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The
TILA
RESPA
Changes
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facebook.com/questsoft twitter.com/questsoftToday’s Speakers
Leonard Ryan
President
QuestSoft Corporation
Angela Cheek
Vice President and Counsel, Product Compliance
Mavent, Inc.
Moderator:Scott Mortenson
Marketing Director
QuestSoft Corporation
Michael Black
Compliance Product Manager
Mavent, Inc.
Jennifer Mathwig
Integration Specialist
QuestSoft Corporation
OCTOBER 14, 2014
TILA-RESPA
Today’s Presenters and Agenda
•
Angela Cheek, VP and Counsel, Product Compliance
•
Michael Black, Compliance Product Manager
•
Agenda
•
Understanding the RESPA/TILA Integrated Mortgage
Disclosure Rule
•
How Mavent is preparing for this change
This presentation may contain forward-looking statements under the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements may include the company’s ability and timing to enhance the features and functionality of Mavent® software and services and of new product
launches. Additional risks and uncertainties related to the company’s business are discussed in the Ellie Mae’s Securities and Exchange Commission filings, including but not limited to the company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Unless otherwise required by applicable laws, the Ellie Mae undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The content provided in this slide presentation is intended for Mavent® webinar
attendees and their staff only and should not be distributed outside your company. Mavent does not permit any unauthorized copying, distribution or redistribution of this presentation. Specific authorization must be obtained in writing from Mavent, Inc. Violations of copyright are subject to substantial penalties as provided by the law plus attorney's fees incurred as a result of violation. The content is intended for general information purposes only. It should not be construed as legal advice or opinion on any specific facts or circumstances. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with applicable laws and regulations.
Integrated Mortgage Disclosures
•
Two Goals
• Aid consumer understanding • Aid industry compliance with
TILA / RESPA disclosures
•
Qualitative Consumer Testing
•
Know Before You Owe
Integrated Mortgage Disclosures – Applicability
•
Applies to all applications on or after 08/01/2015:
• Closed-end 1-4 unit dwelling attached to real property•
Exempt:
• HELOC
• Loans secured by mobile home (not attached
to real property)
• Partial exemption for certain junior lien loans
associated with housing assistance loans for low/ moderate-income consumers
Integrated Mortgage Disclosures –
Record Retention
• Loan Estimate 3 years
after consummation
• Closing Disclosure 5 years
after consummation
• Post-Consummation [if applicable]
• Escrow Cancellation Notice 2 years
• Partial Payment Policy 2 years
• Records can be maintained by any method that reproduces disclosures and other records
What Triggers Loan Estimate?
•
Receipt of all six pieces of information:
1. Borrower Name2. Borrower Monthly Income
3. Borrower SSN/ITIN (to get credit report) 4. Property Address
5. Estimated Property Value
6. Estimated Mortgage Loan Amount
•
Initial Loan Estimate delivered within:
• 3 Business Days after receiving Application
(Creditor or Broker)
• 7 Business Days before consummation
•
Revised Loan Estimate:
• Sent within 3 Business Days of receiving information sufficient
to establish Change of Circumstance (TBD: 1 day if Rate Lock Added)
• Received 4 Specific Business Days before consummation • Cannot be delivered with or after Closing Disclosure
• If not provided in person, receipt assumed within
3 business days after delivery or mailing
• Initial Loan Estimate sent within 3 business days of application date • Initial Loan Estimate sent 7 or more business days prior to loan
consummation
• Initial/Revised Loan Estimate received 4 or more specific business
days prior to consummation
• Revised Loan Estimate sent within 1 business day of rate lock* or
within 3 business days of any other valid changed circumstance
• Loan Estimate cannot be provided with or after the Closing
Disclosure
• Written List of Service Providers and Special Information Booklet
sent within 3 business days of application date
• Pre-disclosure and Post-disclosure reviews
•
Additional Fields/Functionality
•
Loan Estimate Sent Date
•
Loan Estimate Sent Method
•
Mavent assumes the disclosure was provided by U.S.
