Table of Contents
The Integrated Disclosure Rule ... 4
Chapter 1: Introduction to the Integrated Disclosure Rule ... 5 Consolidated Disclosures ... 5 Chapter 2: Delivery of the Loan Estimate and Closing Disclosure ... 7 The Loan Estimate ... 7 The Closing Disclosure and Waiting Periods ... 9 Chapter 3: Completing the Closing Disclosure ... 11 Chapter 4: Completing Pages Two and Three of the Closing Disclosure ... 20 Completing Page Two of the Closing Disclosure ... 20 Completing Page Three of the Closing Disclosure ... 26 Chapter 5: Completing Pages Four and Five of the Closing Disclosure ... 35 Summary ... 42References and Citations ... 43
Business Day Definitions ... 43 Citations for The Integrated Disclosure Rule ... 44 Citations for Completing the Closing Disclosure ... 44THE INTEGRATED DISCLOSURE RULE CHAPTER 1: INTRODUCTION TO THE LOAN ESTIMATE
Covered Transactions
When the Integrated Disclosure Rule applies: The Integrated Disclosure Rule applies to closed‐end consumer credit transactions secured by real property. A consumer credit transaction is one that is primarily for personal, family or household purposes. Construction loans and loans securing vacant land are also included. When the Rule does not apply: Open‐end loans, such as home equity lines of credit (HELOCs), Reverse mortgages Loans secured by dwellings that are not attached to real property (mobile homes, as an example) No‐interest, down payment assistance programs for low‐to‐moderate income borrowers Business, commercial or agricultural loansSpecial Information Booklets
The requirement to provide special booklets to mortgage applicants did not change with the Integrated Disclosure Rule; the following serve as a reminder of the requirements. Your Home Loan Toolkit Your Home Loan Toolkit replaces the Settlement Costs Booklet. The toolkit is given to the borrower at application as another resource to understand the mortgage process. It provides a step‐by‐step guide to understand the nature and costs of real estate settlement services and assists in finding what is affordable. There are interactive worksheets and checklists to use for support and research tips to find other important information for the home buying process. HELOC brochure An applicant applying for a home equity line of credit (HELOC) must receive a copy of the brochure,THE INTEGRATED DISCLOSURE RULE CHAPTER 2: DELIVERY OF THE LOAN ESTIMATE AND CLOSING DISCLOSURE
Chapter 2: Delivery of the Loan Estimate and Closing Disclosure
The Loan Estimate
A Good Faith Estimate
The Loan Estimate is a lender's written good faith estimate of closing costs and loan terms. The lender must make these disclosures based on the best information reasonably available at the time the Loan Estimate is prepared. This means that the lender must exercise due diligence in determining that accurate information is given on the disclosure.Who Must Provide the Loan Estimate?
The creditor is responsible for providing the Loan Estimate to the applicant. A creditor is the lender to whom the loan is initially payable. A broker may provide the disclosure for the creditor and will be expected to comply with all requirements for its preparation, delivery and record retention. However, the creditor remains responsible for ensuring that the requirements have been satisfied. Note: The creditor must honor any Loan Estimate issued by a broker. It may not issue a duplicate disclosure or revised disclosure that corrects an error by the broker.Denied or Withdrawn Loan Applications
If a loan application is denied or withdrawn by the applicant within the three‐business‐day period after application, the creditor is not required to provide the Loan Estimate.Pre‐Disclosure of Loan Terms and Costs
A creditor may provide a prospective applicant with loan terms, estimated payments and estimated costs specific to that applicant prior to issuing a Loan Estimate, but must also include a pre‐disclosure statement. This may be applicable when a purchaser has not selected a property yet. H‐26 Mortgage Loan Transaction – Pre‐Loan Estimate Statement – Model Form Description: This is a model of the statement required by § 1026.19(e)(2)(ii) of the Integrated Disclosures Rule to be stated at the top of the front of the first page of a written estimate of terms or costs specific to a consumer that is provided before the consumer receives the Loan Estimate. It must be given in at least 12‐point font.THE INTEGRATED DISCLOSURE RULE CHAPTER 2: DELIVERY OF THE LOAN ESTIMATE AND CLOSING DISCLOSURE
Calendar Example of Reissuing a Loan Estimate
Now let's look at an example of timing requirements for reissuing a Loan Estimate in combination with the timing requirements for issuing a Closing Disclosure. In this example we assume that the applicant has already consented to receiving electronic disclosures.Sun Monday Tuesday Wednesday Thursday Friday Sa
Loan Estimate is electronically mailed to applicant Loan Estimate is acknowledged received by applicant
