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Preparing For The New TILA-RESPA Integrated Disclosures


Jamie Goodson: Good afternoon, and welcome. My name is Jamie Goodson. I’m the Director of the Division of Consumer Compliance Policy and Outreach here in NCUA’s Office of Consumer Protection,
and I’m the moderator for today’s webinar on the new rules establishing integrated disclosures under the Truth-In-Lending Act, known as TILA, and the Real Estate Settlement Procedures Act, known as RESPA. The Final Rule goes into effect August 1 of this year. We hope to provide helpful information regarding this important topic. First, a note. The information
contained in this presentation is for informational purposes only. We’re providing it as a public service to enhance understanding of the statutes and regulations administered by NCUA, and the presentation expresses the views and opinions of NCUA staff and staff of the Consumer Financial Protection Bureau and is not binding on NCUA, its board
members, or CFPB. So, before we get into the substance of today’s webinar, I have a few administrative announcements about the functionality of the webcast. First, please make sure the volume on your computer is turned up so you can hear the webcast. If you have trouble viewing a slide, click
on the Enlarge Slides button on the bottom of the console. Also, please allow popups from the website. A screen resolution of 1024×768, that’s 1024×768, or higher will allow you to see the slides appropriately. Now, about questions. You can submit a question at any time during the webcast in the
Submit Question box on the lower left area of the console window. We have set aside time at the end of today’s presentation to address questions as time permits. All questions that we don’t answer during the live webcast will be compiled, and we’ll post written responses on the Dodd-Frank Act Mortgage Lending Resources page.
That’s on the Consumer Compliance Regulatory Resources web pages on NCUA.gov. A link to this page is provided on the reference slide at the end of this presentation. The slides for this presentation will be available on the link you used to register, and you will be able to download them, and you will be able to select
hyperlinks to access the resources that are provided. If there are any NCUA staff attending this webinar, you can charge authorized time to participate or review the archived webcast to time code 42. The webcast will be archived for on-demand viewing in approximately two weeks after the live
event, and a media advisory will be issued when the archive is available. And, again, it will be at the same URL as the live event. Okay, now to the agenda. After introductions we’re going to discuss key elements of CFPB changes to disclosure rules under Regulation Z,
which implements TILA, and Regulation X, which implements RESPA. Specifically, we will discuss the Loan Estimate form, the special information booklet issued during that same time frame, the written list of service providers given when consumers are allowed to shop for settlement services, the Closing Disclosure form and the Escrow Closing
Notice. Next, we will discuss resources available to help credit unions and others to comply with the Final Rule’s requirements. Finally, we will answer specific questions about the Final Rule. Our presenters for today’s webinar are Gail Laster, Director of NCUA’s Office of Consumer Protection; Matt Biliouris,
Deputy Director of OCP; Brian Webster, Originations Program Manager for the Consumer Financial Protection Bureau; and Dania Ayoubi, Counsel in the Office of Regulations at CFPB. We also have a special guest, David Friend, who’s also a Counsel in the Office of Regulations at CFPB. To
assist with responding to your questions, we also have additional NCUA staff, Joseph Goldberg, a Program Officer, and Robert Suess, an Analyst. And now I will turn the presentation over to Gail. Gail Laster: Thank you, Jamie, and good afternoon, everyone. And first let me thank our guests here from CFPB. We really appreciate their [Note: sound issue]- maybe I should repeat myself. Good afternoon. I’d
like to thank everybody for participating in this webinar, and I first would like to thank our guests from CFPB. We really appreciate them taking the time to be here and answer questions and go over the issues regarding the rule. And I am happy that you’re all participating with us. So, as Jamie said, and as the slide indicates, CFPB issued a Final Rule providing for integrated
disclosures under the Truth-In-Lending Act, or TILA, and the Real Estate Settlement Procedures Act, or RESPA, on November 20, 2013. This Final Rule was published in the Federal Register on December 31, 2013, and on January 20 of this year CFPB issued an amendment to the Final Rule. A link
to the amendment is provided on the slide. Now, as of the date of this webinar, the amendments had not yet been published in the Federal Register. But during this presentation we will refer to both the original Final Rule and the amendments to that Final Rule as the Final Rule. And, as we’ve indicated
before, the Final Rule amends two parts of Title 12 of the Code of Federal Regulations, Part 1026, or Regulation Z, which implements TILA, and Part 1024, or Regulation X, which implements RESPA. And, again, the Final Rule becomes effective on August 1, 2015. Also,
I’d just like to note that NCUA will be issuing a regulatory alert covering the key issues of the Final Rule. And, as the slide indicates, there are many other resources available to learn additional details about the Final Rule. For example, CFPB has issued a Small Entity
Compliance Guide you can review to learn more about the Final Rule in a plain language and frequently asked question format. Also, a guide to the Loan Estimate and Closing Disclosure forms provides instructions for completing the new forms. We will discuss additional resources later in the presentation.
And, again, further background is that currently creditors provide a different set of disclosure forms to mortgage applicants under TILA and RESPA. Through the Dodd-Frank Wall Street Reform and Consumer Protection Act Congress directed CFPB to integrate the TILA and RESPA disclosures, and the stated purpose
of this integration was to facilitate compliance with the disclosure requirements of TILA and RESPA and to aid the borrower in understanding their transaction by utilizing readily understandable language. Now, this chart on the slide illustrates the combination of the disclosures. CFPB combined
the Good Faith Estimate, or GFE, and the Initial TIL disclosure into a new form, the Loan Estimate. The Loan Estimate is designed to help consumers understand the key features, costs and risks of the mortgage for which they are applying. CFPB also combined the HUD-1 and Final TIL
disclosure into a new Closing Disclosure. Like the Loan Estimate, the Closing Disclosure is designed to help consumers understand mortgage costs. Now, when you look at this slide and in others you’ll note that in the right-hand top corner of the slide we’ve included
the citation in the Code of Federal Regulations for the particular section of the rule that we’re covering. Now, the Final Rule, in terms of coverage, it establishes new disclosure requirements and forms for most closed-end consumer credit transactions secured by real property.
The Final Rule’s requirements related to the Loan Estimate, Closing Disclosure, Special Information Booklet, and Written List of Service Providers do not apply to home equity lines of credit, reverse mortgages or chattel dwelling loans, such as loans secured by mobile homes or a dwelling not
attached to real property. However, note, creditors originating these types of mortgages must continue to use the disclosures currently required by TILA and Regulation Z and the GFE and the HUD-1 forms required under RESPA and Regulation X. Also, an exemption from some requirements applies
to certain no-interest loans secured by subordinate liens made for the purposes of down-payment or similar home buyer assistance, property rehabilitation, energy efficiency or foreclosure avoidance and prevention. The Final Rule’s requirements related to the Escrow Closing
Notice and the Partial Payment Disclosure do not apply to HELOCs or reverse mortgages, but they do apply to chattel dwelling loans. There is also an exemption for entities that originate few loans. So, for example, a credit union that extended consumer credit 25 or fewer times
in the past calendar year or five or fewer times for transactions secured by a dwelling does not qualify as a creditor under TILA and Regulation Z and is not subject to the Final Rule. However, that person may still be a lender subject to the current disclosure requirements
under RESPA and Regulation X. I’d like to turn now to the Loan Estimate, particularly what’s required in the content. In the Loan Estimate you must provide members with a good-faith estimate of credit costs and transaction terms. It must be in writing and contain certain
information prescribed in Regulation Z. Delivery of the completed form must satisfy the timing and the method of delivery requirements set forth in the Final Rule. And when a mortgage broker provides a Loan Estimate to a consumer, this satisfies the creditor’s obligation to provide the Loan Estimate.