Mail if a sent method not provided
•
Loan Estimate Received Date
•
Loan Estimate Received Method
•
Loan Estimate Receipt Acknowledged Method
•
Closing Disclosure received by consumer no later than:
• 3 Specific Business Days before consummation• If Creditor or Settlement Agent does not provide in person,
consumer considered to have received 3 Specific Business days after delivered or placed in mail
•
Revised Closing Disclosure delivered at or before
consummation reflecting any changed terms, unless:
• Disclosed APR becomes inaccurate
• Loan Product changed – prior Closing Disclosure becomes inaccurate
• Prepayment penalty added
THEN
•
Revised Closing Disclosure delivered 3 Specific Business Days
before consummation
•
Closing Disclosure must be received at least 3 specific business
days prior to loan consummation
•
If Closing Disclosure sent via US Mail assumed receipt 6
specific business days from sent date
•
Closing Disclosure cannot be provided with or before a Loan
Estimate/revised Loan Estimate
Closing Disclosure – Mavent Review Timing
and Delivery
Closing Disclosure – Redisclosure Timing and Delivery
•
The Mavent System will calculate and verify the disclosed:
• APR• Loan Product (Description) • Prepayment Penalty Indicator
•
If Closing Disclosure disclosed APR, Product Description, or
Prepayment Penalty Indicator is inaccurate:
• The loan will receive a FAIL response, indicating that a
revised Closing Disclosure must be sent to the borrower and that consummation must extended 3 or more specific
business days after disclosure received.
• If pre-disclosure review – the loan will receive a FAIL response, indicating that the Closing Disclosure is
inaccurate. A corrected disclosure must be produced and sent, and consummation date must be 3 or more precise business days after corrected disclosure is received.
Closing Disclosure – Loan Product Description
•
If the Loan Product changes, creditor must provide a corrected
Closing Disclosure so consumer RECEIVES a Corrected Closing
Disclosure not later than the third specific business day before
Consummation.
•
There are five features to describe the Loan Product:
•
Payment change feature
•
Duration/time period of payment change (if applicable)
•
Rate feature
•
Duration/time period of initial rate change (if applicable)
Duration time period of subsequent rate change (if
Closing Disclosure – Loan Product Description
• The Mavent system will compare the disclosed loan product to the
calculated loan product. If the loan product disclosed on the Closing Disclosure is inaccurate, the system will fail the loan.
• Example Messages:
• The disclosed Loan Product of (18 mo./18mo. Adjustable Rate)
on the Closing Disclosure matches the actual Loan Product disclosure of (18 mo./18mo. Adjustable Rate). (12 CFR
1026.19(f)(2)(ii)(B); 1026.38(a)(5)(iii); 1026.37(a)(10))
• The disclosed Loan Product of (36 mo. Interest Only, Fixed Rate) on the Closing Disclosure is inaccurate. This fixed rate loan has an interest only payment period of (36) months which requires a Loan Product disclosure of (3 Year Interest Only, Fixed Rate). The interest only period must be disclosed in number of years. If the interest only period does not equate to a whole number of years, 1026.37(a)(10) requires disclosure of the whole number of years followed by a decimal point with the remaining months rounded to two places. (12 CFR 1026.19(f)(2)(ii)(B); 1026.38(a)(5)(iii); 1026.37(a)(10))
Loan Estimate vs. Closing Disclosure
• Zero % Tolerance Category
• Fees paid to creditor or mortgage broker
• Fees paid to affiliate of creditor or mortgage broker
• Fees paid for services for consumer not permitted to shop • Transfer Taxes
• Lender Credits
• 10% Tolerance Category
• Recording Fees
• Fees paid for 3rd-party services consumer permitted
to shop for
• Charges that Can Change
• Prepaid interest
• Property insurance premiums • Amounts placed into escrow
• Fees paid to 3rd-party service providers selected by consumer
not on list provided by creditor
• Fees paid for 3rd-party services not required by creditor. These
Loan Estimate – Change in Circumstance
•
Changed circumstance affecting settlement charges
• Example: Appraisal Fee to Affiliate•
Changed circumstance affecting eligibility
• Example: Ineligible for Loan Program•
Revisions requested by consumer
• Example: Power of Attorney•
Interest rate dependent charges
• Example: Initial LE with no rate lock
•
Expiration of initial Loan Estimate
• Example: Intent to Proceed on Business Day 11
•
Delayed settlement date on construction loan
• Example: Settlement expected to occur more than 60 days after initial LE and statement provided on initial LE
Loan Estimate vs. Closing Disclosure Fee Variance
Thresholds
• Mavent system will compare (initial or revised) Loan Estimate disclosed fees to the actual loan fees and Closing Disclosure Fees • Mavent system will fail the loan if a valid changed circumstance is
not associated with any changes to fees that cannot change, fees that can change by 10% in aggregate, and lender credits on a
revised Loan Estimate.
• Mavent system will fail this loan if there are any changes to fees that cannot change, fees that can change by 10% in aggregate, and lender credits between the applicable Loan Estimate and the Closing Disclosure, unless a refund is provided to the consumer.
