1 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Coverage: Most Closed-End Consumer Mortgages – Not HELOCs, reverse
mortgages or mobile home loans not attached to real property
Agency/Citation: Consumer Financial Protection Bureau /
12 CFR §§1026.19(e),(g) & 1026.37
Effective Date: October 3, 2015
The Integrated LOAN ESTIMATE Mortgage Disclosure The Loan Estimate disclosure replaces two current Federal forms - the Good Faith
Estimate (RESPA, Regulation X) and the ‘‘early’’ Truth in Lending disclosures (TILA,
Regulation Z).
The Loan Estimate is designed to provide disclosures that will be helpful to credit union
members in understanding the key features, costs, and risks of the mortgage for which
they are applying and help them shop for their best mortgage option.
For quick reference, use the following links to jump to specific sections of this report:
Delivery Requirements
Pre-Loan Estimate Fee Restrictions
Preliminary Written Estimates
Determining Good Faith Estimates
Requirements when permitting members to shop for services
Optional Services
Services not obtained
Lender Credits
Streamlined Refinancing Programs
Rounding
Refunds
Filling out the Form
Revised Estimates
Home Buying Information Booklet
THE LOAN ESTIMATE & The Home Buying Information Booklet
2 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
WHAT AND WHO IS COVERED?
The new Loan Estimate applies to:
Most closed-end consumer credit transactions secured by real property;
Construction-only loans;
Loans secured by vacant land;
Loans secured by 25 or more acres (previously exempt from some of these
disclosures); and
Extensions of credit secured by a member’s interest in a timeshare plan.
What type of loans are NOT covered?
This new disclosure form does not apply to:
HELOCs
Reverse Mortgages, or
“Chattel-dwelling” loans, which are not attached to real property (land), such as
loans secured by mobile homes.
These loans will remain subject to Regulation X (the existing Good Faith Estimate and
the HUD settlement statement), until the Consumer Financial Protection Bureau (CFPB
or Bureau) addresses them in a separate, future rulemaking. The CFPB intends to
adopt integrated disclosures specifically tailored to their distinct features.
EFFECTIVE DATE The new rule is effective on October 3, 2015. The rule applies to transactions for which
the credit union (or mortgage broker) receives an application on or after this effective
date.
The CFPB notes that in regard to applications received before the effective date, for
example, September 30, 2015, the Loan Estimate, the Special Information Booklet, and
Closing Disclosures required under the new TILA-RESPA integrated disclosure rule do
not apply. Instead, for such loans, where the application was received prior to October
3, 2015, the creditor and the settlement agent must provide the disclosures required
under the existing TILA and RESPA rules, as applicable.
Exceptions: The following provisions become effective on October 3, 2015, without
respect to whether an application has been received on that date:
3 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Pre-disclosure activities - fee restrictions and written information regarding
estimated terms and costs provided prior to the Loan Estimate (§1026.19(e)(2)),
and
Provisions addressing the preemption of inconsistent state disclosure laws (§
1026.28(a)(1)), as well as the commentary regarding the “substantial similarity”
standard used to grant state exemptions (§1026.29).
DEFINITIONS: (12 CFR §1026.2)
“Application”: The Loan Estimate is triggered by a mortgage application. A mortgage
application is considered to be provided when the borrower provides the following six
pieces of information:
the member’s name,
the member’s income,
the member’s social security number (to obtain a credit report),
the property address,
an estimate of the value of the property, and
the mortgage loan amount requested.
The CFPB notes that this new definition does not prevent a creditor from collecting any
additional information in relation to the mortgage loan, however, once a creditor has
received these six pieces of information the Loan Estimate requirements are triggered.
“Business day”: The general definition of “business day” applies to the 3-day
delivery requirement for the Loan Estimate. The general definition considers a
“business day” as a day on which the credit union's offices are open to the public for
carrying on substantially all of its business functions.
The specific definition of “business day” applies to the seven-business-day waiting
period the Loan Estimate must be delivered before consummation. The specific
definition considers a “business day” as all calendar days except Sundays and the legal
public holidays.
“Consummation” vs “Settlement”: In some jurisdictions, settlement does not occur
until after consummation, and costs could change between consummation and
settlement. The CFPB has recognized that recording fees, which are subject to the 10%
tolerance category, are an example of such costs that could change between
consummation and settlement. For this reason, the Bureau has clarified that a charge
“paid by or imposed on the consumer” refers to the final amount for the charge paid by
or imposed on the consumer at consummation or settlement, whichever is later.
4 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Consummation is defined by Regulation Z, §1026.2(13): Consummation means the
time that a consumer becomes contractually obligated on a credit transaction.
Settlement is defined by Regulation X, §1024.2(b): Settlement means the process of
executing legally binding documents regarding a lien on property that is subject to a
federally related mortgage loan. This process may also be called “closing” or “escrow” in
different jurisdictions.
Example: At consummation, the member pays the creditor $100 for recording fees.
Settlement of the transaction concludes five days after consummation, and the actual
recording fees are $70. The creditor refunds the member $30 immediately after
recording. The recording fee paid by the member is $70.
STATE LAW PREEMPTION
State laws are preempted by the rule to the extent of their inconsistencies with the new
integrated disclosure forms. States, creditors, and other interested parties are permitted
to request a determination by the CFPB regarding such inconsistencies. If the Bureau
determines that a State-required disclosure is inconsistent, creditors located in that
State may not make disclosures using the inconsistent term or form, and will incur no
liability under the State law for failure to use them – unless the Bureau’s determination
is subsequently amended, rescinded, or determined invalid.
DELIVERY REQUIREMENTS (12 CFR §1026.19(e)(1))
The Loan Estimate must be delivered or placed in the mail not later than three
“business days” (general definition) after the credit union (or mortgage broker)
receives the member’s written application, and not later than the seventh “business
day” (specific definition) before consummation of the loan. The member does not need
to indicate an intent to proceed with the loan.
The CFPB clarifies that this timing provision does not prevent a creditor from fulfilling its
obligation to evaluate a borrower’s ability to repay. Credit unions will be able to collect
whatever information they need to evaluate a borrower’s ability to repay as long as they
sequence the collection of that information to ensure that they provide a Loan Estimate
once the six “application” pieces of information have been collected. Creditors cannot
condition the issuance of the disclosure on verifying the information.
If the disclosures are provided to the member by means other than delivery in person,
the member is considered to have received the disclosures three business days after
they are delivered or placed in the mail to the address specified by the member.
5 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Additionally, the seven day waiting period begins when the credit union delivers the
disclosures or places them in the mail, not when the member receives or is presumed to
have received the disclosures.
Alternatively, the credit union may rely on evidence that the member received the
disclosures earlier than three business days. Example: If the credit union sends the
disclosures via overnight mail on Monday, and the member signs for receipt of the
overnight delivery on Tuesday, the credit union could demonstrate that the disclosures
were received on Tuesday.
Electronic delivery: The three-business-day delivery period applies to methods of
electronic delivery, such as e-mail. For example, if a credit union sends the disclosures
via email on Monday, the member is considered to have received the disclosures on
Thursday, three business days later. The credit union may, alternatively, rely on
evidence that the member received the emailed disclosures earlier.
Example: If the credit union emails the disclosures at 1 p.m. on Tuesday, the member
emails the credit union with an acknowledgement of receipt of the disclosures at 5 pm
on the same day, the credit union could demonstrate that the disclosures were received
on the same day.
Disclosures provided via email are subject to compliance with the member consent and
other applicable provisions of the E-Sign Act. If the credit union delivers the
disclosures via email, but did not obtain the member’s consent to receive disclosures,
then the credit union is not in compliance – assuming the disclosures were not provided
in another manner in accordance with the timing requirements.
Application withdrawn or denied: The disclosure is not required in cases where the
credit union knows within the 3-day period that the application will not or cannot be
approved, or where the member withdraws the application. This would apply when a
member’s credit score is lower than the minimum score required for the terms the
member applied for, or the member applies for a type or amount of credit that the
creditor does not offer.
Waiver of 7 day Waiting Period :The CFPB believes the seven-business-day waiting
period is the minimum amount of time in which a member could meaningfully shop,
compare, and negotiate the terms of the mortgage loan, and should only be waived in
the most stringent of circumstances. (See Time-share Plan exception below).
After receiving the Loan Estimate, the member may modify or waive the right to the
seven-business-day waiting period in the case of a “bona fide personal financial
emergency” – not for convenience purposes. This determination of whether a “bono fide
personal emergency” exists will be determined on the individual facts and
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
circumstances of each situation. An example of a “bona fide personal financial
emergency” is the imminent sale of the member’s home at foreclosure, where the
foreclosure sale will proceed unless loan proceeds are made available during the
waiting period.
The member must give the credit union a dated written statement that describes the
emergency, specifically modifies or waives the waiting period, and bears the signature
of all the consumers primarily liable on the legal obligation in order for the waiver to be
effective. The waiver should be provided upon the delivery of the Closing Disclosure.
Printed forms are prohibited for this purpose.