However, creditors are expected to communicate with mortgage brokers to ensure the Loan Estimate and its delivery satisfy the Final Rule’s requirements. Continuing, the Final Rule contains a standard Loan Estimate Form referred to as Form
H-24, which is found in Appendix H to Regulation Z. Creditors must use Form H-24 for federally related mortgage loans subject to RESPA. For loans subject to the TILA-RESPA rule that are not federally related mortgage loans,
Form H-24 is a model form. Creditors are not strictly required to use it, but the disclosures must contain the exact same information as and be made with the headings, content and format substantially similar to Form H-24. And with that I’ll now turn over the presentation to
Brian. Brian Webster: Thank you, Gail. We are now going to look at the model Loan Estimate form available in Appendix H to Regulation Z. Page 1 contains general information such as the date issued, the applicant’s name, loan type and whether there is a rate lock,
tables for loan terms, projected payments, costs at closing and a link to more information available on CFPB’s website. Page 2 contains details about closing costs, including loan costs and other costs such as taxes and government fees, a table calculating cash needed to close, and,
as applicable, information about adjustments to payments and to the interest rate. Page 3 of the Loan Estimate contains contact information for the lender, the loan officer and mortgage broker, if any, and information for comparison purposes about loan costs based on the following factors: costs if the member were to
pay off the principal in five years; the annual percentage rate, or APR; and the total interest to be paid, or TIP, as a percentage of the total loan amount. Note that the Final Rule provides for creditors to make specified adjustments to the Loan Estimate form for transactions with no seller. Now I’ll turn it back over to Jamie to
discuss the timing for providing the Loan Estimate. Jamie Goodson: Thank you, Brian. Creditors must deliver the Loan Estimate or place it in the mail not later than the third business day after the creditor receives the member’s application. They also must deliver the Loan Estimate or place it in the mail at least seven business days before consummation. Note that timing
requirements under the Final Rule use two different definitions of the term “business day. ” These definitions, as well as the definitions of the term “application” and “consummation,” are discussed in detail in the following slides. The Final Rule’s timing and delivery requirements associated with the Loan Estimate are triggered when a creditor or broker receives an
application, meaning that the creditor received all of the six elements you see on the slide. These are the same items that are listed under the definition of application under RESPA right now, but what has happened is the list excludes the seventh item, which was any other information deemed necessary by the
loan originator. As mentioned, there are two definitions of the term “business day. ” Under one definition, a business day is a day a creditor’s offices are open to the public for carrying out substantially all of its business functions. This definition varies by creditor. As a shorthand, when we mean
this definition of business day, we’ll say “days open for business. ” Under the other definition, a business day is every day except Sundays and specific federal legal public holidays. This will be the same for every creditor. When we mean this definition of business day we’ll say “days other than Sundays and holidays. ” Creditors must
deliver the Loan Estimate or place it in the mail at least seven business days before consummation, as mentioned. But for purposes of this requirement, business day means every day except Sundays and legal public holidays. The Final Rule incorporates Regulation Z’s definition of “consummation,” which is a legally distinct event from closing or
settlement, although they may occur at the same time. Consummation occurs when a member becomes contractually obligated to the creditor on the loan, which depends on applicable state law. You must verify the applicable state laws to ensure that you provide Loan Estimates and Closing Disclosures in compliance with the Final Rule’s timing requirements.
If a mortgage broker receives a member’s application, either the creditor or the mortgage broker may provide a member with the Loan Estimate. If the Loan Estimate is not provided to a member in person, it is deemed received three business days after it is delivered or mailed, except that the creditor may rely on proof of actual receipt instead. For this timeline
you count every day except Sundays and specified public holidays. The Loan Estimate must also be delivered or placed in the mail at least seven business days before consummation unless the member waives this timing requirement because of a bona fide personal financial emergency. Again, you count every day except Sunday and specified public holidays. Certain changes before
consummation trigger additional three business waiting day periods, and in these periods you count days other than Sundays and holidays, and that’s in connection with the required seven business-day waiting period after providing the Loan Estimate and before consummation. These changes will be discussed later in the presentation.
The Final Rule prohibits imposing fees on a member in connection with an application before the member has received the Loan Estimate and has indicated an intent to proceed with the transaction. This includes application fees, appraisal fees and underwriting fees. However, you may charge a bona fide and reasonable
fee for obtaining the member’s credit report before the member receives the Loan Estimate. Also, prior to receiving notice of intent to proceed, creditors may not hold checks for later deposit or record credit card information for later charge. You may not obtain the credit card information for the credit report and then simply charge the same card
once the member communicates an intent to proceed. You have to take the additional step of obtaining the member’s consent to collect money after the intent to proceed is expressed. A member indicates intent to proceed when after the Loan Estimate has been delivered the member communicates in any manner the member chooses, except
silence, that the member intends to proceed. If a creditor requires a particular manner of communication, the member must use it to convey intent to proceed. You must document the communication of this intent to proceed in order to comply with the Final Rule’s record retention requirements. The Loan Estimate
figures must be made in good faith and must be consistent with the best information reasonably available to the creditor at the time of disclosure. The creditor must exercise due diligence in obtaining information necessary to complete the Loan Estimate. If a creditor uses estimated figures when certain information is
not reasonably available at the time the Loan Estimate is made, the creditor must designate such figures as estimates on the Loan Estimate. Whether a Loan Estimate was made in good faith is determined by looking at the difference between the estimated charges originally provided in the Loan Estimate and the actual charges paid or imposed on the member
– paid by or imposed on the member. Generally, and regardless of whether the creditor later discovers a technical error, miscalculation or underestimation of a charge, if the charge paid by or imposed on the member exceeds the amount originally disclosed on the Loan Estimate, the disclosure is not considered to have been made in good faith.
The accuracy required for a disclosure of a charge depends on the category into which the charge falls. Before we discuss these categories, however, it’s important to note that a tolerance is a permissible variation between the amount disclosed and the amount charged. You’ll hear us refer to tolerances, and that’s just a permissible variation.