Sun Monday Tuesday Wednesday Thursday Friday Sa
Sun Monday Tuesday Wednesday Thursday Friday Sa
Creditor learns of valid changed circumstance Creditor must provide a revised Loan Estimate within three business days of the changed circumstance. Electronically delivers. Borrower acknowledges receipt of revised Loan Estimate (must be received before Closing Disclosure)
Sun Monday Tuesday Wednesday Thursday Friday Sa
Creditor Electronically Issues a Closing Disclosure Borrower acknowledges receipt of Closing Disclosure Consummation can occur three business days after borrower receives the Closing Disclosure
THE INTEGRATED DISCLOSURE RULE CHAPTER 3: COMPLETING THE CLOSING DISCLOSURE
Chapter 3: Completing the Closing Disclosure
Itemization of Settlement Charges
The TILA‐RESPA Integrated Disclosure rule1 requires that borrowers receive the Closing Disclosure at least three business days prior to consummation. This five‐page disclosure itemizes actual settlement charges and compares these costs to those estimated on the Loan Estimate. The first page of the Closing Disclosure is very similar to the Loan Estimate and includes much of the same information so that the borrower is able to make a comparison between what was estimated at application and actual costs.Format of the Closing Disclosure
THE INTEGRATED DISCLOSURE RULE CHAPTER 3: COMPLETING THE CLOSING DISCLOSURE
The Estimated Taxes, Insurance & Assessments Section
Disclose the total monthly amount estimated for property taxes, homeowners insurance, HOA dues, ground rent, leasehold payments and any insurance required by the lender. The total of these amounts is disclosed whether or not an escrow account will be established. Indicate "YES", "NO" or "SOME" to indicate if the items will be escrowed. Any "Other" items should be described. Multiple items should be described as "xxxxx and additional costs". The amount of estimated escrow payments may differ from the Loan Estimate in that the aggregate escrow analysis has been performed.The Costs at Closing Section
The Costs at Closing Section shows totals that are itemized on Page Two and Three of the Closing Disclosure and are brought forward in summary on Page One. Estimated Closing Costs This is the borrower's Total Closing Costs brought forward from Page Two of the Closing Disclosure. It also shows the total "Loan Costs", "Other Costs" and lender credits from Page Two.THE INTEGRATED DISCLOSURE RULE CHAPTER 3: COMPLETING THE CLOSING DISCLOSURE
The Estimated Taxes, Insurance & Assessments Section
Disclose the total monthly amount estimated for property taxes, homeowners insurance, HOA dues, ground rent, leasehold payments and any insurance required by the lender. The total of these amounts is disclosed whether or not an escrow account will be established. Indicate "YES", "NO" or "SOME" to indicate if the items will be escrowed. Any "Other" items should be described. Multiple items should be described as "xxxxx and additional costs". The amount of estimated escrow payments may differ from the Loan Estimate in that the aggregate escrow analysis has been performed.The Costs at Closing Section
The Costs at Closing Section shows totals that are itemized on Page Two and Three of the Closing Disclosure and are brought forward in summary on Page One. Estimated Closing Costs This is the borrower's Total Closing Costs brought forward from Page Two of the Closing Disclosure. It also shows the total "Loan Costs", "Other Costs" and lender credits from Page Two.THE INTEGRATED DISCLOSURE RULE CHAPTER 4: COMPLETING PAGES TWO AND THREE OF THE CLOSING DISCLOSURE
Calculating Cash to Close
There are two variations of the "Calculating Cash to Close" section of Page 3 depending upon the type of transaction, but each compares the charges shown on the most recent Loan Estimate with the actual charges on the Closing Disclosure. A note must be made in the third column of the table if the amounts have changed (unless the change is due to rounding). It must be shown more prominently than the figures in the table, and refer the borrower to the sections of the Loan Estimate and Closing Disclosure where the change can be found. We will now look at each item in this section. Total Closing Costs (Item J, Purchase Table) This line compares the total closing costs from Item J on page two of the Loan Estimate to Item J on page two of the Closing Disclosure. On a non‐purchase transaction (using the alternative table above, these are disclosed as negative numbers, because they are subtracted from the loan amount. If an increase in charges exceeds the applicable tolerances, disclose a statement explaining that the charges exceed legal limits and direct the borrower to the Lender Credit section at the bottom of Page Two. The Lender Credit section should then show that the excess is being refunded. Closing Costs Paid Before ClosingTHE INTEGRATED DISCLOSURE RULE CHAPTER 5: COMPLETING PAGES FOUR AND FIVE