Example of Waiver: If the Loan Estimate is delivered to the member in person on
Monday, June 1, the seven-business-day waiting period ends on Tuesday, June 9. If on
Monday, June 1, the member executes a waiver of the seven-business-day waiting
period, the final disclosures could then be delivered three business days before
consummation, on Tuesday, June 2, and the loan could be consummated on Friday,
June 5.
Joint obligors: Where two consumers are joint obligors, the Loan Estimate may be
provided to any consumer with primary liability on the obligation.
Combined with other disclosures: The Loan Estimate may be provided with other
documents or disclosures, such as a cover letter or disclosures required by State or
other applicable law.
Mortgage Broker: A mortgage broker is any loan originator that is not an employee of
the creditor. If a mortgage broker receives a member’s application, either the creditor or
the mortgage broker must provide the member with the Loan Estimate within three
business days of receipt of the application and, except for timeshare plans, not later
than the seventh business day before consummation of the transaction.
If the mortgage broker provides the Loan Estimate, the mortgage broker must comply
with all relevant regulatory requirements as if it were the creditor, including the record
retention requirements, such as retaining documentation of any reasons a revised Loan
Estimate was provided. The creditor must ensure that the Loan Estimate is provided in
accordance with all of the requirements. Disclosures provided by a mortgage broker in
accordance with the regulations satisfy the creditor’s obligations under the rule.
The new rule does not permit the creditor to issue a separate Loan Estimate or revised
disclosures to correct a mortgage broker’s error. Mortgage brokers are not required to
get authorization from creditors before providing Loan Estimates. Creditors are bound
by the terms of the Loan Estimate, subject to one of the six legitimate reasons for
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
revisions such as changed circumstances or borrower-requested changes, whether or
not the creditor has authorized the mortgage broker to provide the Loan Estimate.
Either the creditor or the mortgage broker may provide a revised Loan Estimate based
on any of the six valid reasons for revisions included in the rule.
The rule does not impose explicit requirements on mortgage brokers with respect to
providing application information to the creditor and to establishing additional conditions
that mortgage brokers must satisfy before they issue a Loan Estimate. The Bureau
believes that these requirements should be set by the creditor contractually with the
mortgage broker.
If a mortgage broker issues the Loan Estimate in the creditor's place, the creditor
remains responsible for ensuring that the requirements have been satisfied. For
example, if a mortgage broker receives a consumer's application and provides the
consumer with the Loan Estimate, the creditor does not satisfy the requirements of
providing a Loan Estimate if it provides duplicative disclosures to the consumer. In the
same example, even if the broker provides an erroneous disclosure, the creditor is
responsible and may not issue a revised disclosure correcting the error. The creditor is
expected to maintain communication with the broker to ensure that the broker is acting
in place of the creditor.
The rule requires either a mortgage broker or creditor to provide the Loan Estimate form
upon receipt of an application by a mortgage broker. However, even if the mortgage
broker provides the Loan Estimate, the credit union remains responsible for complying
with all requirements concerning the provisions of the form.
Time-share Plans: Transactions secured by a member’s interest in a “timeshare plan”
are not subject to the seven-business-day waiting period. [1026.19(e)(1)(iii)(C)]
Given that timeshare transactions typically occur on the same day or the day after the
creditor receives a member’s application, the CFPB believes that it would be
burdensome to creditors to provide the Loan Estimate before consummation. So, if a
member provides the creditor with an application for a timeshare transaction, and
consummation occurs within three business days after the creditor’s receipt of the
member’s application, then the creditor will be considered to be in compliance with the
Loan Estimate timing requirements by providing the Closing Disclosure (1026.19(f)(1)(i))
instead of the Loan Estimate.
However, for timeshare transactions that will be consummated more than three business days after the receipt of an “application”, the Bureau believes that the receipt
8 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
of the Loan Estimate within three business days of the creditor’s receipt of the consumer’s application will help consumers.
PRE-LOAN ESTIMATE FEE RESTRICTION (12 CFR §1026.19(e)(2))
Effective date: The following pre-disclosure provisions are effective October 3, 2015,
regardless of whether an application has been received on that date.
A credit union may not impose a fee on a member in connection with a mortgage loan
application before the member:
1. has received the Loan Estimate, AND
2. takes the affirmative step to indicate an intent to proceed with the mortgage
loan.
This includes, for example, fees for an application, an appraisal, underwriting or even a
“pre-application” fee. (See Credit Report Fee Exception below).
A fee is considered “imposed” if the member is required to provide a method for
payment, for example, check or credit card number, even if the payment is not made at
that time.
Check Example: A credit union may not require the member to provide a $500 check
to pay for a “processing fee” before the member receives the Loan Estimate and has
indicated an intent to proceed with the loan, even if the credit union has stated that the
check will not be cashed until after the Loan Estimate has been delivered and an intent
to proceed indicated by the member.
Credit Card Example: A credit union cannot require the member to provide a credit card
number before the member receives the Loan Estimate, even if the credit union
promises not to charge the member’s credit card for the $500 processing fee until after
the Loan Estimate is provided and the member indicates an intent to proceed with the
loan.
Credit Report Fee Exception: The only exception from this fee restriction is for a bona
fide and reasonable fee for obtaining a member’s credit report. At any time prior to
delivery of the Loan Estimate, a credit union may impose a reasonable credit report fee
in connection with the mortgage loan application. The credit union must accurately
describe or refer to this fee, for example, as a “credit report fee”. Not as Regulation Z
previously allowed, “an application fee”.
9 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Credit Card Example: A credit union may require the member to provide a credit card
number before the Loan Estimate is provided and an intent to proceed with the loan is
indicated, as long as the member’s authorization is only to pay for the cost of a credit
report and the credit union only charges a reasonable and bona fide fee for obtaining
the credit report.
Maintaining a credit card number on file: As long as the credit union requests and
receives a separate authorization for an additional fee to be imposed after the Loan
Estimate is provided and intent to proceed is indicated, the credit union may maintain
the credit card information on file. A separate authorization means a new authorization,
whether verbal or written, from the member for the credit union to charge new fees. The
CFPB notes that an expression of a member’s intent to proceed with a transaction is not
the same as an authorization to the credit union to charge additional fees.
Only one credit report fee allowed. Example: A third party submits a member’s
application to a credit union following a different creditor’s denial of the member’s
application (or following the member’s withdrawal of that application), and if a fee
already has been assessed for obtaining the credit report, the new creditor (the credit
union) or third party must not impose any additional fee until the member receives the
Loan Estimate from the credit union and indicates an intent to proceed with the
transaction.
“Indication of Intent”: A credit union may require a particular method of
communication for the member to “indicate an intent” to proceed.
Acceptable methods of communication include:
Oral communication in person immediately upon delivery of the Loan Estimate
disclosure;
Oral communication over the phone;
Written communication via email; or
Signing a pre-printed form -
as long as these actions occur after receipt of the Loan Estimate. Also, the credit
union must document this communication.
Non-acceptable methods of communication include:
A member’s silence (because it cannot be sufficiently documented). Example: A
credit union may not deliver the disclosures, wait for some period of time for the
member to respond, and then charge the member an application-related fee if
the member does not respond, even if the credit union disclosed that it would do
so.
A signature line on the Loan Estimate that could be signed by the member to
indicate the member’s intent to proceed. (The optional signature line permitted
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
on the sample Loan Estimate in Appendix H to Regulation Z (Form H-24) only
documents receipt of the Loan Estimate.)
PRELIMINARY WRITTEN ESTIMATE (pre-Loan Estimate) (12 CFR §1026.19(2)(ii))
The CFPB recognizes that consumers often want preliminary written estimates based
on less information than is needed to issue the Loan Estimate. The regulation refers to
this preliminary estimate as a “written estimate”. To avoid consumer confusion
between a “written estimate” and the required “Loan Estimate”, the CFPB requires that
the written estimate include a statement to distinguish it from the Loan Estimate and
warn consumers of the risk of relying on preliminary written estimates.
If a credit union provides a member with a written estimate of terms or costs specific to
that member before the member receives the Loan Estimate, the credit union must
clearly and conspicuously state at the top of the front of the first page of the estimate in
a font size that is no smaller than 12-point font: “Your actual rate, payment, and costs
could be higher. Get an official Loan Estimate before choosing a loan.”
Example: If the credit union provides a document showing the estimated monthly
payment for a mortgage loan, and the estimate was based on the estimated loan
amount and the member’s estimated credit score, then the credit union must include the
statement on the document. In contrast, if the credit union provides the member with a
preprinted list of closing costs common in the member’s area, the credit union need not
include the statement. Similarly, the statement would not be required on a preprinted
list of available rates for different loan products. Finally, this requirement does not apply
to an advertisement.
To avoid confusion, pre-application worksheets must not be formatted in a way that is
substantially similar to the Loan Estimate or Closing Disclosure. A written estimate of
terms or costs may not be made with headings, content, and format substantially similar
to Forms H-24 or H-25 of Appendix H to Regulation Z.
A credit union providing member-specific written estimates may use forms they have
already developed, provided that they add the required disclaimer and that their forms
are not substantially similar to forms H-24 or H-25 in Appendix H to Regulation Z.