So the categories are that some charges may exceed the amount disclosed on a Loan Estimate without regard to a tolerance limitation. Other charges are subject to a 10 percent cumulative tolerance. This means that the sum of those charges added together may exceed the sum of all such charges disclosed on the Loan Estimate by no more
than 10 percent without violating the requirement to make disclosures in good faith. Still other charges are subject to zero tolerance, meaning that the creditor may not charge more than the estimated amount except under specific changed circumstances that permit a revised Loan Estimate. Now we’re going to give examples
of each of those types of charges. So, the charges that may change without regard to a tolerance limitation may exceed the amount disclosed on the Loan Estimate by any amount, provided each charge is consistent with the best information reasonably available to you at the time it is disclosed. These charges are: prepaid interest;
property insurance premiums; amounts placed into an escrow, impound, reserve or similar account; services you require if you permit the member to shop and the member selects a third-party service provider not on the written list of service providers – we’ll talk about the written list later; and the last category is charges paid to
third-party service providers for services not required by the creditor, and these charges may be paid to affiliates of the creditor. Charges subject to a 10 percent cumulative tolerance are: recording fees; and charges for third-party services where the charge is not paid to the creditor or the creditor’s affiliate,
and the consumer is permitted by the creditor to shop for the third-party service, and the consumer selects a third-party service provider on the creditor’s written list of service providers. Charges for which a creditor may not charge more than the estimated amount except under specified changed circumstances
include: fees paid to the creditor, mortgage broker or an affiliate of either; fees paid to an unaffiliated third-party service provider if the creditor did not permit the member to shop; and transfer taxes. So we’ve talked about what a tolerance is. The Final
Rule addresses how to cure a tolerance violation as follows. In general, excess payments must be refunded to the member no later than 60 calendar days after consummation. For the 10 percent cumulative tolerance charges, the excess payment considered is the total sum of the charges when they’re
added together, and you look at whether that exceeds the sum of all of the charges disclosed on the Loan Estimate in those categories by more than 10 percent. If it does exceed that amount, the difference has to be refunded to the member no later than 60 calendar days after consummation. For zero tolerance charges, any amount charged beyond
the amount disclosed on the Loan Estimate must be refunded to the member no later than 60 calendar days after consummation. The general rule is that creditors are bound by the Loan Estimate and may not issue revisions because they later discover technical errors, miscalculations or underestimations of charges. However, there are some exceptions to
the general rule. Creditors are permitted to provide the member revised Loan Estimates in certain circumstances. For these circumstances to apply, the definition of the term “changed circumstances” must be met. For the purposes of a revised Loan Estimate, changed circumstance means an extraordinary event beyond the control
of any interested party or other unexpected event specific to the member or the transaction. Examples are war and national disaster. Another category of changed circumstances is that information specific to the member or the transaction that the creditor relied upon when providing the Loan Estimate was inaccurate or changed after the
disclosures were provided. Some examples of that are that the applicant lost a job or a title insurer went out of business. Another category of changed circumstances is there’s new information specific to the member or transaction that the creditor did not rely on when providing the Loan Estimate. Creditors should make
sure their documentation of changed circumstances is clear. This should be a priority with respect to record retention. Now let’s discuss six specific types of changed circumstances that allow for revised Loan Estimates. First, creditors may provide a revised Loan Estimate for changed circumstances occurring after the
Loan Estimate is provided to the member which caused the settlement charges to increase more than permitted by the Final Rule. Second, creditors may provide a revised Loan Estimate for changed circumstances occurring after the Loan Estimate is provided to the member if the changes affect the member’s eligibility for the terms for which
the member applied or affect the value of the security for the loan. Third, creditors may provide a revised Loan Estimate where the member requests revisions to the loan terms of settlement that cause the estimated charge to increase. Fourth, creditors may provide a revised Loan Estimate if the interest
rate is not locked when the Loan Estimate was provided and locking the rate causes the points or lender credits disclosed on the Loan Estimate to change. Note that in situations where the rate was not locked at the time the Loan Estimate was provided, the creditor must provide a revised Loan Estimate to the borrower
no later than three business days, counting days open for business, after the date the interest rate was locked. The fifth category is that creditors may provide a revised Loan Estimate if the member indicates an intent to proceed with the transaction more than 10 business days, counting days open for business, after the
Loan Estimate was originally delivered or placed in the mail. In that situation the Loan Estimate is considered to have expired. Sixth, creditors may provide a revised Loan Estimate if the loan is a new construction loan and the settlement is delayed by more than 60 calendar days and the Loan Estimate states clearly and conspicuously that at
any time prior to 60 calendar days before consummation the creditor may issue revised disclosures. Note that if any of these six exceptions leads to an increase in a settlement charge only to an extent that does not exceed the applicable tolerance, the original Loan
Estimate is still deemed to be in good faith, and redisclosure is not permitted. The creditor must ensure that the consumer receives the revised Loan Estimate no later than four business days before consummation. If the
creditor mails the revised Loan Estimate and wants to rely on the mailbox rule, the creditor would need to place the revised Loan Estimate in the mail no later than seven business days before consummation of the transaction, to allow three business days for receipt. For this purpose, you count days other than
Sundays and legal public holidays. Now I’m going to turn the presentation over to Matt to discuss the special information booklet. Matthew Biliouris: Thank you, Jamie. So up to this point we’ve really been focused on the Loan Estimate disclosure, and these next few slides are really going to get into some other additional pieces of information that
play a critical role in providing members with information so they can compare products and just make more informed financial decisions. So, as this slide indicates, it talks about the special information booklet. This booklet, also known as the Settlement Cost Booklet, currently is required by the Real Estate Settlement Procedures Act, and under the Final Rule creditors
will have to give this booklet without making any more than limited changes to it. I would point you to the actual text of the rule and the commentary, in particular, that does provide some unique circumstances where there can be some additions, modifications or deletions of that. Likewise, in general creditors and mortgage brokers must provide this special information
booklet to members who apply for a member credit transaction secured by real property no later than three business days after receiving the member’s loan application. And for this purpose you count the days the creditor is open for business, so, again, this definition may vary by the creditor. However, a special information booklet is not required under
certain circumstances. So, for example, if the member is applying for a home equity line of credit subject to Section 1026.4, the creditor or mortgage broker must provide a copy of the brochure entitled “When Your Home is on the Line: What You Should Know about Home Equity Lines of Credit” instead of this special information booklet. Also, the creditor
does not need to provide this special information booklet if the member is applying for a real property secured member credit transaction that does not have the purpose of purchasing a one- to four-family residential property such as for a refinancing, a closed-end loan secured by a subordinate lien or a reverse mortgage. And lastly on this point,
the creditor also does not have to deliver the special information booklet if it denies the member’s application or the member withdraws the application before the end of this three business-day period. And just a few more points on this, and I would point to the commentary, again, on this, when two or more persons apply together for a loan, the creditor
may provide a copy of the special information booklet to just one of them. And if the member uses a mortgage broker, the mortgage broker must provide the special information booklet and the creditor need not do so. And Chapter 14 of the Small Entity Compliance Guide contains a really good discussion on the special information booklet. So another key thing
I think Jamie had touched on earlier talking about shopping for providers, so let’s spend a little bit of time talking about that. In addition to the Loan Estimate, if a member is permitted to shop for a settlement service, the creditor must provide the member with a written list of services for which the member can shop, including a list of
third-party service providers. This written list must be provided within the same time frame as the Loan Estimate, no later than three business days, counting days open for business, after the creditor received the member’s application. This written list must be provided separately from the Loan Estimate and identify at least one available
settlement service for each service and state that the member may choose a different off-list provider of that service if it’s applicable. And what do we mean when we talk about the term “shopping”? Shopping means that the member can choose to select a third-party service provider that is not on the written list of providers. If the member is given a list and
is required to choose a provider on the list, the member has not been allowed to shop. Note that the third-party settlement service providers identified on the written list must correspond to the settlement services for which the customer can shop as disclosed on the Loan Estimate. A creditor may also identify on the written list those services for which the
member is not permitted to shop, as long as those services are clearly and conspicuously distinguished from those services for which the member is permitted to shop. So let’s shift gears a little bit and start talking about the Closing Disclosure. Regulation Z describes the Closing Disclosure as a statement of
final loan terms and closing costs. It is a written document that must be delivered to the borrower prior to consummation of the loan. If it takes the place of and consolidates – I’m sorry, it takes the place of and consolidates the final Truth-In-Lending disclosure and HUD-1 settlement statement for most closed-end mortgage
loans. It must be used for covered loans for which an application is received on or after August 1 of this year, 2015. It cannot be used for loans for which borrowers have submitted applications before that date. It cannot be used for home equity lines of credit, reverse mortgages and chattel dwelling loans, such as mortgages secured by
mobile homes or dwellings not attached to real property. And the rule specifies the information and figures a creditor must include in this Closing Disclosure. It must contain actual closing figures, although estimates may be used where necessary information is not readily available. The
regulation includes a model Closing Disclosure, which is called Form H-25. It and the several variations for different circumstances are found in Appendix H to Regulation Z. The model forms must be used for all covered federally related mortgage loans. A key point here is the lender is not required
to use the model forms for covered transactions which are not federally related but may use it as a model. For those transactions, the Final Rule requires using a written document containing all of the information placed on Form H-25 and in a similar format. Appendix H to the rule also contains forms for the seller only
and for use in transactions without a seller. And now I’ll turn the presentation back over to Brian to hit on some of the key contents of the Closing Disclosure. Brian Webster: Thank you, Matt. So now we’re going to take a look at the various pages of the Closing Disclosure. As you can tell, the format of the Closing
Disclosure is designed to be very similar to the format of the Loan Estimate. This was designed to help facilitate consumer understanding of the transaction both at origination and at the closing table. Page 1 of the Closing Disclosure contains closing transaction and loan information. The top section of Page 1
contains the issue date of the Closing Disclosure, date of closing, disbursement date and description of the property. It includes identities of the borrower, seller, lender and settlement agent. It contains the loan term, purpose of the loan, product and loan type. The lender also inserts the sales price,
appraised value or estimated value in this part, depending upon which figure is used to approve the loan. The remainder of Page 1 reflects loan details such as amount, term, monthly principal and interest payment, estimates of total taxes and insurance, total monthly payment with
escrow, total closing costs and cash to close. Page 2 contains closing cost details. These include loan costs and other costs, including government fees, prepaid funds and initial escrow payment, adjustments to payments or interest rate, depending upon the loan type.
