Due to Terri Buhner by December 3rd, 2013
Call for Action: Flood Insurance Issues Could Sink Your Sales
Homeowner Flood Insurance
Affordability Act
Materials for today!
Meeting presentation will be on the MIBOR website today.
A podcast will be available on the MIBOR website within a week.
“The goal here is to make realtor.com not
only the most accurate source of
information, but also the most
comprehensive. Whether it’s for sale or for
rent, to give an entire view of the market”
Added Rental / Lease Inventory
Catch buyers early in home ownership cycle Only verified sources
New Construction Inventory
Needed for a comprehensive website
Something no other major website has
A u g u s t 1 9 t h :
- 5 0 , 0 0 0 + p l a n s
- 6 , 5 0 0 +
c o m m u n i t i e s R e a l t o r. c o m n o w # 1 i n “ f o r s a l e ” p r o p e r t i e s
Non-REALTORS® Listings
Some States required non
REALTORS® to participate.
A Broker owned listing service
may not require REALTOR®
membership.
Policy allows listing services to send all broker’s listings regardless of membership.
TV and radio ad campaign promotes realtor.com
“Every market’s different, call a REALTOR® today
and visit realtor.com”
Unique users are up 22 percent year over year in the
third quarter of 2013, compared with an 18 percent year-over-year increase in the second quarter and a 10 percent increase in the first quarter
Listing Syndication
•
Publishing of listings by the
listing broker on third party
internet websites such as
Zillow or Trulia.
•
REALTOR.com, MIBOR.com
and the IDX policy were the
original form of syndication.
How do Listings get Syndicated?
• A syndication service provider:
• ListHub
• Point2
• Sent by your IDX provider
• Through some other service provider
• Your franchise
• Virtual tour provider
• Printed magazine such as Homes & Land
• Agents or brokers enters them directly
Advantages
• Increased exposure of the listing
• Lead generation via click through to your website
• Fulfills requirements of both buyers and sellers to find it wherever they are looking
Advantages
Concerns
• The terms of use on many sites often contain
statements that may give up copyright protection such as:
“perpetual, non-exclusive, royalty-free licensee to use, retain, transmit, modify, copy, create
derivative work of, and sell or distribute…”
• Ideally the terms of use would state that the
broker’s listing content remains the intellectual property of the contributor.
Concerns
• Keeping data updated across multiple websites with accurate data
• Re-syndication, some sites send data to additional websites. For example, Zillow claims to be the
“exclusive provider of For Sale data to Yahoo! Real Estate”
Publisher Listings Consumer Traffic
Total Property Views
Zillow 13,337 1,442,505
MIBOR Service Corp 20,629 713,070
Trulia 10,763 223,079
Homes.com 14,682 161,605
LandWatch 11,362 22,527
Keller Williams 1,588 6,766
Homes & Land 11,630 5,189
Lake Homes USA 11,407 4,618
Chase My New Home 10,526 4,501
0 50,000 100,000 150,000 200,000 250,000 Fe b 10 A pr 10 Jun 10 A ug 10 *O ct 10 *De c 10 Fe b 11 *A pr 11 *June 11 *Au g 11 *O ct 11 *De c 11 F eb 12 A pr 12 Jun e 12 A ug 12 O ct 12 D ec 12 Fe b 13 A pr 13 Jun e 13 A ug 13 O ct 13 MIBOR.COM REALTOR.COM
• Photos help to produce accurate appraisals • Within 14 days from entry date
• 2 required photos to report a listing Sold • Primary must be of the exterior
• Both may be of the exterior • Up to 24 may be entered
• Vacant land properties excluded
55 years old
128 current members; lenders, title
companies, PMI companies, law firms, appraisers, credit companies, industry
education firms, not-for-profits, and, Realtors
Six chapters state-wide: GIMBA, Northeast,
Northwest, Michiana, SCIMBA and Wabash
Approximately ½ of our members in the
Loan Originator Compensation: Issued January 20, 2013
Implementation date January 1, 2014.
ATR/QM Standards: Issued January 10, 2013
Implementation date January 10, 2014.
High Cost: Issued January 10, 2013
Implementation date January 10, 2014.
Mortgage Servicing: Issued January 17, 2013
Implementation date January 10, 2014.
