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2021 Lending Compliance School
Building for the Future
April 26 – 29, 2021Virtual Seminar
Day 2
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What You Will Learn
Day 1
• Regulation B (ECOA)• Coverage
• Key definitions
• Prohibition on discrimination
• Joint intent
• Adverse action
• ECOA & FCRA
• Government monitoring information
• Appraisals
• Fair Credit Reporting Act (FCRA)
• Fair Housing Act (FHAct)
Day 2 Day 3
• Regulation Z - TRID• Consumer Mortgage
Loan Process
• Coverage
• Key definitions
• Overview of forms
• Disclosure timing
• Fee Placement
• Tolerances
• Changed circumstances
• Regulation Z (TILA)• Open-end credit
Day 4
• Flood insurance
• RESPA
• UDAP/UDAAP
• eSIGN
• Pre-recording
• To Be Available• Lending to servicemembers
• Private mortgage insurance (PMI)
• Regulation Z (TILA)• Coverage
• Exemptions
• Record Retention
• Key Definitions
• Closed-end• Closed-end Disclosures
• Right of rescission
• Prohibited acts & practices
• Valuation independence
• Ability to Repay (ATR)
• Qualified Mortgages (QM)
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➢ Coverage
➢ Exemptions
➢ Record Retention
➢ Key Definitions
➢ Closed-end
Regulation Z (12 CFR 1026)
2
Module 4
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Regulation Z: Truth-in-Lending Act (TILA)
• Purpose• To promote the informed use of consumer credit
• To ensure consumers are provided with greater and more timely information, including required disclosures, on the nature and costs in a consumer credit transaction
• To provide consumer protections in a credit transaction
• Consumer credit• Credit extended to a Consumer (a Natural Person) for a Consumer purpose
• Generally, a natural person
• Personal, family, household purposes
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Regulation Z – Quick Look
• Subpart A – General• Definitions
• Exemptions
• Finance charge
• Subpart B – Open-end Credit
• Subpart C – Closed-end Credit
• Subpart D – Miscellaneous• Record retention, effect on state law, limitations on rates
• Subpart E – Special Rules for Certain Home Mortgage Transactions
• Subpart F – Private Education Loans
• Subpart G – Credit Card and Open-end offered to College Students
• Appendices
• Official Commentary
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Coverage of Regulation Z
• Applies when all (4) of the following conditions are met:1. Credit is offered or extended to consumers;
2. Credit is extended regularly (more than 25 times in the preceding or current calendar year or more than 5 times for transactions secured by a dwelling);
3. The credit is subject to a finance charge or is payable by written agreement with more than (4) payments; AND
4. The credit is primarily for personal, family or household purposes
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Exempt Transactions
• Agricultural Credit, even if the transaction includes a dwelling
• Consumer Credit over $58,300 effective 1-1-2021• 2020 was also $58,300
• Unless, the credit is secured by any type of real property, secured by personal property used by the consumer as their principal dwelling (mobile home, houseboat, etc.)