Page 3 shows the calculation of cash to close. It also contains summaries of the transaction in columns reminiscent of the HUD-1 settlement statement. On Page 4 the lender discloses whether the loan is assumable, if there is a demand feature, when a late payment
accrues, whether there is a negative amortization feature, how it handles partial payments, and information about escrow amounts. It also includes tables describing payment and rate changes for adjustable loans. Page 5 contains a total of all payments,
finance charge, amount financed, APR and the total interest paid as a percentage of the loan amount. It has information about the appraisal, if applicable, the borrower’s liability after a foreclosure and contact information for the lender, mortgage broker, real estate brokers
and settlement agent. It also tells how to contact CFPB for information or to file a complaint. It also has a signature line for the borrowers to confirm receipt of the form. And now I’ll turn the presentation back over to Matt. Matthew Biliouris: Thank you, Brian. So this sets in some of the timing requirements
under the Final Rule for the Closing Disclosure. The Final Rule mandates when the creditor must provide the member with a copy of the Closing Disclosure. The regulation requires a three-day waiting period between the consumer’s receipt of the Closing Disclosure and consummation. For purposes of when to deliver or mail the Closing
Disclosure, business day is different than the term used for the Loan Estimate. For the Closing Disclosure’s deadline, business day means every day except Sundays and legal public holidays. A consumer is deemed to have received the disclosure three business days after it is mailed. Consummation occurs when the consumer
becomes contractually obligated to the creditor on the loan, which depends on applicable state law. A consumer may waive the three business-day period between receipt of the disclosure and consummation only by signing a dated statement describing the bona fide personal financial emergency for which
the loan is required. And regarding that situation, whether a situation is a bona fide personal financial emergency depends on the circumstances of the situation, and I would refer you to the commentary on the rule for some situations that are outlined in those examples. If there are multiple borrowers, each must
sign the waiver. And the creditor is responsible for delivery of the Closing Disclosure to the borrower, although a settlement agent may do so on the creditor’s behalf. The settlement agent, however, is responsible for delivery of the Closing Disclosure to the seller on the transaction. Let’s touch on
some of the accuracy implications of the rule. The Closing Disclosure must contain the actual terms and costs of the transaction. If the credit union uses due diligence and acts in good faith to obtain the actual costs but the information is not reasonably available, it may insert estimates onto
the form. However, if estimates are used, the credit union must provide a corrected Closing Disclosure at or before consummation. This may result in delayed consummation, depending on which data has been estimated. There are three general categories of changes for which a lender must issue a corrected closing
disclosure. These are pre-consummation changes which require a new three-day waiting period; pre-consummation changes not requiring a new waiting period; and post-consummation changes. Let’s touch on some of those. A creditor must provide a corrected Closing
Disclosure for all changes required. However, a new three-day waiting period before consummation is only required if the correction is for a change in the APR, changes to the loan product or addition of a prepayment penalty. In this case, count all days
except Sundays and federal legal holidays to determine the three-day waiting period. The consumer has a right to inspect the corrected Closing Disclosure at least one business day before consummation, and the corrected Closing Disclosure must contain all adjustments in terms known to the lender at the time of the inspection. And
I’d be remiss if I didn’t point out regarding the prepayment penalties, federal credit unions are prohibited from charging a prepayment penalty under the Act – the Federal Credit Union Act, to clarify. You must issue a corrected Closing Disclosure for changes occurring after consummation. If circumstances change within 30
calendar days after consummation, resulting in a change to an amount paid, the corrected Closing Disclosure must be mailed within 30 calendar days of learning of the change. When there are non-numerical clerical errors which do not affect timing, delivery or similar requirements, you must mail the corrected Closing
Disclosure within 60 calendar days of consummation. So, for example, if the Closing Disclosure identified the incorrect settlement service provider as a recipient of a payment, the error would be considered clerical because it is non-numerical and does not affect any of the delivery requirements set forth in the rule. However,
if the Closing Disclosure lists the wrong property address, which affects the delivery requirement imposed by the rule, the error would not be considered clerical. If you must make a refund to cure a tolerance violation, you must also provide a corrected Closing Disclosure that reflects the
refund within 60 calendar days of consummation. And the rule actually imposes a new requirement in the integration here regarding an Escrow Closing Notice. The lender or service provider must provide an Escrow Closing Notice before terminating a member’s escrow account. This notice requirement
applies to closed-end first lien loans on real property or dwelling. Reverse mortgages are excluded from this requirement. The lender or servicer must send the Escrow Closing Notice at least 30 business days before termination and at least three business days before terminating at the consumer’s request. There are exceptions
to the notice requirement, however. No notice is required where the escrow account was established due to delinquency or default of the borrower or where the underlying obligation was terminated. This notice must be provided to escrow accounts linked to closed-end first lien loans secured by residential
real property or other dwelling. And, again, escrow accounts for reverse mortgages are not covered. And now let me turn things back over to Brian. Brian Webster: Thanks again, Matt. So, now that you have basic information about the new TILA-RESPA Integrated Disclosure
Rule, the question is what should you be doing next? If your credit union offers mortgage loans to members, you should take several actions to implement the regulatory requirements of the Final Rule prior to its effective date on August 1 of this year. First, become familiar with the details of the
new requirements. There are links to resources to assist you that are provided later in this presentation. Next, determine the changes that affect your credit union’s processes and determine what adjustments your credit union needs in order to comply with the new rule. Also, review impacted processes and
procedures and develop a plan to implement them by August 1. Important considerations include both an implementation plan and schedule and also a budget for implementing the new rules. In addition, review the plan and scope with your executive management teams. Furthermore, identify third-party
relationships that are impacted by the Final Rule by contacting vendors to ensure that they are on track to implement the necessary changes. Some questions to ask include when will the vendor deliver software updates; what questions does the vendor have about specific changes; what is
the status of the vendor’s implementation of these various changes; what does a vendor do to help your credit union comply; and what does the vendor expect of you in order to be able to comply with the new rule? You should also plan for how you will work with settlement service providers to ensure accuracy
of the disclosures. Note that the tolerances for accuracy described earlier do not apply to all settlement services. You should also develop training materials for staff and management, and also have a plan in order to test and implement any and all technology changes that are required prior to August 1. Then
you’ll need to roll out all of these changes in time to ensure that the new disclosure for applications received on or after August 1, 2015 are ready to roll. At the Bureau, our Regulatory Implementation Initiative provides additional resources designed to help industry
understand the rules. Here we have some examples of the resources. It includes a Small Entity Compliance Guide, the Guide to Forms. We have a timing calendar, and additional resources such as webinars that are made available through our
website. As evident by today’s webinar, we also engage in close collaboration with external stakeholders such as other federal agencies and regulators as well as across internal divisions within the CFPB. Here we have some
