From there to here..
A LITTLE HISTORY... For more than 30 years, federal law required lenders to provide an initial Truth In Lending Statement (TIL) and a Good Faith Estimate (GFE) to consumers applying for a mortgage. At or shortly before closing, consumers would then receive a final Truth In Lending Statement and a HUD-1 Settlement Statement. Unfortunately, most consumers found the forms — and the language and requirements within them — to be confusing, inconsistent, and overlapping. Lenders found them burdensome and difficult to explain. Under the Dodd-Frank Act, the two bodies that required and enforced these forms were combined to form the Consumer Financial Protection Bureau (CFPB). Among other things, the CFPB was mandated to combine TILA and RESPA disclosures, and to propose new rules. After extensive industry and consumer input, the CFPB released the TILA-RESPA Integrated Mortgage Disclosures Rule (TRID). For most closed-end transactions secured by real property, TRID consolidates six existing disclosures required under the previous rules into two forms.
WHAT THIS MEANS FOR US...
EMBRACING CHANGE... STRATEGIC CHANGE – The new rules gave us an opportunity for strategic change. They allowed us to re-look at our business model and underlying assumptions, and evaluate what this means as we look ahead. OPERATIONAL CHANGE – The information necessary to populate the new forms is largely the same, but mapping the data to new forms required changes to operational processes. SYSTEMS CHANGE – We have also integrated the new rules into our Loan Origination Systems and our compliance management system, and have worked with our partners to minimize our third-party risk.
On Q Financial has prepared for the changes by streamlining our practices and workflows to better serve you — and our clients.
WHAT THIS MEANS FOR OUR CLIENTS...
MUCH SIMPLER...
For consumers, the new rule and disclosures provides them the information to compare lenders and ensure they “know before they owe.”
Key changes:
STREAMLINED FORMS – Four overlapping disclosure forms have been distilled down into two forms, the Loan Estimate (LE) and the Closing Disclosure (CD). MORE TIME FOR REVIEW – Instead of receiving the HUD-1 Settlement Statement disclosure at closing (or 24 hours in advance, if requested), consumers will now receive their Closing Disclosure three business days before closing, giving them more time to review their documents.
Benefits to clients:
EASIER TO UNDERSTAND – The new forms will make it easier to understand complicated mortgage terms. EASIER TO SHOP – The Loan Estimate makes it easier to shop around and compare loan offers from multiple lenders, allowing consumers to get the right deal for them. EASIER TO REVIEW – Getting a Closing Disclosure three business days before signing on the dotted line allow consumers to review their terms, consult with experts, and ask any final questions.
WHAT THIS MEANS FOR YOU...
SIMPLER, LESS COMPLICATED... Streamlined processing. . . Go from six forms to two. . .
LOAN ESTIMATE (LE) – Combining the GFE and TIL into one new form helps consumers understand the key features, costs, and risks of the mortgage for which they are applying. CLOSING DISCLOSURE (CD) – Replacing the final TIL and HUD-1 Settlement Statement gives consumers time to thoroughly understand all of the costs of their mortgage loan prior to consummation.
The CFPB has also combined the appraisal notice under the Equal Credit Opportunity Act and the initial servicing transfer disclosure under RESPA.
Get it right the first time!
GREATER ACCURACY – Lenders must now disclose the most accurate fees, except when there is a changed circumstance. Changes to or an inaccurate LE or CD can delay closings!
TRID provides detailed instructions on how these new forms are to be completed and used.
HOW IT WORKS...