ECOA - Appraisal Disclosure: Issued January 18, 2013
Implementation date on January 18, 2014
Appraisals - Higher Priced Mortgages: Issued January 15, 2013
CFPB Background
Qualified Mortgage (Ability to Repay)
Qualified Res. Mortgage (Risk Retention) Mortgage Servicing Standards
High Cost Mortgages and Appraisals HUD/FHA/Other
Current Federal Legislation Resources for Regulatory
IMBA is not representing legal positions for or using this presentation to inform attendees how to address the regulations/issues discussed.
Rather, this is an informational presentation to the attendees of certain aspects of the
regulations presented and to promote thoughtful and constructive discussion.
Washington, D.C. impacting mortgage
business in three ways:
Regulations: access to credit & consumer
protections (1992 ‘GSE Act’)
Enforcement: loan level, systemic and the CFPB Determining the role of government in housing
Created through Dodd-Frank Act in 2010 (House
Fin. Svcs. Cmte. estimate of 24M hours/year to comply with!)
Mission: Make markets work for consumers Conducts rule-making, supervision and
enforcement
Restrict unfair, deceptive or abusive practices Take consumer complaints
Monitor financial markets
Enforce laws that outlaw discrimination and other
Issued 1/10/13 and effective with applications
as of 1/10/14 (804 pages)
Qualified Mortgage – ‘Safe Harbor’ and
presumption of compliance with lower priced loans [LT 1.5% above Average Prime Offer
Rate (4.41% 11/14/13)] and ‘Rebuttable Presumption’ if higher
Max. 43% DTI and fully documented (Nike!) No; balloon, interest only, or, GT 30 years
Max. lender fees of 3% (includes affiliated co’s,
private MI above FHA’s 1.75%, and, lender payments to brokers) if $100,000 +, $3,000 if
$60,000 - $99,999, and, 5% if $20,000 - $59,999
Seller paid charges currently included in 3%
(MBA letter 7/13)
Seller financing excluded if LT 6/yr.
Temporary provision (7 years) for loans that
qualify for; FNMA, FHLMC, FHA, VA and Rural
FHFA limiting Fannie/Freddie purchases to
QM loans (5/6/13)
Exempt; housing finance agencies (IHCDA)
and not-for-profit creditors focused on
HELOCs, bridge financing (LT 12 months), CP loans
(LT 12 months), loans for vacant land and multi-family over 4 units exempt
Legal costs estimated by MBA for a non QM loan
lawsuit are in excess of $70,000/loan, limiting loan options in future!
National Association of Federal Credit Unions –
Survey indicating 44% of members stopping to originate non QM loans
HUD’s QM definition will take effect at the same time as and
thereby replace the CFPB’s definition for FHA loans on January 10, 2014.
FHA will no longer insure loans that do not meet HUD’s QM
definitions.
None of HUD’s proposed QM standards incorporate the
restriction on the DTI ratio associated with underwriting under the ATR/QM Rule.
A QM must satisfy the ATR/QM Rule’s “points and fees”
limitations.
• The loan’s points and fees must not exceed 3% of the loan
amount for loans of $100,000 or more (with different thresholds applying to lower loan amounts).
FDIC, FHFA, Federal Reserve, HUD, OCC and
SEC proposed August 28th (505 pages)
Requires lenders to retain 5% of the risk for
securitized loans for non-QRM loans
FNMA, FHLMC, FHA, VA and Rural Housing
loans exempt
Aligns with QM for risk retention purposes Regulators considering alternative proposal
Issued 7/9/12, Amended 1/10/13 and Effective
1/10/14 (295 pages)
APR 6.5% or more higher than APOR (4.41%
11/14/13)
Lender notification to borrower in advance with
terms and fees identified
Borrowers must receive homeownership
counseling
Banned features include; pre-payment penalties,
Issued 1/18/13 and Effective 1/18/14 (311
pages and excludes QM loans)
FDIC, Federal Reserve, FHFA, NCUA and OCC Borrower must receive copy 3 days before
closing
A 2nd appraisal required if home sold in within
180 days and SP 10% higher, or, if sold in LT 91 days and 20% higher (QM loans excluded)
Issued 1/17/13 and Effective 1/10/14 (753
pages)
Impacts all servicers with GT 5,000 loans Servicer must provide accurate payoff to
consumer in LT 8 business days after written request
Restricts ‘dual tracking’ of both modification
and foreclosure
Servicer must respond to written notices of
Will increase costs associated with servicing
Also:
Single Point of Contact (SPOC) – $25B
national mortgage settlement with state AG’s early 2012 in 49 states with 5 largest servicers
MMI fund current negative economic value of