screenshots of our Regulatory Implementation web page that can be found from ConsumerFinance. gov. From one of these rule screens, as you’ve seen in the bottom right, we also have an email distribution list in which we use to send notifications for any updates made through the
regulatory implementation efforts, and I encourage all of you to sign up if you do not have someone from your organization that’s on this distribution list already. On the next screen are some examples of additional guides that we’ve done for the TILA-RESPA and for other rules. And
here are some other resources that can be found through our Regulatory Implementation website, as well. An additional resource that we have created within the CFPB is our eRegulation site. This is an electronic version of the regulations that incorporates
the existing, historical as well as future versions of the regs and also the official interpretations, better known as the rule commentary. And with that I’ll now turn it back over to Jamie. Jamie Goodson: Thank you, Brian. We understand this is a lot of information to absorb in a short time. For your convenience, we’ve
included information about the reference materials Brian mentioned to help you understand the Final Rule. We encourage you to consult these references for more detailed information. This slide actually provides a link to the TILA-RESPA Integrated Disclosure Rule Implementation web page that Brian mentioned
earlier. And, again, once the slides are posted you should be able to select the hyperlink to reach that. You can find additional resources on NCUA’s Consumer Compliance Regulatory Resources web page. The web page provides access on a variety
of topics, including Dodd-Frank Act mortgage lending resources, Fair Lending resources and deposit resources. We have some time to take some questions and to answer some questions, and we thank you for sending in questions. I’m going to ask
Dania Ayoubi a few questions we received in advance of today’s webcast. So, Dania, what constitutes an acceptable addendum page? For example, if a loan – oh, I’m sorry. I’ve got to let Dania give her disclaimer. Dania Ayoubi: Thanks very much. Just a reminder to all of our listeners today, this
presentation, of course, does not represent legal interpretation, guidance or advice of the Bureau. Of course, while we’ve made efforts to ensure the accuracy of our presentation, it’s not a substitute for the rule, and only the rule and its official interpretations can provide complete and definitive information regarding requirements.
Jamie Goodson: Thank you. So our first question we received was what constitutes an acceptable addendum page? For example, if the Loan Estimate does not have enough room for all of the names and mailing addresses of the consumers applying for the credit, how should the addendum page be disclosed? Dania Ayoubi: Thanks, Jamie.
Comment 1 to Section 1026.37(a)(5) discusses the use of an additional page that may be appended to the Loan Estimate if the names and mailing addresses of all consumers do not fit in the space allocated. Comment 5 to Section 1026.37(o)(5) explains that this additional page should be formatted similarly
to the Loan Estimate so as not to affect the substance, clarity or meaningful sequence of the disclosure. In addition, information provided on additional pages should be consolidated on as few pages as necessary to not affect the substance, clarity or meaningful sequence of
the disclosure. One note worth making here is that in some instances the Loan Estimate does not allow for the use of addenda. For example, Section 1026.37(f)(6) and (g)(8) do not allow for the use of addenda, in which case the creditor should disclose any remaining charges as an aggregate
amount labeled “Additional Charges” instead of itemizing those remaining charges through the use of an addendum. Jamie Goodson: Thanks, Dania. We have another question, which is how should fees paid by the lender be disclosed on the Closing Disclosure? Dania Ayoubi: So the answer here is it depends. It’s
up to the lender on how to disclose credits on the Closing Disclosure as well as how to allocate credits between charges. Generally, the lender will have two options. First, if the lender credit is associated with a particular item or charge the lender may indicate the credit in the “Paid by Others” column
in the loan costs or other costs table on Page 2 of the Closing Disclosure. Pursuant to Section 1026.38(f) and its associated commentary, the lender would use the letter (L) in parentheses to denote that the charge is being paid by the lender. Alternatively, pursuant to Section
1026.38(h)(3) and Comment 1 to that section, the lender may disclose a general lender credit not associated with any particular item or charge and list the credit at the bottom of Page 2 of the Closing Disclosure as a negative number, along with a narrative description. Jamie
Goodson: Thank you for that. Our next question has to do with home equity loans. If a credit union does not charge any fees and also covers all third-party costs – for example, appraisal costs – how should these fees be disclosed on the Loan Estimate or Closing Disclosure? Should they be disclosed and then zeroed out with lender credits,
or should they be left off of the disclosure altogether? Dania Ayoubi: So first we have a threshold question here relating to the applicability of the TILA-RESPA Integrated Disclosures Rule to home equity loans. The rule applies to closed-end consumer credit transactions secured by real estate. So if the home equity loan is open end, the
Integrated Disclosures Rule does not apply, and creditors should continue to use existing disclosures. If, however, the home equity loan is closed-end, the Integrated Disclosures Rule does apply, and creditors are therefore required to provide the new integrated disclosures. Now to the question of whether fees should be
disclosed and offset by a lender credit. The answer depends on what the terms of the legal obligation between the consumer and the creditor are. The disclosures must reflect the terms that the consumer and creditor are legally bound to when the disclosures are provided. The legal obligation normally is presumed to be contained in the
credit contract between the creditor and the consumer. So if the creditor is legally obligated to provide a premium or rebate to the consumer as part of the credit transaction, the disclosures should reflect the value of that premium or rebate in the manner and at the time that the creditor is obligated to provide it.
So what’s important to remember is that the Loan Estimate must reflect charges that will be paid by the consumer. A creditor may decide not to charge an origination fee to the consumer, for example, as Comment 5 to Section 1026.37(f)(1) notes, a charge to cover a loan-level pricing
adjustment or LLPA. Or the creditor may decide not to itemize its overhead for processing a loan and offset those charges with a credit. In that case, the credit contract between the creditor and the consumer is not going to include those charges, and the creditor may simply not disclose
estimates of these charges, as there are no estimated charges to provide to the consumer. However, it gets a bit tricky with other charges payable to third parties, for example, recording fees, transfer taxes and other closing costs. Under those circumstances, it comes down to whether the consumer is
paying for a charge and the creditor is agreeing to cover it through a lender credit or if the creditor is simply not going to pass a charge along to the consumer. In many cases these are charges that need to be paid by the consumer and offset with a lender credit. So, for example, a creditor typically does not just
decide not to charge the consumer transfer taxes. The consumer owes it as part of the real estate transaction, and the creditor may agree to cover it by the use of a credit. In that example, the disclosures should reflect a charge to the consumer and a lender credit to offset that charge. Jamie Goodson: Thanks again, Dania. We now have
a question about appraisal management companies, and the question is, how does the new TILA-RESPA Integrated Disclosures Rule affect the disclosure of fees related to appraisal management companies and to appraisals more generally. Dania Ayoubi: So I think this question is asking how to disclose an appraisal charge that is being paid by the consumer
when there is an appraisal management company, or AMC, that outsources the appraisal, so whether the creditor would need to separately itemize the appraisal and the AMC fee or just disclose it all as one charge payable to the AMC. The TILA-RESPA Integrated Disclosures Rule leaves it up to the creditor to itemize the AMC fee separately
from the appraisal fee or to disclose them as one charge. There is no significant change under the new rule as to how the fee is disclosed other than indicating that the AMC fee is permitted to be separately itemized by the creditor. However, itemization of the AMC fee is not required.
