal - Rate and Term Refinance Itemized Fees Charged (VA) (IRRL Warning)

• LO Compensation Review - This review provides a Warning message on a closed-end loan secured by a 1-4 unit dwelling with an Application Date on or after April 1, 2011 that includes the Mortgage Broker (loan originator) receiving any of the following fees from someone other than the Borrower:

• Loan Discount

• Yield Spread Premium

• RESPA - Your Charge/Credit (Points) amount

• Prepaid Interest

• Interest Rate Buydown Fee

The Encompass Compliance Service will provide a Warning message on a closed-end loan secured by a 1-4 unit dwelling with an Application Date on or after April 1, 2011 that includes the Mortgage Broker (loan originator) receiving compensation directly from the Borrower and from another person.

• OFAC/SSN- This review compares all of the loan's borrower names and aliases against the Office of Foreign Assets Control's (OFAC) Specially Designated Nationals, Blocked Persons and Countries List (i.e., the “SDN” list), Bureau of Industry and Security Denied Persons list maintained by the U.S. Department of Commerce, as well as similar lists established by the Canadian and British governments. In addition, the Encompass Compliance Service may validate the format for the borrower's and the co-borrower's Social Security numbers and verifies the Social Security number against the government’s Death Master File list and the “pocket book” numbers list.

• Citi Rules Review - This review includes certain CitiMortgage® policies available to approved correspondents.

• Other - This section is a combination of reviews that are not included in any of the reviews above, for example ARM Mapper, Perform Mortgage Calculations, and Index Review.

Status ResultsThe overall review status is located toward the top of the report, under the Review Status heading. In addition, there are five possible status results that can be returned for each review within a report. These results are displayed above the Request Summary information section. The possible results, listed in order of severity, are:

• ERROR - This status is delivered when the Encompass Compliance Service encounters a processing exception caused by a system failure or when key elements or data are missing from the loan. When a processing exception occurs, the service is unable to render a compliance decision.

• FAIL - This status is delivered when the Encompass Compliance Service determines the loan contains a compliance exception, thus failing the compliance review.

• ALERT - This status is delivered when the Encompass Compliance Service examines the loan data and, based on its findings, classifies the loan as a “special” loan type. Examples of “special” loans are sub-prime, non-prime, nontraditional, or rate spread home loans. This status simply notifies you that the loan is considered “special”, but is not indicative of any compliance issue.

• WARNING - This status is delivered when the Encompass Compliance Service identifies potential issues within the loan that you should investigate to determine whether a compliance exception exists. For example, a second lien loan amount of $300,000 will generate a Warning status for the HMDA review.


This status is also delivered when the Encompass Compliance Service identifies potential issues within the loan that you should investigate to determine whether a compliance exception exists. For example, certain states require that impound amounts paid by the borrower be placed in interest bearing accounts. The Encompass Compliance Service will return a Warning because it is unable to determine if such funds have been placed in an interest bearing account.

• PASS - This status is delivered when the Encompass Compliance Service does not identify any exceptions with the loan data.

There are two additional status results that can be returned for reviews that are not run:

• Not Requested - The Encompass Compliance Service will show a status of Not Requested for a review type if that review type is either not selected as a review you want to run or the review was not run because it was set up to run only under certain conditions. Both of these characteristics are set by the Encompass administrator in the Compliance Review Setup wizard.

• Not Processed - This status is returned if the details of the specific loan being reviewed make certain laws non-applicable. For example, if the loan is a purchase loan for a California investment property, the Encompass Compliance Service will return a Not Processed status under the High Cost review because both the Federal and California High Cost tests do not apply to purchase loans for investment properties.

NOTE: For more information about these status results and additional details about the standard baseline review results, refer to the Understanding ECS Review Results document.

Viewing a List of Compliance IssuesTo view a list of all errors, failures, alerts, or warnings returned in a report, click the View Error List button. The list includes the specific review that returned the issue, as well as a message explaining why the issue was returned. For example, “There is no geocode data for the property address. Please verify the address is correct.”

If the issue was caused by data entered into a specific field in Encompass, the field ID is included in the list. Click this item in the list, and then click Go To Field to jump directly to the field in Encompass.

The window listing the compliance issues remains open until you click Close, even when you jump to a field in Encompass. To order a new compliance report from this window, click Order Review. The report is displayed on the Compliance Review screen.

View a List of Loan’s FeesTo view a list of all the fees processed during the loan check, click the Fee Details button. Fees that are not mapped correctly or have other issues are highlighted in red.

These issues should be corrected to ensure the most accurate compliance report results. Click a fee in the list, and then click Go To Fee to jump directly to the field in Encompass.

NOTE: The Compliance Review Fee Details window that lists the fees remains open until you click Close, even when you jump to a field in Encompass.

Compliance Review Log AlertIn order for a loan to pass a loan check, every review that was included in the report must return a status of “PASS”. When a loan does not pass a loan check, a “Compliance Review - Did Not Pass” alert is added to the Alerts & Messages tab in the Log. To clear this alert, you can:

• Correct all the issues listed in the report, and then order a new compliance report. When the loan passes the loan check, the alert will be removed.

OR

• Click the Clear Alert button (if enabled by the administrator). Note that even though the alert is removed, the loan's compliance issues will remain until they are corrected.


http://help.elliemae.com/DocumentationLibrary/360/UnderstandingECSReviewResults.pdf

http://help.elliemae.com/DocumentationLibrary/360/UnderstandingECSReviewResults.pdf