-$13.48B (heavy reliance on home prices)
4/1/13 loans with credit scores LT 620
manually underwritten
MIP raised multiple times recently and again
including 2013
MIP will be for life of loan for many borrowers
Recent ruling on ‘disparate impact’ (Effective
H.R. 1077 Consumer Mortgage Choice Act
S. 1217 Housing Finance Reform and Taxpayer
Protection Act of 2013
Protecting American Taxpayers and
Homeowners Act (PATH)
S. 1376 FHA Solvency Act of 2013
Likelihood of any passing in short term small
FNMA/FHLMC buybacks estimated at $84B
since 2007, impacting lenders financially as well as underwriting of current loans
U/W productivity/loan slowed dramatically New guideline allowing lender protection
after 36 payments on time
LO Compensation and CFPB Enforcement –
Unforeseen costs and Castle & Cooke Mortgage
CFPB ‘Hot Buttons’: steering, fair lending, 3rd
party providers, and, marketing/advertising
CFPB Complaint Database: ~58,000
mortgage related with 75% servicing-related and only 2% related to credit/underwriting
NAR Web site (http://www.realtor.org/)
CFPB (http://www.consumerfinance.gov/) MBA (http://www.mbaa.org)
IMBA (http://www.indianamba.org/)
ILTA(https://netforum.avectra.com/eWeb/StartPag
e.aspx?Site=ILTA&WebCode=HomePage)
CFPB Loan and Closing
Disclosures
July 2010
Congress passed the Dodd-Frank Wall Street
Reform and Consumer Protection Act.
Title X of the Act
▪ Creation of the Consumer Financial Protection Bureau (CFPB)
▪ Transferred the authority to regulate RESPA from HUD to the CFPB
▪ Mandated the integration of RESPA and TILA disclosure forms
May 2011
The CFPB released its first prototype of the
RESPA/TILA integrated mortgage disclosure.
The release was the 5th prototype formulated
after meetings with consumers and the industry to determine its usefulness to both sides.
Prototypes were developed for the Loan
Estimate form (to take place of the initial TIL and RESPA’s GFE) and Closing Disclosure (taking place of final TIL and HUD-1)
Loan Estimate given three business days
after application
Closing Disclosure given three business days
before closing
Required to be given to consumers for
mortgage applications received on or after
The CFPB’s proposed disclosures do not
apply to certain loan types.
Home Equity lines of credit Reverse Mortgages
Mortgages secured by mobile homes or by
dwellings not attached to the property
Creditors that make five or fewer loans in one
year
The final rule applies to most closed-end consumer mortgage loans.
It does not apply to
Home equity lines of credit
Reverse mortgages
Mortgage loans secured by a mobile home or
by a dwelling that is not attached to real property
A creditor who makes five or fewer
CFPB’s definition of Application
Contains 6 pieces of information that the lender
can collect
▪ Consumer’s name
▪ Consumer’s income
▪ Property Address
▪ Estimate value of the property or sales price on a purchase transaction
▪ Mortgage loan amount sought
3 pages long
Must be delivered to the borrower at least
seven days prior to the loan closing and at least one day prior to the delivery of the Closing Disclosure.
The Lender must attach a provider list of service which the
borrower may need for the overall transaction (not just service providers for the loan
The CFPB– like the RESPA rules – places a
tolerance level on charges that increase at closing.
• Unlike the RESPA rules, the lender is NOT required to provide a NEW Loan Estimate.
• Instead, the re-disclosure of any increases is provided in the Closing Disclosure.
As with the RESPA rules, the cost of certain
items may not change from the time of the initial disclosure
• However, the CFPB rules expand the charges that cannot increase at closing: lender fees, transfer tax,
Like the RESPA rules, some costs – including charges by borrower-selected providers from
lender’s list and recording fees -- cannot, in the aggregate, increase by more than 10%
Other charges from provider not shown on the lender’s list can go up at closing with no penalty to the lender
The accuracy of our fee quotes will be more important than ever!
Direct your lender customers to contact their title and escrow provider to make sure they are getting accurate escrow or
closing fees, title premiums, endorsement fees transfer tax and recording charges needed to complete the Loan Estimates
Unlike with the GFE, when the lender is completing the Loan Estimate, they must show all the charges in each category in
alphabetical order.