Jamie Goodson: Thank you. We’ve come to the end of the slides for which we have question slides to show you, but we’ve got more questions, of course. One question is whether a creditor is allowed to issue a revised Loan Estimate only when there are changed circumstances or are there other events that – or
other events that – sorry, let me start over. Is a creditor allowed to issue a revised Loan Estimate only when there are changed circumstances or other events that may permit resetting of tolerances, or can a creditor revise a Loan Estimate to update information for accuracy even when there is no basis for resetting a tolerance? Dania Ayoubi: So the Final Rule
provides specific triggering events, as we covered, that allow creditors to redisclose estimates for good faith for tolerance purposes. But the rule does not prohibit creditors from providing a revised Loan Estimate at any time for accuracy or informational purposes, even when a tolerance is not affected. So note that if
a creditor provides an informational Loan Estimate, merely providing the disclosure does not impact tolerances and does not impact the good faith analysis. Jamie Goodson: Thank you. So except for a bona fide and reasonable fee for obtaining the consumer’s credit report, the rule prohibits imposing fees on a consumer
in connection with the application before the consumer has received the Loan Estimate and indicated to the creditor an intent to proceed with the transaction. What constitutes an intent to proceed? Dania Ayoubi: The rule generally allows creditors to define what constitutes an intent to proceed for these purposes, and
creditors may require, for example, communications in writing. The only thing expressly excluded by the rule is silence, which creditors may not treat as communication of intent to proceed. However, if a creditor has not specified a particular manner of communication, then the rule essentially treats any communication by the
consumer to the creditor expressing an intent to proceed as sufficient. And just to note, this is not substantially changed from how it’s determined today under RESPA. Jamie Goodson: Great. So we have another question, which is, are creditors allowed to make changes to the new forms, or do they have to use the forms exactly as CFPB did
in the appendix? Dania Ayoubi: The answer to this depends on whether the transaction is covered by RESPA. For any transactions that are covered by RESPA today and subject to the new Integrated Disclosures Rule after August 2015, the forms are mandatory forms, just like the RESPA GFE and HUD-1. This will be the case for most
covered transactions. However, for transactions that are not subject to RESPA but still fall within the scope of the rule, for example, non-real estate secured manufactured housing, the forms will be model forms. Jamie Goodson: Thank you. If a creditor does not charge late fees, what
should be disclosed on the Loan Estimate? Dania Ayoubi: The answer to this question depends upon the legal obligation between the consumer and the creditor. Section 1026.37(m)(4) requires the disclosure of a statement detailing any charges that may be imposed for a late payment stated
as a dollar amount or percentage charge as a late payment amount and the number of days that a payment must be late to trigger the late payment fee and labeled “Late Payment. ” So if a creditor does not charge late fees, the dollar amount or percentage charge should be disclosed as zero. Jamie Goodson: Thank you for
answering all those questions. I think we’re going to give you a break right now, and if I’m correct, David, you’re ready to answer some questions? David Friend: Certainly. Jamie Goodson: Okay. So we have one question, which is. could you please clarify your comment regarding construction permanent financing? Where would we put the 60-day redisclosure
language, on the Loan Estimate? David Friend: Yes, it would be on the Loan Estimate. This is actually something that we clarified with our most recent amendments to the TILA-RESPA rule. Basically the language that can be placed on the Loan Estimate to indicate that this is a construction loan
and – new construction loan and that a new revised Loan Estimate would be provided at least 60 days prior to consummation would be on the third page under, I think, Other Considerations. So we made clear in our amended rule where that language can go on the Loan Estimate.
Jamie Goodson: Thank you. Another question is, does the Closing Disclosure have to be provided to all borrowers on the loan? If we mail the Closing Disclosure, do we have to allow six business days before closing? David Friend: So, to the first question, the Closing Disclosure
has to be provided to anyone who has a right to rescind the transaction. That’s usually going to be a determination you’re making in a refinance transaction. So anybody with a right to rescind is going to be the one who receives the Closing Disclosure. For a purchase transaction
it’s the applicant. So it can be – there are general rules related to multiple applicants in 17(d) – 1026.17(d) – that relate to what is – how to deliver it when you have multiple applicants. Jamie Goodson: Thank you. Another question is about Page 3 of the Loan
Estimate. Does the statement on Page 3 of the Loan Estimate concerning appraisals meet the requirements of Regulation B 1002.14, Appraisal Disclosure Notice? David Friend: So, one of the purposes that we had for the integrated disclosures is to try to consolidate as many
various disclosures that are required under federal law in as few documents as possible. It is clear from both the regulation text, and we also mentioned this in the preamble, that we did intend for that disclosure to satisfy the Regulation B appraisal disclosure notice requirements. So
that was the intent of that language. Jamie Goodson: Okay. Another question has to do with escrow. Do you have to disclose tax and insurance costs on the closing disclosure if you do not require escrow? David Friend: Okay, this is an interesting question. This is something that was actually
added under the Dodd-Frank Act that costs associated with the mortgage with the property have to be disclosed on the disclosures now, even if they are not escrowed. On the forms themselves, if you look at the Loan Estimate, on Page 1 you have a breakdown of property
taxes, insurance and other costs, and that may include amounts that are not in escrow. On the Closing Disclosure, not only is there a notice in the projected payments table, but on Page 4 there is a breakdown of both escrowed costs and non-escrowed
cost. Again, these are a required part of the Dodd-Frank modifications to the disclosures that were added, and we integrated those into the integrated disclosures. The one thing to note is that these are amounts that are not subject to any of the
good faith tolerance requirements outside of – not necessarily when they’re placed in these locations if they’re not escrowed. The thing to note is that creditors would be disclosing it based on the best information reasonably available to the creditor at the time the disclosure
is provided. And that’s the general 1026.17(c)(1) standard. So it’s a question of what the best information is at that time for that information, and it doesn’t mean that a creditor can just ignore that. It’s just the best information they have at that time. Jamie Goodson: Great. Now we have a question
about rescission. Is the three-day rescission period counted in the seven-day delay from the date a Loan Estimate is provided and consummation? For example, if a Loan Estimate for a refinance is provided on Monday and the member signs the closing docs on Friday, that’s five days, and then the loan funds on the following Wednesday to get you to seven days. I’ll let you answer
that how you please. It was kind of complicated. David Friend: So there’s a few things, and I’m going to kind of unpack them just a little bit. The three-day rescission period has not changed. The method of calculating when it starts counting has not changed with the integrated disclosures. It starts from the date of consummation,
just like it has previously. The question related to the seven-day delay, I’m not sure. That might be a reference to the existing Regulation Z timing requirements that you have to have provided – well, currently it’s the early TIL, but it will
be the Loan Estimate, at least seven days prior to consummation. So I’m not sure how that works. The seven days refers to – is not – is an existing restriction on when consummation can occur under Regulation Z, so I’m not sure how that fits into the
calculation. Jamie Goodson: Okay, thank you. The next question I could either throw to you or to Brian, whoever – okay. Is there a new version of the settlement cost booklet than what is currently being used? David Friend: So, as part of the integrated disclosures we recognized that we would be
changing the forms that would be provided to consumers starting August 1. Currently the settlement costs booklet includes images related to the current GFE and HUD-1. Because of that we are currently working on updating the settlement cost booklet and having it available to creditors well before the August
1 implementation date. We’re in the process of getting that squared away at this time. Jamie Goodson: Great. Now we have a question about rate locks. Can the institution redisclose after the lock date if there is no change in terms? David Friend: Well, the first thing I’m
going to mention is that this is one – consistent with current RESPA practice, this is one of the things that requires a revised Loan Estimate when the rate is locked. The reason for that is that interest rate charges and terms can now be relied upon by the consumer
absent other events down the road. So even though there may not be a change in terms, there probably is likely a change to the expiration period for the interest rate on Page 1 of the Loan Estimate. Jamie Goodson: Thank you. Now we have a question about counting days. From the time of
the initial application, how many days does the lender have to disclose to the member? Is it three business days or seven business days? David Friend: The creditor is required to deliver or place in the mail the Loan Estimate within three business days of receiving an application for the loan. I think the seven business
days reference is, again, a reference to current timing requirements under Regulation Z that were put into place under the Mortgage Disclosure Improvement Act that mandates that consummation cannot happen sooner than seven days after the initial disclosure is
provided. Jamie Goodson: Okay. Great. Now we have a question about affiliates. Is the definition of affiliate the same under this rule, or has it changed? David Friend: Well, the definition of affiliate, this is kind of an important thing
to note. Under the TILA-RESPA integrated disclosures, as elsewhere in Regulation Z, an affiliate is defined as an affiliate under the Bank Holding Company Act. So there are several tests under the Bank Holding Company Act. The most common is 25 percent ownership stake.