Verification of Information (12 CFR §1026.19(e)(2)(iii))
The credit union or other person is prohibited from requiring a member to submit
documents verifying information related to the member’s application before providing
the Loan Estimate. The credit union may collect any information that it requires prior to
providing the Loan Estimate, but is not permitted to require that the member submit
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
documentation to verify that information. Example: A credit union may ask for the sale
price and address of the property, but may not require the member to provide a
purchase and sale agreement to support the information that the member provides
orally before the credit union provides the Loan Estimate.
DETERMINING GOOD FAITH ESTIMATES (12 CFR §1026.19(e)(3))
The General Rule
The settlement service charges listed on the Loan Estimate must represent a good faith
estimate of these charges. The general rule is that an estimated closing cost disclosed
on the Loan Estimate is in good faith if the charge later paid by or imposed on the
member does not exceed the amount originally disclosed. There are some exceptions
to this general rule:
limited increases permitted for certain charges (permitted tolerances);
changed circumstances affecting the costs and terms of the loan; or
changes made at the borrower’s request.
(See detailed information regarding these exceptions below)
If the originally estimated amount changed due to one of the valid reasons allowed by
the rule, such as a changed circumstance or borrower request, the credit union may
compare the actual charge paid by or imposed on the member with a revised
estimated amount. (See Revised Estimates in this report)
“No Cost” Loans are Not Exempt : The general rule applies to both charges that are
paid by the member, and charges that are imposed on the member. In a “no cost” loan
transaction, closing costs may not be paid by the member because they are financed by
the creditor, but are nonetheless imposed on the member.
The CFPB believes that consumers should receive reliable cost estimates for “no cost”
loans so that the consumer can use the Loan Estimate to compare loans where the
closing costs are financed with loans that do not finance closing costs.
Zero Tolerance Category (The General Rule)
The following charges, when paid or imposed on the member, must not exceed the
amounts listed on the initial Loan Estimate:
(a) origination charges - fees paid to the creditor and fees paid to a mortgage
broker;
(b) transfer fees;
(c) affiliate charges - fees paid to an affiliate of the creditor or mortgage broker;
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
(d) fees paid to an unaffiliated third party that the creditor requires the member to
use – the member is not allowed to shop for the service.
(The 2015 rule added “affiliate fees of the creditor” and “fees of lender-required service
providers” to this category. Before October 3, 2015 these charges were in the 10%
tolerance category).
Payments to Affiliated Providers disbursed to unaffiliates are Not Exempt: The
CFPB explains that if a lender requires a consumer to use an affiliated company for title
services, then the fees the consumer pays to the affiliate company should be subject to
zero percent tolerance, even if the affiliate uses vendors to perform the title services.
Example: Payments that affiliated title companies receive at closing that are then
disbursed to unaffiliated service providers as payment for services performed by the
unaffiliated service providers on behalf of the affiliated title companies, are not exempt.
Aggregate amount: The Bureau does not believe it is appropriate to permit fees in the
zero percent tolerance category to increase, regardless of whether the aggregate
amount of these fees does not increase.
To avoid the zero tolerance rule: If the credit union does not want the zero percent
tolerance rule to apply to the cost of a lender-required service, the credit union must
permit the member to shop around for the settlement service provider for that service,
and the service provider cannot be an affiliate of the credit union.
10% Tolerance Category
This part of the rule provides flexibility in disclosing individual fees by focusing on
aggregate amounts. Certain estimated charges are considered in good faith if the
aggregate amount (or the sum) of all such charges paid by or imposed on the member
does not exceed the aggregate amount (or sum) of all such charges that was disclosed
on the Loan Estimate by more than 10%. This limited increase is only allowed for:
Recording fees, and
Charges paid to unaffiliated third parties for which your member is allowed to
shop – and the member picks a service on the list provided by the credit union.
Example: Assume that the sum of all estimated charges in the 10% category disclosed
on the Loan Estimate equals $1,000. The credit union does not include an estimated
charge for a notary fee but a $10 notary fee is charged to the member. Assume the
notary fee is subject to the 10% aggregate limitation, the credit union has not violated
the rule if the sum of all amounts charged to the member subject to the 10% aggregate
limitation does not exceed $1,100, even though an individual notary fee was not
included on the Loan Estimate.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Example: The credit union includes a $300 estimated fee for a settlement agent on the
Loan Estimate and this fee is included in the category of charges subject to the
aggregate 10% limit. The sum of all of the charges in this category, including the
settlement charge, equals $1,000. The credit union does not violate this rule if the actual
settlement agent fee exceeds $330 (ie: 10%), provided that the sum of all such charges
does not exceed $1,100 (ie: 10%).
However, even if a particular charge does not increase by more than 10 percent, if the
aggregate of all such charges does increase by at least that amount, then even that
charge is not considered in good faith.
Services for which the member may shop, but does not: If the credit union requires
a service in connection with the mortgage loan transaction and permits the member to
shop for that service, but the member either does not select a settlement service
provider or chooses a settlement service provider identified by the credit union on the
list, then good faith is determine using the 10% aggregate limitation.
Example: If a credit union discloses on the Loan Estimate an estimated fee for an
unaffiliated settlement agent and permits the member to shop for that service, but the
member either does not choose a provider, or chooses a provider identified by the credit
union on the required written list, then the estimated settlement agent fee is included
with the fees that may, in aggregate, increase by no more than 10%. However, if the
member chooses a provider that is not on the written list, then good faith is determined
by the best information available to the credit union at the time the Loan Estimate was
provided.
Unlimited Increases Category
Regardless of good faith estimate efforts, certain types of estimates may change
significantly after the original Loan Estimate is provided. Similar to the pre-October 3,
2015 rule, under the new rule a cap will not be applied to certain settlement cost
estimates. NOTE: Even though good faith is not determined by a comparison of
estimated amounts and actual costs, the estimates for these charges must still be made
in good faith by using the best information available.
The estimates for the charges in this category, or lack of an estimated charge for a
particular service, must be consistent with the best information reasonably available
to the credit union at the time the disclosures were made. This means that the estimate
for the charge was obtained through due diligence, acting in good faith.
The charges in this “unlimited increases” category include:
prepaid interest;
o Example: If the credit union knows that the loan must close on the 15th of
the month but estimates prepaid interest to be paid from the 30th of that
month, then the under-disclosure violates the rule. If, however, the credit
union’s estimates are consistent with the best information reasonably
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
available that the loan will close on the 30th of the month and bases the
estimate of prepaid interest accordingly, but the loan actually closes on
the 1st of the next month, the credit union is in compliance.
property insurance premiums (whether or not the insurance provider is a credit
union affiliate);
amounts placed into an escrow, impound, reserve, or similar account; and
charges paid to third-party service providers, such that:
o they are required by the creditor,
o the credit union permits the member to shop for the service,
o the credit union provides a written list of providers, and
o the member chooses a servicer not on the list.
Example: If the member informs the credit union that the member
will choose a settlement agent not identified by the credit union on
the written list and the credit union subsequently discloses an
unreasonably low estimated settlement agent fee, then the under-
disclosure violates the rule.
Charges paid for third-party services not required by the credit union, even if a
credit union affiliate provides them. The Bureau takes this position because the
optional nature of such services means that borrowers may decide not to
purchase these services later in the origination process, or choose a provider
that offers a better price for the service.
Requirements When Permitting Members to Shop for Services
List of providers: If the credit union permits a member to shop for a settlement service,
the credit union must provide the member with a written list identifying available
providers of that service and stating that the member may choose a different provider
for that service. If the member is not allowed to shop off the list, then it is not permitting
the member to shop. A sample service provider list expressly disclosing that the
member may choose a different settlement service provider off the list is available in
Appendix H to the rule, Form H-27.
No written list provided: If the credit union permits the member to shop for a service
provider, but fails to provide the list of service providers, then good faith is determined
using the 10% tolerance category, instead of the unlimited tolerance category,
regardless of the provider selected by the member. However, if the selected provider is
an affiliate of the credit union, good faith is determined using the general rule - zero
tolerance.
Requirements of providers: A credit union may impose reasonable requirements
regarding the qualifications of the provider. For example, the credit union may require
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
that a settlement agent chosen by the member be appropriately licensed in the relevant
jurisdiction.
Delivery of the list: The list must be provided separately from the Loan Estimate but in
accordance with the timing requirements (within three business days of receiving the
application, not later than 7 days before consummation of the loan). Although the Loan
Estimate must be provided on separate pages that are segregated from other
documents or disclosures, the credit union is not prohibited from providing the written
list in the same transmittal as the Loan Estimate.
Contents of the list : The list must include sufficient information to allow the member to
contact the service provider, such as the name, address and telephone number. The
street address is not required, but if it is not listed the credit union must demonstrate
that the information that is provided is sufficient to allow the member to contact the
provider. Providing the member with a toll-free number or a Web site, rather than a
written list with contact information, is not sufficient because it adds an extra step into
the shopping process.
The list should not include service providers that are no longer in business or that do not
provide services in the area where the member or the property is located. A vendor
management company must not be included on the list if it cannot ensure that the
service for which it is listed can be performed by its employees or contractors in the
area where the member or property is located.
