The closing process will significantly change when the Consumer Financial Protection Bureau's fine rule for integrated mortgage disclosures goes into effect. The rule integrates forms required under the Truth-in-Lending Act (TILA) and Real Estate Settlement and Procedures Act (RESPA). A Loan Estimate will replace the current Good Faith Estimate and early TIL disclosure, while a Closing Disclosure will replace the HUD-1 and final TIL disclosure.
The CFPB announced a proposal to push back implementation until Oct. 3, 2015.
ALTA's Land Title Institute has created a training DVD to help you prepare for the disclosures. The DVD includes six modules that will help you understand the disclosures, including an introduction, what led to the development of the new disclosures, a step-by-step explanation of the Loan Estimate and Closing Disclosure, a discussion on how business processes will change, walk through how business relationships will change and how data will be shared, and additional resources and next steps.
A customizable model presentation also is available to guide discussions with your customers.
Purchase a recording of the TILA-RESPA Integrated Forum held in Dallas. The more than seven hours of discussion provides the latest interpretations and rules on the TILA-RESPA integration from the CFPB, addresses implications for closing/settlement, provides information on completing the Loan Estimate and Closing Disclosure, highlights how technology can be used to collaborate and solve compliance issues and explains how the entire real estate transaction will be changed.
Additional Documents and Resources
ALTA Settlement Statement
ALTA developed standardized ALTA Settlement Statements for title insurance and settlement companies to use to itemize all the fees and charges that both the homebuyer and seller must pay during the settlement process of a housing transaction. Four versions of the ALTA Settlement Statement are available. Download here.
Freddie Mac and Fannie Mae have released a common industry dataset, called the Uniform Closing Dataset, which leverages and maps to Mortgage Industry Standards Maintenance Organization (MISMO) data standards, to support implementation of the TILA-RESPA Closing Disclosure form.
If you want to report a possible violation of the Real Estate Settlement and Procedures Act (RESPA), email firstname.lastname@example.org. Include any evidence and contact information so that investigators may contact you. To the extent consistent with law enforcement needs, the Bureau will not disclose your identity and will maintain confidentiality as permitted by federal laws.
Fitch: TRID Non-Compliance Risk Modest for Investors
Although the frequency of non-compliance issues will likely be elevated initially as lenders implement the new changes, those non-compliance issues are not likely to translate into higher risk for bondholders, Fitch Ratings reported.
January 21, 2016
What You Need to Know When Sharing Closing Documents The implementation of the CFPB’s Know Before You Owe regulation has brought up a number of questions regarding who is permitted to receive copies of closing documents, including the Closing Disclosure and alternate settlement statements, such as the ALTA Settlement Statements. It is important to note that the Know Before You Owe regulation did not implement any changes on data privacy, however, ALTA encourages title insurance and settlement companies to take this opportunity to review your company’s privacy policies to ensure they match your data-sharing practices.
January 21, 2016
Fee Names on Loan Estimate and Closing Disclosure Must Match Because the Consumer Financial Protection Bureau wants consumers to be able to compare fee estimates with what’s actually charged at closing, the TILA-RESPA Integrated Disclosures (TRID) rule requires fee terminology to be consistent between the Loan Estimate and Closing Disclosure.
January 21, 2016
10 Reasons Why Secondary Market Is Rejecting Purchase of TRID Loans While there are reports that the TILA-RESPA Integrated Disclosures (TRID) are making it longer to close mortgages, there may be a larger problem growing with investors on the secondary market refusing to purchase loans because of potential compliance issues. Read on for a compilation from ALTA members of 10 reasons why investors are rejecting loans.
January 14, 2016
CFPB Releases Fact Sheet for Construction Loans Under TRID
The Consumer Financial Protection Bureau (CFPB) released a fact sheet to clear up confusion on whether the TILA-RESPA Integrated Disclosures (TRID or Know Before You Owe) should be used on construction loans. According to the fact sheet, most construction loans that are closed-end consumer credit transactions secured by real property are covered by the Know Before You Owe mortgage disclosures. A construction loan that is an open-end transaction or a loan for a commercial purpose is not covered. Additionally, the CFPB provides guidance on disclosing construction loans with permanent financing as one loan or two loans.
January 14, 2016
TRID Hiccups Percolate More than three months into implementation of the Consumer Financial Protection Bureau’s Know Before You Owe rule, there are several issues title and settlement agents are contending with as the industry adapts to the TILA-RESPA Integrated Disclosures. While there are a few key problems with the regulation, many issues appear to be the result of needing to adapt to the significant process change required to produce and deliver the Closing Disclosure.
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