So under the TILA-RESPA disclosures as far as the tolerance provisions, that’s going to be controlled by the Bank Holding Company Act definition. That’s notably distinguished from the RESPA affiliate definition in relation to RESPA Section 8. So the Bank Holding Company Act definition of affiliate
is what controls as far as what an affiliate is for the disclosure purposes. Jamie Goodson: Great. Thanks. Now we have another question about the information booklet. Where can these booklets be obtained? David Friend: So, the information booklets can be obtained at the Government Printing
Office. Again, we are in the process of updating those booklets. So as soon as we have them available we intend to let creditors know that they’re available so that they can integrate them into their systems so that they can provide the booklets when
the new integrated disclosures are utilized starting in August. Brian Webster: And, David, this is Brian. This is a shameless plug for our regulatory implementation email distribution list, because we were discussing that earlier today and
planning on when the settlement booklet or the new information booklet is made available and is available at the GPO, we will be sending out a blast email through that distribution list to let all members and creditors know that it is now available for them to start reviewing and making plans to implement into
their disclosure process. Jamie Goodson: Great. Thank you. Now we’re being asked for a recap, and the question is, would you please review what you mentioned at the beginning about a small credit union writing less than 25 mortgages per year? And you can clarify the question, because I think it goes to thresholds. David Friend:
Yes, this is a question related to basic TILA coverage. So, basic TILA coverage is if you make more than – and something to clarify is that there are several tests related to whether someone is a creditor under Regulation Z. If you satisfy any one of the tests, then you are considered
a creditor for all consumer credit purposes. So, for instance, if you’re considered a creditor because you’re doing regular credit extensions more than 25 times in a calendar year, you’re a creditor for all purposes. Another test to determine whether
you’re a creditor is if you’re making more than five loans secured by a dwelling. That’s right. And so if you meet either one of those tests you would be considered a creditor for Regulation Z purposes. Jamie Goodson: Right. David Friend: And there
are more tests. I’m just giving the two most common. Also, if you happen to originate more than – happen to originate a high-cost loan in a calendar year, you’re then a creditor, as well. Jamie Goodson: Thank you. We’re also being asked to restate what was stated about
providing a revised Loan Estimate due to revisions outside of the rule. I’m not actually sure what that means, but you may know. David Friend: I think this deals with something that Dania touched on a little bit earlier, and that is just to contrast, current RESPA practice generally
prohibits the issuance of a revised GFE without a changed circumstance. It’s very broad brushed. There are some other things in there. But that’s generally what RESPA currently controls. Under the new integrated disclosures there is no prohibition on providing a
revised Loan Estimate at any time for informational purposes or other purposes. The only thing to note is that the only time you can reset the underlying good faith estimate analysis, the amounts that are disclosed for the settlement charges for tolerance purposes, is when
there is a changed circumstance. So, to a certain extent, just because you provide a revised Loan Estimate does not necessarily reset the underlying tolerance levels for the settlement charges. Jamie Goodson: Great. Thank you. Now we have a question about
whether the Closing Disclosure can be provided to the attorney for a borrower or seller. David Friend: The requirement is to be provided to the consumer. That is the regulatory requirement. I really do not want to think about state agency law or anything
else related to that. Jamie Goodson: Great. Let me just do a technical check. David, are you ready to proceed to the next question? David Friend: Sure. Jamie Goodson: Okay, great. The question is, are the Loan Estimate and Closing Disclosure forms available?
David Friend: So, we do have examples of the Loan Estimate and Closing Disclosure forms on our Regulatory Implementation website. They are cleaner, more clear PDF copies than what is in the Federal Register. They’re basically standalone. There’s a
cover with some of the scenarios that they reflect. But you can obtain them from the Regulatory Implementation web page. Jamie Goodson: Great. If the lender does not charge closing costs on a fixed home equity loan, does the lender still need to document
intent to proceed? David Friend: Okay. That question seems to be confusing several different subject matters. Intention to proceed – so I’m going to try to unpack this. First of all, if it’s a closed-end second subordinate financing it would
be covered. I don’t see why it would not be. So then the next question is what the “no cost” means, what the lender not charging means. Again, I would note that we’re talking about charges the consumer will pay or will be imposed on the consumer. So
if the creditor – it’s going to depend on the terms of the legal obligation. If the creditor goes ahead and has in the legal obligation that the consumer will not pay for any of those charges nor is the creditor going to provide lender credit to offset those charges, then if the
creditor just decides not to charge the consumer for originating that loan, there would be no charges listed on the Loan Estimate for loan costs. There would likely be other costs associated with it, including recording fees and transfer taxes. As far as the intent to proceed, I think Dania addressed
this a little bit earlier, where the intent to proceed is basically some sort of affirmative indication to the consumer that they want to continue with the transaction. There is a little bit of flexibility for creditors on how they’re going to accept that, but I don’t know if that really
answers the question or not. Jamie Goodson: I think you did a good job. So I’m being asked to ask certain questions. All right. So let me just scroll for a moment. This one? Okay. So we have a
question about defining consummation. David Friend: So, consummation is defined under Regulation Z as the time in which the consumer becomes legally obligated on the credit transaction. That could be –
well, that is usually determined by applicable state law. Jamie Goodson: Okay, thank you. Now we have questions about bare land loans. If you make a loan on bare land secured by unimproved property, do you have to make the disclosures? David
Friend: Okay, so I’m not sure – I’m going to assume that bare land is talking about vacant lots, basically unimproved land that is not – that does not have a dwelling on it nor is a dwelling expected to be constructed on the property in the next two years. If
that’s the case, then there is a RESPA provision – a RESPA exemption. I don’t know all of the details off the top of my head, but there is a RESPA exemption related to vacant land. However, under Regulation Z, Regulation Z’s test is whether it is for a consumer
purpose. So this could be – and, of course, it’s going to depend a lot on more facts than just whether it’s bare land. It’s going to be – it’s likely to be, if it’s a consumer purpose loan, covered by Regulation Z. If it is covered by Regulation Z and secured by real property,
then the disclosures would be used but they would be model disclosures instead of prescribed disclosures since it would not be a RESPA-covered transaction. Jamie Goodson: Okay, thank you. I have another question about whether redisclosure will be required if the APR goes down. David Friend: Okay, that actually is
something I believe we addressed in a webinar. I’ll again mention that as part of our regulatory implementation outreach we have worked with the Federal Reserve, their Outlook Live platform, to do a series of webinars associated with the TILA-RESPA integrated disclosure. In those, now I think
it’s four that we have done, and there may be more in the future, we have answered a number of questions. We did answer this question related to that webinar. I’d probably defer to the answer we provided there. We do have links to these webinars on our Regulatory Implementation website, and
that’s probably the best information I can give at this point. Jamie Goodson: Okay. Thank you. Now we have a question about what proof is required for proof of receipt of the Loan Estimate. David Friend: Well, the standard under Regulation Z is found at 1026.25, which relates to record retention. The