• Note: A private education loan IS subject to Reg Z, special disclosures required with wait periods, UNLESS the private education loan is an open-end credit or the loan is secured by any real property or a dwelling
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Exempt Transactions
• Organizational Credit• Extension of credit to other than a natural person (corporation, partnerships,
associations, etc.)• 2 very limited and specific exceptions
• TRID – trusts for tax and/or estate planning purposes
• Business credit cards provided to > 10 employees – Billing error rights extended
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Regulation Z Record Retention
• Generally, evidence of compliance under Reg Z must be retained for 2 years after the date disclosures are required to be made or action is required to be taken
• However …• Compensation paid to a loan originator must be retained for 3 years;
• A loan originator organizations must maintain records to evidence all compensation it receives from a creditor or a consumer for 3 years
• Evidence of compliance with the ability to repay determination requirements must be maintained for 3 years after consummation of a covered transaction
• Evidence of compliance with the requirements regarding providing the Loan Estimate and Closing Disclosure must be retained for 3 years after the later of:• Date of consummation,
• Date disclosures are required to be made, or
• Date the action is required to be taken
• A creditor must retain each completed Closing Disclosure, and all documents related to such disclosures, for 5 years after consummation
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Key Definitions
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Application
• The submission of a consumer's financial information for the purposes of obtaining an extension of credit
• TRID applications• Consumer's name
• Income
• Social security number to obtain a credit report
• The property address
• An estimate of the value of the property
• Loan amount
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Consumer
• A cardholder or natural person to whom
consumer credit is offered or extended• For purposes of rescission, the term also includes a
natural person in whose principal dwelling a security
interest is or will be retained or acquired, if that
person's ownership interest in the dwelling is or will be
subject to the security interest
• For purposes of §§1026.20(c) through (e), 1026.36(c),
1026.39, and 1026.41, the term includes a confirmed
successor in interest
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Credit
• Open-end Credit• Consumer credit extended by a
creditor under a plan in which:• The creditor reasonably contemplates
repeated transactions;
• The creditor may impose a finance charge from time to time on an outstanding unpaid balance; and
• The amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the creditor) is generally made available to the extent that any outstanding balance is repaid
• Closed-end Credit• Consumer credit other than “open-
end credit”
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Business Day
• General Definition• Any day the financial
institution is open to the
public for carrying
substantially all of its business
• Not further defined
• Do not take loan applications
• Do not close loans
• Memo post deposits
• Specific Definition• All calendar days except Sundays
and certain legal public holidays
• New Year’s Day, January 1;
• Martin Luther King, Jr.’s Birthday,
the 3rd Monday in January;
• Washington’s Birthday, the 3rd
Monday in February;
• Memorial Day, the last Monday in
May;
• Independence Day, July 4;
• Labor Day, the 1st Monday in
September;
• Columbus Day, the 2nd Monday in
October;
• Veteran’s Day, November 11;
• Thanksgiving Day, the 4th Thursday
in November; and
• Christmas Day, December 25
•
•
•
•
•
•
•
•
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Finance Charge (12 CFR 1026.4)
• The cost of consumer credit as a dollar amount• Includes any charge payable directly
or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit
• Does not include any charge of a type payable in a comparable cash transaction
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Finance Charge
• Why so important• Disclosures
• Consequences• Is a material disclosure
• Civil liability
• Right of rescission
• Reimbursement for understatements
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Fin
ance
Ch
arge
Gu
ide This chart is
available in federal exam
manuals
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Fin
ance
Ch
arge
Gu
ide
IBA Handout
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Finance Charges: Always include
• Finance charges INCLUDE, unless otherwise excluded, the following:• Any charge payable directly or indirectly by the consumer and imposed directly or
indirectly by the creditor as an incident to or a condition of the extension of credit;
• Charges by third parties
• Closing agent charges
• Mortgage broker fees
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Finance Charges: What’s included
• Examples of finance charges included;• Interest;• Service, transaction, activity and carrying charges;• Points, loan fees, finder’s fees and assumption fees;• Premiums or charges for any guarantee or insurance which
protects the creditor against the consumer’s default or other credit loss;
• And UNLESS otherwise excludable; • Appraisal, investigation, credit report fees, premiums or other charges for
credit life, A&H or loss of income, loss of or damage to properties;• Inspection and handling fees for staged disbursement of construction loan