How many servicers must be listed? The credit union must identify at least one
available provider for each settlement service for which the member is permitted to
shop. If the credit union determines that there is only one available settlement service
provider, the credit union is only required to identify that provider on the written list.
Affiliates: Affiliates are permitted to be included on the list, as long as the affiliate
business arrangement is in compliance with RESPA requirements (§1024.15) and the
affiliation is disclosed to the member when the Loan Estimate is provided. Additionally,
the heading on the list should clearly state that the member can select the provider or
shop for different providers, clarifying that an affiliated provider is not a required
provider.
Referrals: The list is considered a “referral” for purposes of RESPA’s prohibition against
kickbacks and unearned fees. (§1024.14(f)).
Endorsements: The credit union may include a statement on the written list that the
listing of a settlement service provider does not constitute an endorsement of that
service provider.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Fees: Credit unions are not required to list the estimated fees of the service providers,
even though Form H-27(A) of Appendix H does provide space to do so. The credit
union is required to itemize on the Loan Estimate the estimated amount for each of the
services for which a member may shop. Even if the credit union lists on the written list
more than one service provider for a particular settlement service, the credit union must
itemize on the Loan Estimate only one estimated cost of that service for one of the
service providers listed. This estimated cost would be the amount used for the purpose
of the good faith estimate analysis. However, the rule does not prohibit a credit union
from identifying the estimated fee of each service provider listed for a settlement service
on the written list.
Revised Loan Estimates: The credit union is only required to provide the written list
once, in accordance with the timing requirement that applies to the original Loan
Estimate.
Optional Services
The CFPB does not believe that optional services chosen by a consumer should be
exempt from the good faith requirement. Differences between the amounts of estimated
charges for services not required by a credit union and the amounts of such charges do
not constitute a lack of good faith, as long as the original estimated charge, or lack of an
estimated charge for a particular service, was based on the best information
reasonably available to the credit union at the time the Loan Estimate was provided.
Example: The member informs the credit union that the member will obtain a type of
inspection not required by the credit union. The credit union must include the charge for
that item in the Loan Estimate based on the best information reasonably available to
the credit union at the time that the estimate was provided.
Example: The subject property is located in a jurisdiction where borrowers are
customarily represented at closing by their own attorney, even though it is not a
requirement. If the credit union fails to include a fee for the member’s attorney, or
includes an unreasonably low estimate for such fee, on the original Loan Estimate, then
the credit union’s failure to disclose, or under-estimate, violates the rule.
Example: If the credit union requires homeowner’s insurance but fails to include a
homeowner’s insurance premium on the Loan Estimate, then the credit union’s failure to
disclose the charge is a violation of the rule.
Example: The credit union does not require flood insurance and the subject property is
located in an area where floods frequently occur, but not specifically located in a zone
where flood insurance is required. The credit union’s failure to include flood insurance
on the original Loan Estimate does not constitute a lack of good faith.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Services not obtained
If the credit union discloses a cost estimate for a settlement service on the Loan
Estimate, but the settlement service was not obtained, the credit union cannot include
the fee estimate in the estimated aggregate amount for purposes of conducting the
good faith analysis.
Example: Assume the credit union included a $100 estimated fee for a pest inspection
on the Loan Estimate, the fee is included in the 10% tolerance category, but a pest
inspection was not obtained in connection with the transaction. In this case, the sum or
aggregate of all charges in the 10% tolerance category paid by or imposed on the
member is compared to the sum of all such charges disclosed on the Loan Estimate,
minus the $100 estimated pest inspection fee.
Lender Credits
To perform the good faith analysis with respect to lender credits, the total amount of
lender credits, whether specific or non-specific, actually provided to the member is
compared to the amount of lender credits as identified in the Loan Estimate.
Non-specific lender credits (generalized payments from the credit union to the member
that do not pay for a particular fee on the Loan Estimate) and specific lender credits
(specific payments, such as a credit, rebate, or reimbursement, from a credit union to
the member to pay for a specific fee) are negative charges to the member. The actual
total amount of lender credits, whether specific or non-specific, provided by the credit
union that is less than the estimated lender credit on the Loan Estimate is an increased
charge to the member for purposes of determining good faith.
Example: If the credit union discloses a $750 estimate for lender credits, but only $500
of lender credits is actually provided to the member, the credit union has not complied
with this rule. This is because the actual amount of lender credits provided to the
member is less than the estimated lender credits disclosed on the Loan Estimate, and is
therefore an increased charge to the member for purposes of determining good faith.
Example: The credit union discloses a $750 estimate for lender credits to cover the
cost of a $750 appraisal fee. The appraisal fee subsequently increases by $150, and
the credit union increases the amount of the lender credit by $150 to pay for the
increase. In this case, the lender credit is not being revised in a way that violates this
rule. Although the credit increased from the amount disclosed, the amount paid by the
member did not. However, if the credit union discloses a $750 estimate for lender
credits to cover the cost of a $750 appraisal fee, but subsequently reduces the credit by
$50 because the appraisal fee decreased by $50, then the rule has been violated. This
situation is a violation of the rule because, although the amount of the appraisal fee
decreased, the amount of the lender credit decreased, as well.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Streamlined Refinancing Programs are Not Exempt
Although requested by the financial industry, the CFPB declined to provide a specific
exemption that would allow the amount of lender credits to decrease so that the creditor
would be able to stay within guidelines under streamlined refinancing programs.
Similar to the existing rule, under the new rule loan originators may only:
apply the amount of the excess lender credits to additional closing costs
previously not anticipated to be included in the loan,
apply the excess to a principal reduction to the outstanding balance of the loan,
pay the member the excess in cash, or
reduce the interest rate and the credit accordingly.
Use Unrounded Numbers to Compare Actual and Estimated Costs
Although dollar amounts of certain charges disclosed on the Loan Estimate and Closing
Disclosure are required to be rounded to the nearest whole dollar, the credit union
should use unrounded numbers to compare the actual charge paid by or imposed on
the member for a settlement service with the estimated cost of the service. This applies
to charges that cannot increase and those fees whose aggregate may increase up to
10%.
Refunds Related to Loan Estimates If amounts paid by the member exceed the amounts specified in the Loan Estimate
beyond the tolerance limits, the credit union must refund the excess to the member no
later than 60 days after closing. The credit union must also deliver or place in the mail
corrected disclosures that reflect the refund within the 60-day period.
LOAN ESTIMATE CONTENT – Filling out the Form (12 CFR §1026.37)
Generally, the Loan Estimate contains the disclosures of categories of information that
will vary due to the type of loan, the payment schedule of the loan, the fees charged, the
terms of the transaction, and State law provisions.
The disclosures must be made using Form H-24, found in appendix H to the rule.
The form may be translated into languages other than English, and credit unions may
modify Form H-24 to the extent that such translation prevents the headings, labels,
designations, and required disclosure items from fitting in the space provided on form H-
24.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
You may add additional pages to the Loan Estimate for:
Applicant Information: An addendum page may be added to the Loan Estimate if
the space provided is insufficient to list all of the applicants.
Services You Can Shop For: An addendum to the Loan Estimate may be used
to disclose additional services for which the member is permitted to shop.
You may not add additional pages to the Loan Estimate for:
Property Information: An addendum to the Loan Estimate may not be added to
disclose a description of personal property.
State Law Disclosures: If State law requires additional disclosures, those
additional disclosures are made on a document whose pages are separate from,
and not presented as part of, the Loan Estimate.
Services You Cannot Shop For: An addendum to the Loan Estimate cannot be
used to disclose additional services the member is not permitted to shop for
beyond the 13 permitted on the form.
Other Costs: An addendum to the Loan Estimate cannot be used for additional
items on the Other Costs Table located on page 2 of the Loan Estimate.
Attaching a business card. The credit union may physically attach a business card over
the credit union’s name and address on the Loan Estimate.
Adding administrative information. The credit union may insert at the bottom of each
page under the required disclosures any administrative information, text, or codes that
assist in identification of the form or the information disclosed on the form - as long as
the space provided on Form H-24 for any of the information required by the rule is not
altered.
Rounding : Dollar amounts must be rounded to the nearest whole dollar where noted in
the regulation. If an amount is required to be rounded but is composed of other amounts
that are not required or permitted to be rounded, use the unrounded amounts in
calculating the total and then round the final sum. Conversely, if an amount is required
to be rounded and is composed of rounded amounts, use the rounded amounts in
calculating the total. Percentage amounts may not be rounded and should be shown up
to two or three decimals, as needed, except where noted in the regulation. If a
percentage amount is a whole number, show the whole number only with no decimals.
20 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
PAGE 1 OF THE LOAN ESTIMATE The first page of the Loan Estimate includes general information, a Loan Terms table with descriptions of applicable information about the loan, a Projected Payments table, a Costs at Closing table, and a link for members to obtain more information about loans secured by real property at a website maintained by the CFPB. See Figure 1.
The statement “Save this Loan Estimate to compare with your Closing Disclosure” appears on the top of the page.
General Information
Creditor’s information: The top of the page also includes the name and address of the credit union, a logo or slogan can be used along with the credit union’s name and address, so long as the logo or slogan does not exceed the space provided for that information. If there are multiple creditors, use only the name of the creditor completing the Loan Estimate. If a mortgage broker is completing the Loan Estimate, they should use the name of the creditor if known. If not yet known, the space should be left blank.