creditor is responsible for retaining records to show that they have complied with the requirements of the regulation. Regulation Z does not provide for a mandated methodology by which a creditor shows whether they’ve complied. I don’t know if – sometimes prudential regulators have some additional
things that they like to talk about, but it’s not something that Regulation Z goes into much detail on. Jamie Goodson: Okay. Thank you. Now we have a question about intent to proceed. How long does a member have to indicate the intent
to proceed? David Friend: So, if you look at Section 1026.19(e)(3)(iv)(E), it basically says that a Loan Estimate expires if the consumer has not expressed an intention to proceed within 10 days of it being delivered or placed in the mail. Jamie
Goodson: Okay. Give me one second to find a question we had about email, because I think a lot of people want to know that. So the question is if an estimate is sent via email, is that the same as mail, and therefore the three-day rule still applies? David Friend: Well, this is not an application of Regulation
Z. The question really deals with electronic delivery of disclosures, and there’s a separate federal law called the ESIGN Act that governs how creditors and how businesses can use electronic disclosures and delivery. There are several requirements under the ESIGN Act. I’m not going to go
over the ESIGN Act. But if you assume that you are compliant with the ESIGN Act, you can make the disclosures by electronic means. Jamie Goodson: Okay, thank you. Now we have a question about Form H-24. That form requires a signature on the last page to confirm receipt of the document,
and the question is how do you recommend that a credit union handle getting a signature if they are mailing the form? David Friend: So, one thing to note here is that there is no signature requirement on the Loan Estimate or the Closing Disclosure. I would also note that
there is no signature requirement under current law or regulation for the GFE or HUD-1. So the signature on the last page, the optional signature box on the last page, is an option that creditors can use to demonstrate that the form has been received
by the consumer by the consumer’s signature if the creditor so chooses. It is not a regulatory requirement. Jamie Goodson: Okay. Thank you. Now we have a question about numerical clerical errors. If a numerical clerical error is made on the Loan Estimate that is unrelated to
information specific to the member or the transaction that was relied upon when providing the original Loan Estimate, may the credit union give a revised Loan Estimate and be compliant? And if you need me to repeat that – David Friend: So, I think we’ve gone over this a little bit before. If we’re
talking about the Loan Estimate there is no prohibition when providing a revised Loan Estimate. The only question is whether it resets the applicable underlying variance levels or tolerance levels. So it’s a question of can a creditor do that? Yes, a creditor
can provide revised Loan Estimates. It may not – in that situation it might not reset any tolerances, but it is not prohibited. Jamie Goodson: Okay. No, and you’re right. We may be getting some duplicate questions. So I’m going to give you one I think I have not heard yet.
Were these forms tested on a group of consumers to formulate the ease of understanding as compared to the old forms? David Friend: This is a question I haven’t had in a while, so bear with me. There was extensive, multiple rounds of consumer testing about the disclosures and consumers’ understanding
of the disclosure. I don’t have the exact numbers of participants or anything like that. But we did publish, and you probably can obtain a copy from the Regulatory Implementation website or somewhere on our Final Rule page,
of the reports that were done as a result of the testing we did with consumers as well as a – we did a – studies were both qualitative, and we also did a quantitative analysis
comparing the current forms to the new disclosures. That testing generally resulted in a – the new forms performed much better than the existing forms. Jamie Goodson: Thank you, David. We’re actually going to give you a break for just a minute. I’m
going to toss a question to Joe. We have a question, what is a federally related mortgage loan? Joseph Goldberg: Okay. The term “federally related mortgage loan” is a broadly defined term that includes most home mortgage loans secured by residential real property other than temporary financing such as
construction loans. These loans include loans made by a lender regulated by or whose deposits or accounts are insured by any agency of the federal government – of course, that includes NCUA; loans made, insured, guaranteed, supplemented or assisted in any way by any agency of the federal
government; loans sold to Fannie Mae, Freddie Mac or Ginnie Mae; and loans made by a person who is a creditor as defined in Section 103(g) of the Truth-In-Lending Act and that makes or invests in residential real estate loans aggregating more than $1 million per year. Jamie Goodson:
Great. Thank you. We also have a question about the actual holidays that are not counted as business days. I don’t know if Joe or Rob wants to handle that. Robert Suess: I can handle that. What are the federal holidays that are not counted as business days for the
every day except Sundays and federal holidays definition? Currently there are 10. They are New Year’s Day; Martin Luther King, Jr. ‘s Birthday; Washington’s Birthday; Memorial Day; Independence Day; Labor Day; Columbus Day; Veteran’s Day;
Thanksgiving Day; and Christmas Day. Jamie Goodson: Thank you. We have actually neared the end of our presentation. I’m going to actually let you know about two upcoming events, if you hold on just one
second. Waiting for my screen to – oh, apparently I need to do something better. Okay, yes, I wanted to let you know about some other events that either have occurred or will be occurring. So, yesterday NCUA’s Chairman, Debbie
Matz, hosted a town hall meeting with the CFPB Director, Richard Cordray, and that webinar will be posted on our website. A link – again, when you access or download the presentation you should be able to press this hyperlink, or if you search on our website you can also find it. I also want to highlight that NCUA
is also having a Fair Lending and Home Mortgage Disclosure Act Compliance webinar. That’s coming up on February 20 at 2:00 p. m. Eastern. And again there’s a link here, and you can also find it on our web page. I want to extend sincere thanks to everyone who participated in today’s webinar, particularly our guests from
the Consumer Financial Protection Bureau. You did yeoman’s work answering tons of questions. And thank you all, all the webinar participants, for joining in. Thank you for your interest, and stay tuned for additional information. I’m going to now just show a contact page. If you have questions you can feel free to contact NCUA’s
Office of Consumer Protection for policy questions, and we have another address up there, as well, if you have safety and soundness questions. With that, I will leave you to your day, and thank you again.

Stephen Childs

One Comment

  1. When you send a QWR to your Servicer and in the QWR questions you ask for the Original Loan, MERS, Orginal Deeds, Security Deeds and Trust, and the original promissory Loan and then they say they we protected under the Consumer Financial protection Bureau or what ever that law is

    And if they Quote this…
    (We must decline to provide you with copies of any of our internal procedures, procedure manuals, or loss mitigation rules and workout procedures, or information regarding any servicing platform we may employ}. Additionally, {we must decline to provide a copy of any Prospectus or Pooling and Servicing Agreements between Seterus and the owner of the loan, or copies of agreements between Seterus and our contracted service providers) (as this information falls outside of the scope of the servicing of the loan and are considered privileged}, confidential and/or proprietary. We must also decline to provide copies of the full servicing file, including copies of disbursements to vendors for services provided on behalf of the loan, {copies of all letters, statements and documents mailed on your behalf, or copies of disbursements to vendors for services provided on behalf of the loan as this information is either not available or (it would be unduly burdensome to research such a request.}

    My Question is what do you say to the Service in the Respa Letter for the Servicer saying that {it would be Unduly burdensome to research such a request} I heard there is a Law according from the CFPB that they do not have to give that out is there another law that Counteracts that or dispute that

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