1. or how not to get tripped up by TRID

5. Enter Congress Major Components  Created Financial Stability Oversight Council  Reformed mortgage, securitization and derivative markets  Established Consumer Financial Protection Bureau “Sweeping overhaul of the United States financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.“ – President Barack Obama

6. Consumer Financial Protection Bureau Purpose: “Protect consumers by carrying out Federal consumer financial laws.”

7. Protecting the Consumer is Everything CFBP Complaint Process Complaint Portal on www.consumerfinance.gov Homepagewww.consumerfinance.gov

8. First Order of Business Replace the existing disclosures required by RESPA and TILA with a single disclosure.

9. The New Forms

10. Starting point 10

11. CFPB’s Goals Improved consumer understanding ○ Risk factors ○ Short-term and long-term costs ○ Monthly payments Better comparison shopping ○ Comparisons of competing loan offers ○ Shopping for closing costs Avoiding costly surprises at the closing table ○ Easier comparisons of the estimated and final loan terms of the loan ○ More time to consider choices ○ Limits on closing cost increases

13. When do you use TRID  Most consumer mortgages, EXCEPT: home-equity lines of credit Reverse mortgages Mortgages secured by a mobile home or dwelling not attached to land No-interest second mortgage made for down payment assistance, energy efficiency or foreclosure avoidance

14. The Name of the Game

15. How do we get there? 1. Importance of Communication and Collaboration among Lenders and Title/Closing Agent. a) Managing and sharing transactional information b) How will you get provider fees? 2. Managing the CD delivery and receipt calendar a) Delivery method b) Timing c) Evidence of compliance 3. How will to the closing or signing ceremony flow? a) How will last minute changes work b) The sellers side of the transaction 4. Some Lenders will not want to/be able to take on creation and delivery of the CD. How will Title/Closing Agent handle different lender requirements?

16. TRID places two requirements on the Lender related to the Borrower's Closing Disclosure: 1. Produce the Closing Disclosure (CD) and ensure accuracy of the information. [§ 1026.38(t).] 2. Ensure the CD is received by the consumer at least 3 business days before Consummation. [§ 1026.19(f)(1)(ii).] While the lender can partner with the title/closing agent to perform these tasks, it is at lender’s discretion and the lender is ultimately responsible Who will produce the Closing Disclosure

17. Collaboration Will Be Key While RESPA and TILA Information is combined on a single form, the underlying information is still located in two separate systems: Loan-centric information – lender’s loan origination systems (LOS) Property – centric information: settlement agent’s system Key Questions: – When will data be moved? – How will data be moved? – Who decides when data is “final”? – Pre-closing v. Post-closing collaboration No Matter What – Consumer must get a single complete CD from someone

19. Loan Estimate  Similar but different than today Earlier More accurate  How will creditors and brokers obtain data to meet this goal? Many costs are transaction specific (like title) Past data may not reliable Process to capture changes to fees  Tip: learn about changed circumstances

20. Three-Day Rule Policy: Consumers must receive their Closing Disclosure at least three business days before closing. – Business day = Every day but Sundays and Federal Holidays Proposal: Must re-disclose and restart three business day clock if something changes. Some limited exceptions. Final: Only have to re-disclose and restart clock in limited circumstances. – APR changes – Product changes – Addition of prepayment penalty

21. How to Count the Three Days

22. How Will CD Get To Consumer? 1. What Are The Potential Methods Of Delivery? – Hand Delivery – Courier/Express Mail – Electronic – Must Comply With Consumer Consent And Other Applicable E-sign Provisions – Postal Service 2. What Does Evidence Of Delivery Look Like? – Optional Confirm Receipt Line On Cd – Mailbox Rule - Presumption Of Receipt Three Business Days After They Are Delivered Or Placed In The Mail – Evidence Of Actual Receipt – Audit Trail

23. Getting CD to Consumer 3. Can the consumer waive? – Bona fide personal financial emergency – Example: imminent sale of home at foreclosure auction 4. What about multiple borrowers/obligors? – Who is the “consumer”? In general and in rescission situations. Different rules for spouses/tenants in common vs. guarantors/obligors – Multiple consumer situations—primary liability concept

24. Disclosure of Title Fees  Lenders policy: Services you can shop for category How to calculate: Full premium without any adjustment that might be made for the simultaneous purchase of an owner’s title insurance policy. Can use enhanced policy or endorsements if the lender knows that these products will be purchased.  Owners policy Other category Must be listed as “optional” How to calculate: Full owner’s title insurance premium, adding the simultaneous issuance premium for the lender’s coverage, and then deducting the full premium for lender’s coverage.

25. What does it mean to allow consumer shopping Shopping = Choosing someone not on the lenders list This matters for tolerances – On list: 10% bucket – Off list: no limit – If affiliate of creditor or broker: 0% bucket RESPA & state Law put limits on prohibiting shopping

26. Written Provider List  The written list must identify: At least one available provider of that service Include a clear statement that the consumer may choose a different provider for that service Provide sufficient information for the consumer to contact an identified provider such as the name under which the provider does business and the provider's address and telephone number.  How will QC work for shopping?

27. The Other Consumer  What about the SELLER! Separate disclosure - Model H-25(i)  Delivered by the settlement agent  Lender(creditor) must be given a copy!  Does NOT contain a signature line!

28. Final Disbursement Rule does NOT prohibit a separate form from being used Lenders have expressed concern regarding too many different forms! but Acknowledgment and acceptance of final figures and disbursement is CRITICAL

29. ALTA Settlement Statement Developed to serve as a template Provides actual buyers/sellers debits and credits Authorizes final settlement Adaptable for all markets

31. Post Consummation Room Corrected Disclosure (not redisclosure) changes that actually affect the amount paid by a consumer( including seller) i.e. taxes, HOA fees, recording fees just to name a few! Including tolerance violations Must be made within 30 days of consummation!

32. CONSUMER IMPACT  Loss of earnest money  Back to Back closing failures  Inaccurate disclosure of costs  Delay in closing  EXTREME FRUSTRATION with all real estate professionals  Collaboration is Critical with all RE professionals

33. How Will TRID Change Your Market Where do you get your business?  Big Banks  Credit Unions/Community Banks  Non-Bank lenders

36. TRID Prepare, Ask Questions, Train  Have you set expectations for all involved (consumers, lenders, title, real estate agents)?  How will lenders get title rates before the LE is delivered?  Owner’s Title Insurance is listed as “Optional” on the LE; what are you doing to get to consumers before they come to closing?  Who (lender/settlement agent) will prepare the CD?  How will information on the CD be exchanged?  How are you demonstrating evidence of compliance?  How will simultaneous issue title rates be disclosed?  Are your Closers trained on what to say about the value of title insurance?  Are your Closers trained on what to say to various versions of the CD?  How are you providing lenders actuals for a final CD?

37. Our Biggest TRID Challenges  TILA Liability Rest with Creditor  Includes Private Right of Action  Inaccurate Disclosure of Title Policy Fees  We Can Figure Out How to Handle the Calculation  Will the Consumer Understand?  Do You Have a Plan to Get to the Consumer in Time?  ALTA Created a Model “ALTA Settlement Statement”  We are preparing our case for a post-implementation change  Owner’s Title Insurance is Optional

38. Its all about salability  Keys to a good Compliance Management System Consistency Documentation Testing  Tip: Only vary from your process if you really love the loan, because odds are you’ll be holding it on your books

39. And staying out of CFPB jail

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