If the owner’s premium is to be paid by borrower, the charge must be shown as “(optional)” in the description.
Unlike the current RESPA rule, the owner’s policy is not required to be shown as a borrower charge if the seller is paying the premium.
The instructions for completing the form
require the lender group the title related
charges together by using the word “Title”
before each charge and then alphabetizing the
list thereafter.
Loan policy premiums are to be quoted as full premiums without applicable discounts (such as simultaneous
Just like the GFE, the consumer is encouraged to shop the loan
program against other loan programs.
The final rule and the Official Interpretations (on
which creditors and other persons can rely)
contain detailed instructions as to how each line on the Loan Estimate form should be completed
There are sample forms for different types of
loan products
The Loan Estimate form also incorporates new
disclosures required by Congress under the Dodd-Frank Act
Either a mortgage broker or creditor is
required to provide the Loan Estimate form upon receipt of an application by a mortgage broker
If the mortgage broker provides the Loan
Estimate, the creditor remains responsible for complying with the all requirements
Consistent with current law, the creditor
generally cannot charge consumers any fees until after the consumers have been given the Loan Estimate form and the consumers have communicated their intent to proceed with the transaction
There is an exception that allows creditors to
charge fees to obtain consumers’ credit reports
. Unless an exception applies, charges for the
following services cannot increase:
▪ The creditor’s or mortgage broker’s charges for its own services
▪ Charges for services provided by an affiliate of the creditor or mortgage broker
▪ Charges for services for which the creditor or mortgage broker does not permit the consumer to shop
Charges for other services can increase, but
generally not by more than 10%, unless an exception applies
• The consumer asks for a change
• The consumer chooses a service provider that was not
identified by the creditor
• The information provided at application was
inaccurate or becomes inaccurate
• The Loan Estimate expires.
When an exception applies, the creditor generally must provide an updated Loan Estimate form
The rule allows lenders or brokers to provide
consumers with written estimates before
application if they choose to, as long as a pre-application estimate includes a clear
disclaimer to prevent confusion with the official “Loan Estimate”
This disclaimer is also required for
Page 1
Provides the loan terms
Page 2
Analyses loan fees and gives estimated Cash to
Close
Page 3
Additional information about the loan and the
Page 1
Loan Terms: Loan Amount, Interest Rate, Monthly P&I, Prepayment
Penalty or Balloon Payment
Projected Payments: P&I, Mortgage Insurance, Escrow Account Cash to Close: Estimated Cash to Close
Page 2
Loan Costs: Origination Charges, Costs You Cannot Shop for & Costs You
Can Shop For
Other Costs: Taxes & Government Fees, Prepaids, Escrow Account, Other Calculating Cash to Close
Page 3
Comparisons: In 5 Years, APR, TIP
Other Considerations: Appraisal, Assumption, HOI, Late Payment, Refinance, Servicing Confirm Receipt
The final rule and the Official Interpretations
(on which creditors and other persons can rely) contain detailed instructions as to how each line on the Closing Disclosure form
should be completed
There are sample forms for different types of
The creditor must give the Closing Disclosure form to
consumers so that they receive it at least three business days before the consumer closes on the loan.