Date issued: The date the disclosures are mailed or delivered to the member.
Applicant information: Name and mailing address of the member(s) applying for the loan. Use each applicant’s name and mailing address if there are multiple applicants. An additional page may be added to the Loan Estimate if the space provided is insufficient to list all of the applicants.
Property information: You must list the address of the property (which must include the zip code) that will secure the mortgage transaction. If the address of the property is unavailable, use a description of the location of the property, for example a lot number. Always use a zip code. Personal property, such as furniture or appliances, that also secures the credit transaction may be, but is not required to be included as “property”. An additional page may not be appended to the Loan Estimate to disclose a description of personal property.
Sale Price: The contract sale price of the property for transactions that involve a seller. If there is no seller involved, the label “Prop. Value” should be used with the estimated value of the property.
Loan Term: Include the term to maturity of the credit transaction stated in years or months, or both, as applicable.
Purpose: State the member’s intended use of the loan, using one of the following terms: “Purchase”, “Refinance”, “Construction”, or “Home Equity Loan”.
Product: Provide a description of the loan. You are required to include two pieces of information in this disclosure. The first piece of information (1026.37(a)(10)(ii)) is any payment feature that may change the periodic payment, which includes:
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Negative Amortization: when the principal balance of the loan may increase due to the addition of accrued interest to the principal balance. The duration of this payment feature must also be included.
Interest Only: when one or more regular periodic payments may be applied only to interest accrued and not to the principal of the loan. The duration of this payment feature must also be included.
Step Payment: when the scheduled variations in regular periodic payment amounts occur that are not caused by changes to the interest rate during the loan term. The duration of this payment feature must also be included.
Balloon Payment: when the terms of the legal obligation include a payment that is more than two times that of a regular periodic payment. The duration of this payment feature must also be included.
Seasonal Payment: when the terms of the legal obligation expressly provide that regular periodic payments are not scheduled between specified unit-periods on a regular basis. For example, a “teacher” loan that does not require monthly payments during summer months has a Seasonal Payment.
Example: a payment feature where there is a five-year period during which the payments cover only interest, and are not applied to the principal balance, would be disclosed as a 5 Year Interest Only for the payment feature.
If the loan can be described with more than one of these descriptions, only the first applicable feature (in the order listed above) is disclosed. Example: a loan that would result in both Negative Amortization and a Balloon Payment would only disclose Negative Amortization as part of the product description on the Loan Estimate.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
FIGURE 1.
23 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
The second piece of information (1026.37(a)(10)(i)) included in the loan description (“Product”) is the type of interest rate applied to the principal balance:
Adjustable Rate: When the interest rate may increase after consummation, but the rates that will apply or the periods for which they will apply are not known at consummation. Each description must be preceded by the duration of any introductory rate or payment period, and the first adjustment period, as applicable. Example: A product with an introductory rate that is fixed for the first five years and adjusts every three years starting in year 6 is a 5/3 Adjustable Rate.
When there is no introductory period for an Adjustable Rate, disclose “0.” Example: A product with no introductory rate that adjusts every year after consummation is a 0/1 Adjustable Rate.
Step Rate: When the interest rate will change after consummation and the rates that will apply and the periods for which they apply are known at consummation. Each description must be preceded by the duration of any introductory rate or payment period, and the first adjustment period, as applicable. Example: A product with a step rate that lasts for ten years, adjusts every year for five years, and then adjusts every three years for the next 15 years is a 10/1 Step Rate. (Comment 37(a)(10)-1.ii)
When there is no introductory rate for a Step Rate, disclose “0” and then the applicable time period until the first adjustment. (Comment 37(a)(10)-1.ii)
Fixed Rate: When the interest rate is not an Adjustable Rate or Step Rate.
Loan type: Include the type of loan offered to the member using one of the following terms, as applicable: “Conventional”, “FHA”, “VA”, or “Other”, and provide a brief description of the loan type.
Loan ID #: The Loan ID # may be used by the credit union, member, and other parties to identify the transaction. The same Loan ID # may not be used for different, but related, loan transactions (such as different loans to the same borrower). When a revised Loan Estimate is issued, the Loan ID # must be sufficient for the purpose of identifying the transaction associated with the initial Loan Estimate.
Rate Lock: Include a statement of whether the interest rate disclosed is locked for a
specific period of time. When the interest rate is locked at the time of the Loan
Estimate’s delivery, the date and time (including the applicable time zone) when the lock
period ends must be disclosed. You must also include a statement that the interest
rate, any points, and any lender credits may change unless the interest rate has been
locked, and the date and time (including the applicable time zone) at which estimated
closing costs expire.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Loans Terms Table: The Loan Terms Table describes whether the loan amount,
interest rate and monthly principal and interest can increase after closing, as well as
whether the loan has a prepayment penalty and/or balloon payment.
Projected Payments Table: The Projected Payments Table shows the estimates of
the periodic payments that the member will make over the life of the loan. The initial
periodic payment (or range of payments, if required) will be listed in the first column.
Depending on the features of the loan, subsequent periodic payments also may be
required to be disclosed.
The maximum number of columns the Projected Payments Table may contain is four. If
a loan has more than four triggering events, show a range of payments in the fourth
column that reflects all remaining periodic payments not shown in the first three
columns. Balloon Payment Exception: A balloon payment scheduled as a final
payment always requires its own column. If disclosing the final balloon payment means
that other triggering events will not fit within the four-column maximum, show the other
triggering events as a range of payments in the third column. A balloon payment that is
not a final payment is a triggering event that does not necessarily require its own
column.
Mortgage Insurance: The automatic termination of mortgage insurance generally
requires the corresponding periodic payment to be shown in its own column, unless
doing so would exceed the four-column maximum. Where the automatic termination of
mortgage insurance need not be shown in its own column, the column showing the next
periodic payment or range of payments should show the periodic payment amount
without mortgage insurance.
The lender must automatically terminate mortgage insurance or any functional
equivalent. Even if the borrower may cancel the insurance earlier, use the date on
which the lender must automatically terminate mortgage insurance coverage under
applicable law. Only termination of mortgage insurance is a triggering event, while a
decline in mortgage insurance premiums is not.
Estimated Escrow: Disclose the amount the member will pay into an escrow account
each month under the terms of the legal obligation. Use a rounded number. If an escrow
account will not be established, disclose “0.” Disclose “—” if there will be an escrow
account, but the escrow account will be closed during the time-frame attributable to the
applicable periodic payment.
Estimated Taxes, Insurance & Assessments: Disclose the total monthly amount due for
property taxes, homeowner’s insurance, charges imposed by a cooperative,
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
condominium or homeowners association, ground rent, leasehold payments, and
certain insurance premiums, such as credit life, accident, health, or loss-of-income
insurance, insurance against loss of or damage to property, or against liability arising
out of the ownership or use of property, and debt cancellation or debt suspension
coverage, or charges if required by the lender. Disclose it as a rounded number.
PAGE 2 OF THE LOAN ESTIMATE
Page 2 of the Loan Estimate (Figure 2) includes a good-faith itemization of the “Loan
Costs” (costs paid by the member to the creditor and to third-party providers of services
the creditor requires to be obtained during the origination of the loan), and “Other Costs”
(such as taxes, governmental recording fees), a “Calculating Cash to Close” Table to
show the member how the amount of cash needed at closing is calculated, and for
certain transactions, an Adjustable Payment (AP) Table, or Adjustable Interest Rate
(AIR) Table with relevant information addressing how the monthly payments or the
interest rate will change. (Figure 3)
When are fees NOT considered “paid to” a particular party?
Pass-through fees: A fee is not considered “paid to” a person if the person does
not retain the fee. For example, if a member pays the credit union transfer taxes
and recording fees at the real estate closing and the credit union subsequently
uses those funds to pay the county that imposed these charges, then the transfer
taxes and recording fees are not “paid to” the credit union. Similarly, if a member
pays the credit union an appraisal fee in advance of the real estate closing and
the credit union subsequently uses those funds to pay another party for an
appraisal, then the appraisal fee is not “paid to” the credit union.
Reimbursements: A fee is also not considered “paid to” a person if the person
retains the fee as reimbursement for an amount it has already paid to another
party. For example, if a credit union pays for an appraisal in advance of the real
estate closing and the member pays the credit union an appraisal fee at the real
estate closing, then the fee is not “paid to” the credit union, even though the
credit union retains the fee, because the payment is a reimbursement for an
amount already paid.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Figure 2.
27 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Figure 3.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Origination Charges: These are items the member will pay to each creditor and loan
originator for originating and extending credit.
First, include the amount paid, if any, by the member to the creditor to reduce the
interest rate (sometimes referred to as “points”) as both a percentage of the loan
amount and a dollar amount. If no points are charged, then leave blank both the
percentage of points and the dollar amount.
Any other items that the member will pay to the creditor and loan originator may also be
disclosed, up to 13 individual items. If there are more than 13 Origination Charges,
disclose the total amount of the items that exceed 12 as “Additional Charges.” Describe
the items, other than for points paid, using terminology that clearly and conspicuously
describes the service that is disclosed.