• For the purposes of the 10% aggregate fee comparison, if the fees on a Revised Loan Estimate have not increased by 10%, the Initial Loan Estimate fees will be used for the comparison.
Loan Estimate – Requirements
•
General Information
•
Loan terms
•
Projected payments
•
Costs at closing
•
Web site reference
•
Closing cost details
• Loan costs • Other Costs
• Calculating Cash to Close
• Adjustable Payment (AP) Table
Loan Estimate – Requirements
• Additional Information About This Loan
• Broker NMLSR ID • Lender NMLSR ID
• LO NMLSR ID for Broker and Lender, Name, LO Email
• Comparisons
• In 5 years – Total PITI and loan costs paid off
• In 5 years – Total Principal paid off • APR
• Total Interest Percentage (TIP)
• Other Considerations • Appraisal • Assumption • Homeowner’s insurance • Late Payment • Refinance • Servicing
• Liability after foreclosure
Loan Estimate Comparison– Requirements
•
Mavent system will calculate the following values and
compare to the last disclosed values (unless a Closing
Disclosure has been sent):
•
Total Principal, Interest, MI, and Loan Costs in First
Five Years
•
Total Principal in First Five Years
•
APR
Closing Disclosure – Requirements
•
General Information
•
Loan terms
•
Projected payments
•
Costs at closing
•
Closing cost details
• Loan costs• Other costs
•
Calculating Cash to Close
•
Summary of borrower’s transaction
•
Summary of seller’s transaction
Closing Disclosure – Projected Payment Table
Requirements
• Mavent will calculate the Projected Payments Table for either the Loan Estimate or Closing Disclosure (optional)
• Mavent will compare Disclosed Projected Payments Table to Calculated Projected Payments Table (optional)
• Number of Columns
• Years in Sequence Subheading • Principal & Interest Payments • Interest Only
• Min and Max Principal and Interest • Mortgage Insurance
Closing Disclosure – Requirements
•
Additional Information About This Loan
• Assumption • Demand Feature • Late Payment • Negative Amortization • Partial Payments • Security Interest • Escrow Account
•
Adjustable Payment (AP) Table
•
Adjustable Interest Rate (AIR) Table
•
Loan Calculations
• Total of Payments • Finance Charge • Amount Financed
• Annual Percentage Rate (APR)
Closing Disclosure – Requirements
•
Other Disclosures
•
Appraisal
•
Contract Details
•
Liability After Foreclosure
•
Refinance
•
Tax Deductions
•
Questions Notice
•
Contact Information
Closing Disclosure – Requirements
•
Loan Calculations
The Mavent system will calculate and verify the values
disclosed on the Closing Disclosure:
•
Finance Charge
•
Amount Financed
•
APR
•
Total Interest Percentage
•
Liability after Foreclosure
Closing Disclosure –
Post Consummation Tolerance Cures
•
Events after consummation
• Event in connection with settlement occurs within 30 calendar
days following consummation causing CD to become inaccurate
• Change to amount paid by consumer from amount disclosed
• Creditor must deliver or place in mail corrected Closing Disclosure
not later than 30 days after receiving information sufficient to establish event occurred
•
Non-numeric clerical errors
• Deliver or place in mail corrected Closing Disclosure no later
than 60 calendar days after consummation
•
Refunds related to good faith analysis (Tolerance Exceeded)
• Creditor refund excess no later than 60 calendar days afterconsummation
• Creditor delivers or places in mail corrected Closing Disclosure
reflecting refund no later than 60 calendar days after consummation
Mavent - TILA/RESPA Integrated Mortgage
Disclosures Reviews
Loan Estimate
•Delivery Timing •Fee Variance •Changed Circumstance •Loan Comparisons•Loan Product Description •Projected Payments Table
•Adjustable Interest Rate Table* •Adjustable Payment Table*
•NMLS Registration Review*
Closing Disclosure
• Delivery Timing
• Re-disclosure Requirements • APR
• Loan Product Description • Prepayment Penalty
• Loan Calculations
• Projected Payments Table • Cash to Close Validation*
• Adjustable Interest Rate Table* • Adjustable Payment Table*
*Features to be added after initial release
Implementation Issues for Lenders
•
Understand the Requirements
•
Update policies and procedures
•
Identify affected products, departments, and staff
•
Identify business-process, operational, and
technology changes that will be necessary for
compliance
•
Identify impacts on key service providers or business
partners
• Settlement Agents • Mortgage Brokers