• If the creditor makes certain significant changes between the
time the Closing Disclosure form is given and the closing the consumer must be provided a new form and an additional three-business-day waiting period after receipt of the new form
▪ changes to the APR above 1/8 of a percent for most
loans (and 1/4 of a percent for loans with irregular payments or periods)
▪ changes the loan product
Can be disclosed on a revised Closing Disclosure
form provided to the consumer at or before closing, without delaying the closing
Will not cause closing delays for less significant
costs that may frequently change
The Consumer has the right to examine the
Closing Disclosure on request on the day before closing even without substantial changes
Page 1
Provides details of transaction & loan terms
Page 2
Breaks up loan fees, gives cash to close & all additional costs including costs paid by seller
Page 3
Breakdown of cash to close and summary of buyer’s and seller’s transaction
Page 4
Variety of loan disclosures
Page 5
Traditional TIL disclosures, total interest percentage, contact information,
Page 1
Closing information: Closing Information, Transaction Information, Loan Information
Loan Terms: Loan Amount, Interest Rate, Monthly P&I, Prepayment Penalty or Balloon Payment Projected Payments: P&I, Mortgage Insurance, Escrow Account
Page 2
Loan Costs: Origination Charges, Costs You Cannot Shop for & Costs You Can Shop For Other Costs: Taxes & Government Fees, Prepaids, Escrow Account, Other
Page 3
Calculating Cash to Close: Table compares estimate to final costs
Summaries of Transactions: Summary of Borrower’s and Seller’s transactions, similar to page 1
Page 4
Loan Disclosures: Assumption, Demand Feature, Late Payment, Negative Amortization, Partial Payment and Security Interest. Also additional gives additional Escrow Account information
Page 5
Traditional TIL: Finance Charge, APR & total interest percentage
Other Disclosures: Appraisal, Contract Details, Liability after Foreclosure, Refinance & Tax Deduction
Contact Information: Contact information for professional parties involved with transaction
In proposal, the CFPB left open the
questions of who should prepare the closing disclosure. The bureau has indicated it
plans to make the lender liable for accuracy. The choices are:
The creditor provides the closing disclosure; or The settlement agent provides the closing
The creditor is responsible for delivering the
Closing Disclosure form to the consumer
Creditors may use settlement agents to
provide the Closing Disclosure, provided that the settlement agents comply with the final rule’s requirements for the Closing Disclosure
The current HUD-1 process
The lender prepares the TILA final disclosure and
delivers it to the consumer 3 business days before closing.
Settlement agent prepares and delivers the HUD-1
to the consumer on or before closing.
The proposed 3 day rule
Requires the consumer to receive the Closing
Disclosure 3 days prior to closing.
If changes are made, with some exception, another
Closing Disclosure can be delivered in 3
ways
Hand Delivery – you know the consumer
received the form the same day you delivered it
Mail – if no receipt of when consumer received
the disclosure, a presumption exists that
consumer received it 3 days after it was mailed
Email – if no evidence exists that the consumer
received the email, the same presumption is
made as if you mailed the disclosure, 3 business days
Seller-buyer negotiation
Goes into effect only after buyer has received the disclosure
When buyer has received disclosure and buyer & seller agree to
change the transaction in a way that affects the cost, a new 3 day waiting period does not have to begin
Minor cost increase
If the amount increased is $100, no new 3 day waiting period
This exception does not apply to 0 tolerance fees
Post-closing change to government fees
If the disclosure becomes inaccurate because of changes in
government fees after closing, the creditor must deliver a revised disclosure within 3 business days but does not have to re-close the loan
Correction of non-numerical clerical errors
Tolerance refunds
If there is a tolerance violation, the refund can be handled as it is
HUD bundled the title and closing costs together
CFPB unbundles the charges so they will be listed separately
HUD utilized various series to organize information
The 700 series for Real Estate Broker fees
The 1100 series for title charges
CFPB proposed rule puts an end to that
In Closing Disclosure the CFPB removed the series numbers and
inserted lettered sections
The Closing Disclosure begins with Section A on page 2 and ends
with Section N on page 3.
When itemizing fees, the CFPB wants them to be in alphabetical
order
Although the fees will be in alphabetical order; CFPB wants all title
fees to be preceded by the word “title” so all the fees will be grouped together.
Page 1
Summary of Transaction
▪ Column 1
▪ Due To Seller At Closing
▪ Adjustments For Items Paid By Seller In Advance
▪ Due From Seller At Closing
▪ Adjustments To Items Unpaid By Seller
▪ Column 2
▪ Contact Information
Real Estate Broker (B)
Real Estate Broker (S)
Page 2
Closing Cost Details – Seller Paid
▪ Loan Costs
▪ Origination Charges
▪ Services Borrower Did Not Shop For
▪ Services Borrower Did Shop For
▪ Other Costs
▪ Taxes And Other Government Fees
▪ Prepaids
▪ Initial Escrow Payment At Closing
The proposed regulations will cost businesses
money, costs which some small businesses won’t be able to handle
Updating technology to drop the current series
numbers in favor of the lettered categories is a cost settlement companies will absorb
Employee training will be another cost associated
with the proposed changes
In addition to these costs is the cost small businesses
spent 3 years ago when the new HUD-1 went into effect
The Closing Disclosure is substantially
different from the HUD-1
It will take agents time to get used to the changes It is also a much longer form so it will take
agents longer to go over the form with consumers
The closings will take longer to complete which
Materials for today!
Meeting presentation will be on the MIBOR website today.
A podcast will be available on the MIBOR website within a week.
