The New TILA/RESPA Rule A briefing on the new federal regulations effective October 3, What you will see in the following slides are national regulations. Please also refer to your local and state laws to ensure you are in compliance with state regulations.

Course Overview In this course, we will: Review the new TILA/RESPA rule Share tips for a smooth, stress-free closing 2

The TRID Rule T T ruth in Lending Act R R eal Estate Settlement Procedures Act I I ntegrated D D isclosures 3 T R I D The rule

It’s the Law This is a federal law and impacts the entire real estate industry This change is brought to you by: the Consumer Financial Protection Bureau Effective date: October 3,

The Rationale for This Change Give a borrower more time to fully understand the actual charges for a particular loan Simpler, easy-to-understand language No surprises in terms of fees or how a loan works 5

New Forms Introduced 6

7

Two New Disclosures 8 The Closing Disclosure (replaces the HUD-1 and final Truth in Lending) The Loan Estimate (replaces the Truth in Lending and Good Faith Estimate)

Applications received on Oct 3, 2015 will use the new documents Loan Estimate Closing Disclosure Applications received before Oct 3, 2015 will continue to be processed through using old forms HUD1 Good Faith Estimate Truth in Lending Disclosure Oct 3, 2015 There Will Be a Transition Period 9 NOTE: The new Integrated Disclosures must be provided by a mortgage broker that receives an application from a consumer for a closed-end credit transaction secured by real property on or after October 3, 2015

The Closing Timeline 10 The closing date determines when the Closing Disclosure (CD) must be sent by the lender and received by the homebuyer. The CD must be received at least three business days before the closing.

The Closing Timeline 11 Sundays and holidays are NOT included as “business days” for the review period. Regular mail via US Postal Service adds three days to the process. Overnight mail or courier delivery adds one day. When ing, we count days, not hours. It can be received any time during the business day.

The Clock Will Be Reset A new, 3 business-day waiting period is required if: The APR increases more than 1/8% for fixed-rate loans and 1/4% for adjustable-rate loans A prepayment penalty is added There is a change to the basic loan product* In these cases, the clock resets and a new 3 business-day period begins. Basic Loan Product Change* AddedPrepayment 12 *For example, a switch from fixed to adjustable interest rate loan or to a loan with interest-only payments. % for adjustable Increase of More Than APR % for fixed Re-set

Other Changes to the CD For changes other than an increase in APR, addition of a prepayment penalty, or to the basic loan product, the Borrower has the right to inspect a changed CD one business day before the day of the actual Closing. This may change the date Closing actually occurs. EXAMPLE: If the CD is changed on the date of Closing for reasons other than cited above, the Borrower has the right to push the Closing to the following business day in order to review the changed CD. The Borrower may waive this right and close on the same business day. 13

The Good News... Now your buyers will know all the fees in advance (3 days in advance) With the new 3-business-day waiting period, the buyers can review everything and have the time to go to the bank, get any cash needed, be better prepared for a much smoother closing 14

You Need Mortgage, Title & Insurance Partners who:  Are educated and competent to comply with the new regulations and ensure an on- time closing  Have the infrastructure and technology to handle the new forms and process  Coordinate among all parties so closings are efficient and stress-free 15

Tips for a Smooth Closing 16 Reminder: The tips we are about to provide are to assist in getting to a smooth closing. Please also refer to your state and local requirements and regulations to confirm these tips are in line with local and state regulations.

Tips for a Smooth Closing for Buyers Introduce your buyers to your Gold Services/Mortgage Partners early on in the process. Guide buyers to be prepared to provide all needed documents so they can put a loan application in right away. Consult with your Gold Services/Mortgage Partners at the outset of any contract for guidance on how closing dates and timeline may be impacted by TRID. 17

Tips for a Smooth Closing for Buyers Best practice: Recommend TWO walk- throughs – one 7 to 10 days before closing to allow time for any needed changes to the CD and one the day of closing to verify the property condition. When scheduling back-to-back closings, advise clients to be mindful of the rule’s potential to affect closing dates. 18

Tips for a Smooth Closing Be sure to offer your clients a home warranty It can reduce expenses for unforeseen repairs Avoid unpleasant surprises 19

Tips for a Smooth Closing For BOTH buyers and sellers Advise buyers and sellers to avoid last-minute changes as this may impact their Closing timeline. Avoid closing on the last day of the month... –Lower volume, therefore, revisions to CDs can happen more quickly. –Make it easier to arrange for movers and other needed services. 20

Use the Buyer Consultation It’s more important than ever to conduct a Buyer Consultation with every buyer. Introduce your buyers to the Gold Services/Mortgage Partner Show your value. Explain the process.

Suggested Dialogue “I want to introduce you to my Gold Services/Mortgage Partner. His name is Bob and he will review how this new federal regulation could impact your closing. He has some information that will definitely help you through this process.”* *When you introduce the GSM, have buyer sign the RESPA/AfBA form if applicable. 22