IN A NUTSHELL... Once the application is received, with the required information, the clock starts ticking…
Loan application received with required FED6 info: • APPLICANT NAME • SSN • LOAN AMOUNT
• INCOME • PROPERTY ADDRESS • ESTIMATED VALUE
Loan estimate to borrower (replaces GFE and TIL) 3 G E N E R A L B U S I N E S S D AY S 1
• CASH TO CLOSE (ITEMIZED AND CATEGORIZED) • SETTLEMENT CHARGES (ITEMIZED) • SERVICES FEES (NON-SHOPPABLE, ZERO TOLERANCE)
Circumstances that trigger a Revised LE: • • • • • •
CHANGES DUE TO THE BORROWER ELIGIBILITY BORROWER REQUESTS A CHANGE EXPIRED LE INTEREST RATE LOCKED IN DELAYED SETTLEMENT DATE ON A CONSTRUCTION LOAN INCREASE TO APR OR FINANCE CHARGE
(MAY REQUIRE A COST TO CURE AT CLOSING IF OUT OF TOLERANCE)
Timing for a Revised LE:
• MUST BE ISSUED WITHIN 3 GENERAL BUSINESS DAYS OF KNOWLEDGE OF CHANGE • BORROWER MUST ACKNOWLEDGE RECEIPT 4 SPECIFIC DAYS2 BEFORE CONSUMMATION • IF BORROWER DOES NOT ACKNOWLEDGE RECEIPT, 7 DAY MAIL BOX RULE WOULD APPLY • CANNOT ISSUE A REVISED LE IF THE CD HAS BEEN ISSUED
Receipt of Closing Disclosure (CD) by borrower 3 S P E C I F I C D AY S B E F O R E C L O S I N G D O C S C A N B E D R AW N
• SETTLEMENT CHARGES (ITEMIZED) • SHOWS WHO IS PAYING AND WHEN
Circumstances that trigger a revised CD
(must be provided at or before closing documents are prepared) 3 D AY WA I T I N G P E R I O D W I L L A P P LY W H E N :
• INACCURATE APR • CHANGE TO THE LOAN PRODUCT • CHANGE FROM CONVENTIONAL TO FHA LOAN MAY AND THE PERIODIC PAYMENT CHANGES • PREPAYMENT PENALTY IS ADDED
2
1 GENERAL BUSINESS DAYS – DAYS YOUR OFFICE IS OPEN FOR BUSINESS SPECIFIC BUSINESS DAYS – ALL CALENDAR DAYS EXCEPT SUNDAY AND PUBLIC HOLIDAYS:
NEW YEAR’S DAY (JANUARY 1) • MARTIN LUTHER KING, JR. DAY (THIRD MONDAY IN JANUARY) WASHINGTON’S BIRTHDAY (THIRD MONDAY IN FEBRUARY) • MEMORIAL DAY (LAST MONDAY IN MAY) INDEPENDENCE DAY (JULY 4) • LABOR DAY (FIRST MONDAY IN SEPTEMBER) • COLUMBUS DAY (THIRD MONDAY IN OCTOBER) VETERAN’S DAY (NOVEMBER 11) • THANKSGIVING DAY (FOURTH THURSDAY IN NOVEMBER) • CHRISTMAS DAY (DECEMBER 25)
BUT THERE ARE EXCEPTIONS...
ALWAYS...
The new LE and CD forms may be used for these transactions, but they cannot be used instead of the GFE, HUD-1, and the Truth In Lending Statement for transactions that require very specific disclosures, such as reverse mortgages. • HOME EQUITY LINES OF CREDIT (HELOCS) • REVERSE MORTGAGES • MORTGAGES NOT SECURED BY REAL PROPERTY (I.E., BOAT LOANS, MOBILE HOMES, OR ANY DWELLING THAT IS NOT PERMANENTLY AFFIXED TO REAL PROPERTY, ETC.) • LOANS MADE BY PERSONS WHO ARE NOT CONSIDERED “CREDITORS” THAT MAKE 5 OR FEWER LOANS PER YEAR • CERTAIN NO-INTEREST SECOND MORTGAGE LOANS USED FOR DOWN PAYMENT ASSISTANCE, PROPERTY REHABILITATION, ENERGY EFFICIENCY, OR FORECLOSURE AVOIDANCE
ON Q FINANCIAL
SUPPORTS YOU... WE SHARE YOUR HIGH EXPECTATIONS AND DRIVE TO WIN, and we’ll work with you to meet your goals.
On Q Financial has been simplifying the loan process for clients since 2005. We start by understanding our clients’ financial goals and, then provide a transparent, simplified mortgage process that helps mortgage consultants streamline the process for clients.
Need help with your T RID applications? CONTACT US
866 - OnQ - Easy 866 - 667 - 3279 TRID@OnQFinancial.com SOURCES
On Q Financial Integrated Mortgage Disclosures (RESPA-TILA) Policy Manual Know Before You Owe (CFPB site) Mortgages: What you Don’t Know About Know Before You Owe (pwc)
On Q Financial, Inc. is an Equal Housing Lender, NMLS #5645 This material is provided to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. 068i0000002EzZ7