Only items paid directly by the member to compensate a loan originator are considered
Origination Charges. Do not disclose compensation to a loan originator paid indirectly
by a creditor through the interest rate on the Loan Estimate.
Services You Cannot Shop For: When listing these items, you must use terminology
that describes each item, and disclose them in alphabetical order. For example, you
might include Appraisal fee, Credit Report fee and Flood Determination fee – in that
order. Disclose no more than 13 “Services You Cannot Shop For”. If there are more
than 13 such services, disclose the total amount of the items that exceed 12 with the
label “Additional Charges”. An addendum to the Loan Estimate may not be used to
disclose the additional items.
Services You Can Shop For: When listing these items, you must use terminology that
describes each item, and disclose them in alphabetical order. For example, you might
include a Pest Inspection fee, Title- Settlement Agent Fee, or Title: Title search. (Items
that are a component of title insurance or are for conducting the closing must include
the introductory description of “Title”. (§§ 1026.37(f)(2)(i) & 1026.37(g)(4)(i))
Disclose no more than 14 “Services You Can Shop For”. If there are more than 14 such
services, disclose the total amount of the items that exceed 13 with the label “Additional
Charges”. An addendum to the Loan Estimate may be used to disclose the additional
items.
Other Costs Table: Items on the “Other Costs” Table must be disclosed in the order listed in the regulation, with any additional items listed in alphabetical order in subsequent lines of the applicable subheading. An addendum to the Loan Estimate cannot be used for additional items on the Other Costs Table. If all of the charges cannot be itemized in the number of lines provided in a subheading of the Other Costs Table, the total of those items that exceed the number permitted are disclosed with the label “Additional Charges” on the last line of that subheading.
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March, 2015
Taxes and Other Government Fees: Under this subheading you will disclose
“Recording Fees and Other Taxes” first and “Transfer Taxes” second.
Transfer taxes are state and local government fees on mortgages and home sales that
are based on the loan amount or sale price of the property. The name that is used
under state or local law to refer to these amounts is not determinative of whether or not
they are disclosed as Transfer Taxes on the Loan Estimate.
Disclose only Transfer Taxes paid by the member on the Loan Estimate. Whether the
member pays the transfer tax is based on applicable State or local law. Example: If a
State law indicates a lien can attach to the member’s acquired property if the charge is
not paid, the amount is included as part of the Transfer Taxes. Example: If State or
local law is unclear or does not specifically attribute the amount to the seller or
purchaser/member, disclose the amount apportioned to the member using common
practice in the locality of the property.
Transfer taxes to be paid by the seller are not disclosed on the Loan Estimate as
Transfer Taxes.
Prepaids: These are items to be paid by the member in advance of the first scheduled
payment of the loan. Prepaids may include: Homeowner’s Insurance Premium,
Mortgage Insurance Premium, Prepaid Interest, Property Taxes, and a maximum of
three additional items. Each item must include the applicable time period covered by the
amount to be paid by the member and the total amount to be paid.
Initial Escrow Payment at Closing : These items may include homeowner’s insurance,
mortgage insurance and property taxes.
Other : These items include charges in connection with the transaction that the member
is likely to pay or has contracted with a person other than the credit union to pay at
closing and of which the credit union is aware of at the time of issuing the Loan
Estimate. Example: Commissions of real estate brokers or agents, additional payments
to the seller to purchase personal property pursuant to the contract of sale,
Homeowner’s Association and condominium charges associated with the transfer of
ownership, and fees for inspections not required by the credit union but paid by the
member pursuant to the contract of sale.
Items that disclose any premiums paid for separate insurance, warranty, guarantee, or
event-coverage products not required by the credit union must include the parenthetical
description (optional).
Lender Credits: This is the amount of any payments from the credit union to the
member that do not pay for a particular fee on the Loan Estimate and is disclosed as a
negative number.
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March, 2015
For loans where all or a portion of closing costs are offset by a credit or rebate provided
by the credit union (sometimes referred to as a “no cost” loan), disclose such credit or
rebate as Lender Credits. The credit union should ensure that Lender Credits is
sufficient to cover the estimated items the credit union represented to the member as
not being paid by the member at consummation, regardless of whether such
representations pertained to specific items.
Calculating Cash to Close
This is the total amount of cash or other funds that must be provided by the member at
consummation, with an itemization of that amount into the following components:
Total closing costs,
Closing costs to be financed,
Downpayment and other funds from borrower,
Deposit,
Funds for borrower (determined by subtracting the principal amount of the credit
extended from the total amount of all existing debt being satisfied),
Seller credits,
Adjustments and other credits: This is the total amount of all items in the “Loan
Costs” and “Other Costs” tables that are paid by persons other than the loan
originator, creditor, member, or seller, together with any other amounts that are
required to be paid by the member at closing pursuant to the contract of sale (if
any), disclosed as a negative number. Example: gifts from family members, and
credits from a developer or home builder to be applied to items in the Loan Costs
and Other Costs Table.
Estimated Cash to Close.
Estimated Payoffs and Payments: This is the total amount to be paid to third
parties not otherwise disclosed as items in the Loan Costs or Other Costs tables,
disclosed as a negative number. Examples: payoffs of existing liens secured by
the property such as mortgages, deeds of trust, judgments that have attached to
the property, Mechanics’ and materialmans’ liens, Local, State, and Federal tax
liens, payments of unsecured outstanding debts of the member, and payments to
other third parties for outstanding debts of the member as required to be paid as
a condition for the extension of credit.
Transaction without a seller: An optional “Alternative Calculating Cash to Close” Table
can be disclosed for transactions without a seller. A credit union that uses the optional
Alternative Calculating Cash to Close Table must also use the alternative disclosure
provisions of the Alternative Costs at Closing Table on Page 1 of the Loan Estimate.
Adjustable Payment (AP) Table: This Table is disclosed when (1) the periodic principal and interest payment may change after consummation, but not because of a
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March, 2015
change to the interest rate, or (2) the loan is considered to be a Seasonal Payment product. If the loan does not have one of these two features, the AP Table is not disclosed.
Rounding
The amounts disclosed in the Loan Costs and Other Costs Tables are rounded to the
nearest whole dollar. The daily amount of Prepaid Interest and the monthly amounts
for the items in the Initial Escrow Payment at Closing are not rounded, but the
calculated amounts for those items are rounded to the nearest whole dollar. (See
§1026.37(o)(4) for more specific information addressing which disclosures must be
rounded and which disclosures must not be rounded.
Page 3 of the Loan Estimate
The third page of the Loan Estimate (Figure 4) discloses “Additional Information About
This Loan”, such as additional contact information, a “Comparisons” Table, an “Other
Considerations” Table, and an optional “Confirm Receipt” for the member to
acknowledge receipt of the Loan Estimate.
Contact information: Additional contact information is included on the third page of the
Loan Estimate, such as the Nationwide Mortgage Licensing System and Registry
(NMLS) license identification number for the creditor and mortgage broker, if any, and
the individual loan officer of both.
Comparisons Table: The Comparisons Table includes the statement “Use these
measures to compare this loan with other loans”: “In 5 Years”, “Annual Percentage Rate
(APR)”, and “Total Interest Percentage (TIP)”.
Other Considerations Table: The additional “Considerations” that must, if applicable, be
disclosed on the Loan Estimate include:
Appraisal information (for high-priced mortgage loans and loans covered by the
Equal Credit Opportunity Act);
Assumption (whether the subsequent purchaser of the property may assume the
loan on its original terms);
Homeowner’s insurance (at the option of the creditor, a statement that such
insurance is required and that the member may choose the provider);
Late Payment (details of any amount that may be imposed for a late payment);
Refinance ( the nature of a refinance of the loan in the future);
Servicing (whether the credit union intends to service the loan or transfer to
another servicer);
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March, 2015
Liability After Foreclosure (for refinance transactions, a statement relating to
State law protections against liability after foreclosure).
Confirm Receipt: The member is not required to sign the Loan Estimate. The credit
union may add a signature statement and have the member sign Page 3 of the Loan
Estimate to confirm receipt of the disclosure. If used, the signature statement must
contain the exact language from the model form:
“By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form.”
(§1026.37(n)(2))
If the Confirm Receipt section is not used by a credit union, a statement about Loan Acceptance must be included at the end of the Other Consideration Table that states,
“You do not have to accept this loan because you have received this form or signed a loan application.”
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Figure 4.
34 CUNA’s CompNotes – THE LOAN ESTIMATE & Information Booklet
Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
REVISED ESTIMATES (12 CFR §1026.19(e)(3)(iv))
There are certain situations that could legitimately cause increases over the amounts
originally estimated. In these situations, a credit union may use a Revised Estimate of a
charge instead of the amount originally disclosed in the Loan Estimate to determine
good faith – as long as the revision is due to one of the valid reasons listed in the
regulation. To satisfy the good faith requirement, Revised Estimates may increase only
to the extent that the reason for revision actually caused the increase. For example, if a
member requests a rate lock extension, then the revised disclosures may reflect a new
rate lock extension fee, but the fee may be no more than the rate lock extension fee
charged by the creditor in its usual course of business, and other charges unrelated to
the rate lock extension may not change.
