Tag Archives: know before you owe

CFPB Proposes Updates to “Know Before You Owe” Mortgage Disclosure Rule

Changes would provide clarity, preserve protections for consumers

By Jeff Sorg, OnlineEd Blog

canstockphoto17974449 change sign(July 29, 2016) – The Consumer Financial Protection Bureau (CFPB) today proposed updates to its Know Before You Owe mortgage disclosure rule. The proposed amendments are intended to formalize guidance in the rule, and provide greater clarity and certainty. The changes proposed today would augment the implementation of the Know Before You Owe rule, which took effect last year, and help facilitate compliance within the mortgage industry.

“Getting a mortgage is one of the most important financial choices a consumer will ever make. The Bureau’s rules are designed to make sure consumers have the information they need, in a form they can easily understand and use, before making the decision,” said CFPB Director Richard Cordray. “Our proposed updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process.”

The Know Before You Owe mortgage disclosure rule took effect Oct. 3, 2015. The CFPB’s rule created new, streamlined forms that consumers receive when applying for and closing on a mortgage. The rule put in place requirements about when the new forms are given to the consumer and limits to changes in the original loan estimate. In addition to clarifications and technical corrections, the proposed amendments address a handful of other issues within the rule. Proposed changes include:

  • Tolerances for the total of payments: Before the Know Before You Owe mortgage disclosure rule, the total of payments disclosure was determined using the finance charge as part of the calculation. The Know Before You Owe mortgage disclosure rule changed the total of payments calculation so that it did not make specific use of the finance charge. The Bureau is now proposing to include tolerance provisions for the total of payments that parallel existing tolerances for the finance charge and disclosures affected by the finance charge. This change would make the treatment of the total of payments disclosure consistent with what it was before the Know Before You Owe mortgage disclosure rule.
  • Housing assistance lending: The rule gave a partial exemption from disclosure requirements to certain housing assistance loans originated primarily by housing finance agencies. The Bureau’s proposed update would promote housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The rule would also exclude recording fees and transfer taxes from the exemption’s limits on costs. Through the proposed update, more housing assistance loans would qualify for the partial exemption, which should encourage lenders to partner with housing finance agencies to make these loans.
  • Cooperatives: The Bureau is proposing to extend the rule’s coverage to include all cooperative units. With a cooperative, a buyer becomes a shareholder in a corporation that owns the property. The buyer is then entitled to exclusive use of a housing unit in the property. Currently, the rule only covers transactions secured by real property, as defined under state law. Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the Bureau would simplify compliance.
  • Privacy and sharing of information: The rule requires creditors to provide certain mortgage disclosures to the consumer. The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a closing disclosure to consumers, sellers, and their real estate brokers or other agents. The Bureau is proposing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.

The CFPB seeks input from a wide range of stakeholders and invites the public to submit written comments on the proposal. Comments are due Oct. 18, 2016, and will be weighed carefully before final regulations are issued.

The proposal is available at: http://www.consumerfinance.gov/policy-compliance/rulemaking/rules-under-development/amendments-federal-mortgage-disclosure-requirements-under-truth-lending-act-regulation-z/

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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The Top 10 Things Real Estate Agents Need to Know About TRID/Know Before You Owe

Real Estate Agents need to review and become familiar with the Closing Disclosure in order to answer buyer and seller questions

By Jeff Sorg, OnlineEd Blog

canstockphoto14866114un-known(December 23, 2015) – Every real estate agent should get familiar with the TILA-RESPA integrated disclosure forms. These new Loan Estimate and Closing Disclosure forms are required for most mortgage loan applications. While it is the job of the lender or settlement agent to complete the forms, these are the top ten things real estate agents should know about the TILA-RESPA Integrated Disclosures:

  1. A closing statement form called the Closing Disclosure (CD) is used for most mortgage loan applications. In most cases, the lender, not the settlement agent, will prepare and deliver the CD.
  2. The CD must be delivered to the consumer at least three business days before the scheduled closing date.
  3. The settlement agent should send settlement information to the lender 10 to 14 days before the closing date for the lender to prepare of the CD and meet its delivery requirements. Real estate agents should also communicate all buyer paid charges to the settlement agent 14 days before the closing date.
  4. The settlement agent will need to include on the CD the real estate agent’s company license number and the agent’s real estate license number. Consider including these numbers as part of your email signatures and on your letterheads.
  5. The CD sent to the consumer will not include the seller’s side of the transaction. The settlement agent will be responsible for completing and delivering the seller’s side of the CD.
  6. If the real estate agent wants a copy of the CD it will need to be obtained from the consumer; the settlement agent is not allowed to send a copy of the CD to the real estate agent.
  7. Changes to the CD after delivery to the consumer might trigger a new three-day waiting period, if changes cause the Annual Percentage Rate to be inaccurate, the buyer changes loan products or a prepayment penalty is added to the loan. Under the Equal Credit Opportunity Act (ECOA), changes and adjustments affecting property value might also trigger additional disclosure and review periods.
  8. In some circumstances, the CD will refer to Owner’s Title Insurance as “optional.” The consumer should be advised to obtain appropriate advice for from their title insurance agent for the protections given to them by purchasing owner’s title insurance.
  9. TRID rules may affect the sale agreement terms that real estate agents negotiate for either the buyer or seller. For example, a closing 30 days out may no longer be realistic. The best advice is to communicate with the lender and the closing agent to determine a realistic time frame for closing every transaction.
  10. A system should be in place to communicate changes to the sale agreement after it is signed and sent to the lender. Buyers should also be advised to respond immediately to lender requests.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

7 Things Real Estate Brokers Need to Know About TRID

TRID, it’s really not all that complicated for the real estate broker

By Jeff Sorg, OnlineEd Blog

(Listen to this post in audio)

what you need to know(December 18, 2015) – TRID is an acronym for TILA/RESPA Integrated Disclosure and is part of Know Before You Owe – Mortgages, the CFPB’s mortgage initiative designed to help consumers understand their loan options, shop for the mortgage that’s best for them, and avoid costly surprises at loan closing. The TRID rules became effective October 3, 2015. Here are seven important things real estate brokers will want to know about TRID:

  1. The buyer’s settlement statement is now called the Closing Disclosure or CD. You will want to become familiar with this form so you can explain it to your buyer clients. View a pdf copy view the closing disclosure.
  2. Your settlement agent cannot send you a copy of the CD. If you want a copy, and you should, you will need to get it from your buyer.
  3. The CD must be delivered by the mortgage lender to the buyer at least three business days before closing.
  4. In limited circumstances, a change to the CD after it is delivered to the buyer might trigger a new three-day waiting period if the buyer changes loan products, a prepayment penalty is added, or the change causes the previously disclosed annual percentage rate to be inaccurate.
  5. Your settlement agent will need your real estate company’s license number and your personal real estate license number.
  6. You’ll want to get your settlement agent all of your buyer paid charges at least 10-to-14 days before closing so these can be communicated to the lender in order for the lender to prepare an accurate CD and meet the requirements for its delivery to the buyer.
  7. Plan on 45 day closings, and be sure to extend your purchase contracts if new waiting periods are triggered as you get close to this date.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

It’s Official! CFPB Moves TRID Implementation Date to October 3, 2015

(Jeff Sorg, OnlineEd) – The Consumer Financial Protection Bureau has issued a final rule moving the effective date of the Know Before You Owe mortgage disclosure rule, also called the TILA-RESPA Integrated Disclosures, or TRID, to October 3, 2015.

The final rule issued today also includes technical corrections to two provisions of the Know Before You Owe mortgage disclosure rule.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on July 21, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.