Valid Reasons for a Revised Estimate
(1) Extraordinary / Unexpected Event: This includes an extraordinary event
beyond the control of any interested party or other unexpected event specific to
the member or transaction, such as a war or a natural disaster. Example: If the
credit union provided an estimate of title insurance on the Loan Estimate, but the
title insurer goes out of business during underwriting, then this unexpected event
specific to the transaction is a changed circumstance. “Unexpected event” is
meant to encompass scenarios that involve changes that take place after the
original Loan Estimate has been provided to the member;
“Interested party” should be interpreted broadly. Example: The local
government where the property is located can be considered an interested party
because it would be the recipient of the transfer taxes that would be collected
upon consummation of the transaction.
(2) Inaccurate Information: This includes information specific to the member or
transaction that the credit union relied upon when providing the disclosures and
that was inaccurate or subsequently changed after the Loan Estimate was
provided. Example: The credit union relied on the member’s income when
providing the Loan Estimate. The member represented to the credit union that
the member had an annual income of $90,000, but underwriting determines that
the member’s annual income is only $80,000. The credit union relying on this
inaccurate information is a changed circumstance.
Example: Two co-applicants applied for a mortgage loan. One applicant’s
income was $30,000, while the other applicant’s income was $50,000. The credit
union relied on the combined income of $80,000 when providing the Loan
Estimate. The applicant earning $30,000 becomes unemployed during
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March, 2015
underwriting. The reduced combined income of $50,000 is a changed
circumstance.
Example: A credit union provides a $200 estimated appraisal fee on the Loan
Estimate, which will be paid to an affiliated appraiser and therefore may not
increase for purposes of determining good faith (zero tolerance category). The
estimate was based on information provided by the member at application – that
the property was a single-family dwelling. Upon arrival at the property, the
appraiser discovers that the property is actually a single-family dwelling located
on a farm, which requires a $400 appraisal fee. A changed circumstance has
occurred (ie: information provided by the member is found to be inaccurate after
the Loan Estimate was provided), which caused an increase in the cost of the
appraisal. Therefore, if the credit union issues a revised Loan Estimate with the
corrected appraisal fee, the actual appraisal fee of $400 paid at the real estate
closing by the member will be compared to the revised appraisal fee of $400 to
determine if the actual fee has increased above the estimated fee.
However, if the credit union failed to provide a revised Loan Estimate, then the
actual appraisal fee of $400 must be compared to the originally disclosed
estimated appraisal fee of $200.
(3) New Information: This includes new information specific to the member or
transaction that was not relied on when providing the original disclosures.
Example: If the credit union relied upon the value of the property in providing the
Loan Estimate, but during underwriting a neighbor of the seller, upon learning of
the impending sale of the property, files a claim contesting the boundary of the
property to be sold, then this new information specific to the transaction is a
changed circumstance.
Example: A credit union provides a $400 estimate of title fees, which are
included in the category of fees which the aggregate may not increase by more
than 10% for the purposes of determining a good faith estimate. An unreleased
lien is discovered and the title company must perform additional work to release
the lien. However, the additional costs amount to only a five percent increase
over the sum of all fees included in the category of fees which may not increase
by more than 10%. A changed circumstance has occurred (ie: new information),
but the sum of all costs subject to 10 percent tolerance category has not
increased by more than 10%.
A valid reason for issuing a revised Loan Estimate exists when changed
circumstances cause estimated charges to increase or cause the sum of certain
charges to increase by more than 10%. The rule does not prohibit the credit
union from issuing a revised Loan Estimate, but if the credit union issues revised
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
disclosures in this scenario, when the disclosures are delivered, the actual title
fees of $500 may not be compared to the revised title fees of $500; they must be
compared to the originally estimated title fees of $400 because the changed
circumstance did not cause the sum of all costs subject to the 10% tolerance
category to increase by more than 10%
(4) Member’s Eligibility Changes: A revised Loan Estimate may be provided when
a changed circumstance affecting the member’s eligibility for the specific loan
terms, such as the member’s creditworthiness or the value of the collateral,
causes the estimated charges to increase.
Example: Prior to providing the Loan Estimate, the credit union believed that the
member was eligible for a loan program that did not require an appraisal. The
credit union then provides the Loan Estimate, which does not include an
estimated charge for an appraisal. During the underwriting it is discovered that
the member was delinquent on mortgage payments in the past, making the
member ineligible for the loan program originally identified on the Loan Estimate.
The member is eligible for a different program that requires an appraisal. If the
credit union provides a revised Loan Estimate reflecting the new program and
including the appraisal fee, then the actual appraisal fee will be compared to the
appraisal fee included in the revised disclosures to determine if the actual fee
has increased above the estimated fee. However, if the revised disclosures also
include increased estimates for title fees, the actual title fees must be compared
to the original estimates assuming that the increased title fees do not stem from
the change warranting a revised Loan Estimate.
(5) Revisions Requested by the Member: A revised Loan Estimate may be
provided if the member requests revisions to the credit terms or the settlement
that cause a charge on the Loan Estimate to increase. Example: The member
decides to grant a power of attorney authorizing a family member to consummate
the transaction on the member’s behalf after the Loan Estimate is provided. If the
credit union provides a revised Loan Estimate reflecting the fee to record the
power of attorney, then the actual charges will be compared to the revised
charges to determine if the fees have increased.
(6) Interest Rate Dependent Charges: A revised Loan Estimate may be provided if
the interest rate on the original Loan Estimate had not been locked, or a locked
interest rate has expired. When the interest rate is later locked, the charge or
credit for the interest rate chosen, the adjusted origination charges, per diem
interest, and loan terms related to the interest rate may change.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Under these circumstances, a revised Loan Estimate must be provided, no later
than three business days after the date the interest rate is locked (February 19,
2015 change from the original final rule), showing the new interest rate and
revisions to any other interest rate dependent charges and terms, such as the
points paid to the credit union to reduce the interest rate and lender credits.
Example: A credit union sets the interest rate by executing a rate lock
agreement with the member. If such an agreement exists when the original Loan
Estimate is provided, then the actual points and lender credits are compared to
the estimated points and lender credits included in the original Loan Estimate for
the purpose of determining good faith.
Example: If the member enters into a rate lock agreement with the creditor after
the Loan Estimate is provided, then the rule requires the credit union to provide,
no later than three business days after the date the interest rate is locked, a
revised version of the Loan Estimate reflecting the revised interest rate, the
points, lender credits, and any other interest rate charges and terms. If the
revised version of the Loan Estimate reflects any revised points and lender
credits, the actual points and lender credits are compared to the revised points
and lender credits for the purpose of determining good faith.
(7) Loan Estimate Expires: A revised Loan Estimate may be provided when the
member does not express an intent to proceed with the transaction until more
than ten business days after the original Loan Estimate has been provided.
Once the Loan Estimate has expired, credit unions are permitted to provide
revised disclosures that may reflect new charges. For purposes of determining
good faith, a credit union may use the charges on this revised estimate instead of
the original Loan Estimate. The rule requires no justification for the change to
the original estimate other than the lapse of ten business days.
Example: A credit union includes a $500 underwriting fee on the Loan Estimate
and the credit union delivers those disclosures on Monday. If the member
indicates intent to proceed 11 business days later, the credit union may provide a
new Loan Estimate with a $700 underwriting fee. In this example, the rule
requires the credit union to document that a new disclosure was provided, but
does not require the credit union to document a reason for the increase in the
underwriting fee.
(8) Construction Loan with Delayed Settlement Date: In transactions involving
new construction, where the credit union reasonably expects that settlement will
occur more than 60 days after the Loan Estimate is provided, the credit union
may provide a revised Loan Estimate to the member if the original Loan Estimate
states clearly and conspicuously that at any time prior to 60 days before
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
consummation, the credit union may issue revised disclosures. If no such
statement is provided, the credit union may not issue revised disclosures, except
as permitted by the Closing Disclosure provisions to provide corrected
disclosures reflecting any changed terms at or before consummation. (12 CFR
§1026.19(f)(2))
“Construction loan” includes the purchase of a home either to be constructed or
under construction. However, if a use and occupancy permit has been issued for
the home prior to the issuance of the Loan Estimate, then the home is not
considered to be under construction and the transaction would not be a
construction loan to build a home for purposes of this exception.
NOT Changed Circumstances
Missing Application Information: For purposes of determining whether an estimate is
provided in good faith, a credit union is presumed to have collected these six pieces of
information that constitute a mortgage application (name, income, SSN, property
address, value of property, and the loan amount sought) before providing the Loan
Estimate. If a credit union provides the Loan Estimate prior to receiving, for example,
the property address from the member, the credit union may not subsequently claim
that the receipt of the property address was a changed circumstance.
Errors: As a general matter, errors are not a basis for revising Loan Estimates, and
mortgage broker errors should not be treated differently than other errors.
Exceeding Points and Fees Threshold: The CFPB recognizes that creditors are
incented not to make loans that exceed the points and fees thresholds for qualified
mortgages, HOEPA loans, or qualified residential mortgages. If a changed
circumstance causes the loan to exceed the application threshold, then the credit union
has a legitimate basis for revision. However, the fact that the points and fees exceed the
threshold, by itself, is not a changed circumstance. The CFPB notes that a loan may
exceed the threshold because of mistakes that the creditor made in the points and fees
calculation. And, as stated above, creditor errors are not legitimate reasons for revising
Loan Estimates. Furthermore, a Loan Estimate is not a loan commitment. A credit union
may deny a loan once the applicable points and fees threshold has been exceeded, as
long as Regulation B requirements are met.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
Delivery of Revised Disclosures
If a revised Loan Estimate is provided by the credit union, it must be delivered to the
member within three business days of receiving information sufficient to establish that
a valid reason for revision exists. The three-business-day begins on the date that the
credit union receives information that sufficiently establishes the reason for the revision.
Additionally, the member must receive a revised version of the Loan Estimate not later
than four business days prior to consummation. If the revised Loan Estimate is not
provided to the member in person, the member is considered to have received the
revised disclosures three business days after the credit union delivers it or puts it in the
mail. It must be delivered in a manner that ensures that the disclosure is not received
after or on the same business day as the member receives the Closing Disclosure.
If there are less than four business days between the time the revised version of the
Loan Estimate must be provided and consummation, credit unions comply with these
requirements if the revised disclosures are reflected in the Closing Disclosure.
Example: If the credit union is scheduled to meet the member and provide the Closing
Disclosure on Wednesday, and the APR becomes inaccurate on Tuesday, the credit
union complies with this rule by providing the Closing Disclosure reflecting the revised
APR on Wednesday. However, the credit union does not comply with the rule if it
provides both a revised version of the Loan Estimate reflecting the revised APR on
Wednesday, and also provides the Closing Disclosure on Wednesday.
Example: If the credit union is scheduled to email the Closing Disclosure to the member
on Wednesday, and the member requests a change to the loan that would result in a
revised Loan Estimate on Tuesday, the credit union complies with this rule by providing
the Closing Disclosure reflecting the member-requested changes on Wednesday.
However, the credit union does not comply if it provides both the revised version of the
Loan Estimate reflecting member requested changes, and also the Closing Disclosure
on Wednesday.
10% Tolerance Category
The three-business-day period is counted from the date on which the creditor has
received sufficient information to establish that the sum of all fees included in the
category of fees subject to the 10 percent tolerance rule has exceeded the original
estimate sum of such fees by more than ten percent due to changed circumstances.
Example: The credit union receives information on May 1, that a fee included in the ten
percent tolerance category will increase by an amount totaling six percent of the
originated estimated sum of charges in the ten percent tolerance category. Then on
May 8th, the credit union receives information that a changed circumstance will cause a
different fee included in the ten percent tolerance category to increase by an amount
totaling two percent of the originated estimated sum of charges in the ten percent
tolerance category. Next, on June 15th the credit union receives information that a
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
changed circumstance will cause a different fee included in the ten percent tolerance
category to increase by an amount totaling four percent of the original estimated sum
of charges in the ten percent tolerance category. The credit union would have to provide
a revised Loan Estimate reflecting the 12 percent increase by June 18th, assuming that
June 16th, 17th and 18th are business days.
Example: Assume a credit union requires a pest inspection. The unaffiliated pest
inspection company informs the credit union on Monday that the subject property
contains evidence of termite damage, requiring a further inspection, the cost of which
will cause an increase in estimated settlement charges by more than an aggregated
10%. The creditor must provide revised disclosures by Thursday.
Example: Assume a credit union receives information on Monday that, because of a
changed circumstance the title fees will increase by an amount totaling six percent of
the originally estimated settlement charges. The credit union had received information
three weeks before that, because of a changed circumstance, the pest inspection fees
increased by an amount totaling 5 percent of the originally estimated settlement
charges. Thus, on Monday, the creditor has received sufficient information to establish
a valid reasons for revision and must provide revised disclosures reflecting the 11
percent increase by Thursday.
Example: Assume a credit union requires an appraisal. The credit union receives the
appraisal report, which indicates that the value of the home is significantly lower than
expected. However, the credit union has reason to doubt the validity of the appraisal
report. A reason for revision has not been established because the credit union
reasonably believes that the appraisal report is incorrect. The credit union then
chooses to send a different appraiser for a second opinion, but the second appraiser
returns a similar report. At this point, the credit union has received information sufficient
to establish that a reason for revision has, in fact, occurred, and must provide corrected
disclosures within three business days of receiving the second appraisal report. In
order to comply with Regulation Z’s recordkeeping requirements, the credit union must
maintain records documenting the credit union’s doubts regarding the validity of the
appraisal to demonstrate that the reason for revision did not occur upon receipt of the
first appraisal report.
Revisions Due to Good Faith Estimate Refunds:
If the credit union is required to refund settlement costs to the consumer due to a good
faith estimate discrepancy, the credit union must deliver or place in the mail corrected
disclosures that reflect the refund within the 60-day period.
Record Retention (12 CFR §1026.19(3)(iii))
To comply with Regulation Z record retention requirements (12 CFR §1026.25), credit
unions must retain records demonstrating compliance with the Loan Estimate
requirements. Example: If revised disclosures are provided because of a changed
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
circumstance affecting settlement costs, the credit union must be able to show
compliance by documenting the original estimate of the cost at issue, explaining the
reason for revision and how it affected settlement costs, showing that the corrected
disclosures increased the estimate only to the extent that the reasons for revision
actually increased the cost and showing that the timing requirements of the rule were
satisfied.
However, the documentation requirement does not require separate corrected
disclosures for each change. A credit union may provide corrected disclosures
reflecting multiple changed circumstances, provided that the credit union’s
documentation demonstrates that each correction complies with the rule.
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
THE HOME BUYING INFORMATION BOOKLET (12 CFR §1026.19(g)) (formerly “Special Information Booklet”) The CFPB has updated the “Special information Booklet”, which has been required
since 1974 by RESPA to be provided to consumers shopping for a home loan. The
updated publication is titled: “Your Home Loan Toolkit: A Step-by-Step Guide” (Booklet),
and is available for download on the Bureau’s website:
http://www.consumerfinance.gov/learnmore/#respa
The CFPB is required to prepare at least once every five years, “a booklet to help
consumers applying for federally related mortgage loans to understand the nature and
costs of real estate settlement services.” The updated Booklet includes new content,
such as:
information on homeownership counseling services,
an explanation of a consumer’s responsibilities, liabilities and obligations in a
mortgage transaction,
information on flood insurance,
information on the new Loan Estimate and Closing Disclosure,
a list of questions a consumer obtaining a federally related mortgage loan should
ask regarding the loan, for example:
o will the member have the ability to repay the loan?
o Has the member sufficiently shopped for the loan?
o Does the loan include prepayment penalties?
o Does the loan include balloon payments?
o Will the loan benefit me, the borrower?
Additional Bureau contact information, online tools and information on how to
submit complaints, and
A link to a HUD Web page on loan fraud.
Exceptions: The credit union or mortgage broker is not required to provide the Booklet
for credit transactions secured by real property, for which the purpose of the loan is not
to purchase a one-to-four family residential property.
Examples include:
(A) Refinancing transactions;
(B) Reverse mortgages; and
(C) Closed-end loans secured by a subordinate lien. However, the Booklet would
be required to be provided when the credit union is extending a closed-end first-
lien consumer credit transaction secured by real property for the purpose of
purchasing a one-to-four family residential property, even if the credit union also
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Colleen Kelly, Senior Federal Compliance Counsel
March, 2015
is extending a closed-end subordinate-lien loan contemporaneously. The credit
union would not be required to provide a second Booklet for the subordinate-lien
loan.
HELOC: In the case of a home equity line of credit, a credit union or mortgage broker
that provides the member with a copy of the brochure entitled “When Your Home is On
the Line: What You Should Know About Home Equity Lines of Credit,” or any successor
brochure issued by the CFPB, is deemed to be in compliance with this requirement.
Delivery The credit union must deliver or place in the mail the Booklet no later than three
business days after the member’s application is received. If the credit union denies
the member’s application before the end of the three-business-day period, or if the
member withdraws the application, the credit union does not need to provide the
Booklet. However, the CFPB encourages credit unions to provide the Booklet to
members at any other time, preferably as early in the home or mortgage shopping
process as possible.
Mortgage Broker: If a member uses a mortgage broker, the mortgage broker must
provide the Booklet and the credit union does not need to provide it.
Joint Applicants: When two or more persons apply together for a loan, the credit union
is in compliance with the rule if the credit union provides a copy of the Booklet to one of
the persons applying.
Future Developments
The Bureau expects future revised or alternative versions of the booklet, which may
possibly expand the scope beyond first-lien, purchase-money consumer credit
transactions secured by real property, as well as address topics other than settlement
costs. Additionally, the CFPB may determine that alternative versions of the booklet for
particular product types may aid consumer understanding by providing information most
relevant to their situation.
The Bureau may also choose to permit the forms or booklets of other Federal Agencies
to be used by creditors.
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