proceeds;• A tax imposed on a creditor, if the creditor imposes the charge on the
consumer
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Finance Charges: Always Excluded
• Finance charges EXCLUDE the following:• Any charge of a type payable in a comparable cash transaction i.e. Taxes, license fees
or registration fees, discounts available to a particular group of consumers that meet certain criteria such as having accounts at a particular FI
• Costs of doing business - taxes imposed on the creditor and creditor absorbs the cost
• Taxes are not finance charges- stamp tax, property tax, state or local tax
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Finance Charges Always Excluded
• Examples of charges excluded:• Application fees charged to ALL applicants for credit
• Charges for actual or unanticipated late payment
• Charges for paying items that overdraw an account
• Participation fees
• Seller’s points- even if the buyer pays
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Fin
ance
Ch
arge
s: E
xem
pt
ifce
rtai
n c
on
dit
ion
s ar
e m
etIBA Handout
Examples
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Finance Charges: Real Estate Related Fees
• 1026.4(c)(7) Real Estate Related Fees• In transactions secured by real property or in a residential mortgage (purchase money or
initial construction of the consumer’s principal dwelling, the following fees are excluded, if fees are bona fide and reasonable in amount• Fees for title exam, abstract, title insurance, surveys• Fees for preparing deeds, mortgages, settlement and similar documents• Notary and credit report fees• Appraisal and inspection fees (i.e., pest, flood hazard determination) service must be performed prior to
closing)• Amounts required to be paid into escrow or trustee accounts• Credit Insurance, Property Insurance, Debt Cancellation and Debt Suspension,if certain conditions are
met• Property insurance premiums - if certain conditions are met• Voluntary debt cancellation or debt suspension fees - if certain conditions are met• Security interest charges - taxes/fees to public officials for lien perfection, tax levied on documents
securing the indebtedness
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Prepaid Finance Charge
• A finance charge paid separately • In cash or by check before or at consummation or withheld from the proceeds of the
credit at any time
• Examples of typical prepaid finance charges include:• Buyer’s points
• Service fees
• Loan fees
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Finance Charge Tolerance
• For closed-end• Not secured by real property or a dwelling
• $5 more than or less than the actual finance charge if the amount financed is $1,000 or less
• $10 more than or less than the actual finance charge if the amount financed is more than $1,000
• Secured by real property or a dwelling – cannot be understated by more than $100 (an overstated FC is always accurate)
• Right of rescission – cannot be understated by more than $35 in a foreclosure action
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Finance Charges
• Whenever you add a new fee for credit• Always
• Always
• Always
• Verify whether or not it is a finance charge
Examiner Feedback
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Annual Percentage Rate
• Cost of credit, expressed in the terms of a yearly rate
• Calculation• Closed-end
• Appendix J – Reflects the actuarial method• Under the actuarial method, at the end of each
unit-period (or fractional unit-period) the unpaid balance of the amount financed is increased by the finance charge earned during that period and is decreased by the total payment (if any) made at the end of that period
• https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/J/
• FFIEC APR Tool: https://www.ffiec.gov/examtools/FFIEC-Calculators/APR/#/accountdata
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Annual Percentage Rate
• Why important• Disclosures
• Use for APR/APOR comparisons
• Consequences• Is a material disclosure
• Civil liability
• Right of rescission
• Reimbursement for understatements
• If calculating the APR incorrectly, then may affect APR/APOR comparisons
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Annual Percentage Rate Tolerance
• Closed-end• General
• Regular - .125 above or below
• Irregular - .25 above or below
• Includes transactions with multiple advances (e.g., construction), initial/premium ARM
• Transactions secured by real property or a dwelling, the rule provides additionaltolerances• If the APR is based on the finance charge, and the finance charge is accurate, then the APR will be
accurate
• If the disclosed finance charge is understated, and the disclosed APR is also understated but is closer to the actual APR than the rate that would be accurate had it resulted from the understated finance charge
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Closed-end Disclosures
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Closed-end loans (non-TRID)
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TIL Statement
• Truth-in-Lending Statement (the “TIL”)• For any closed-end consumer credit transactions not secured by real property or a cooperative unit, a
creditor must provide the consumer a Truth-in-Lending Statement
• Must be made before “consummation” of the transaction, i.e., before the time that a consumer becomes contractually obligated on a credit transaction
• Format• Required disclosures must be clear and conspicuous, in writing, and in a form that the consumer may keep
• Although no minimum type size is mandated (except for the interest rate and payment summary for mortgage transactions), the disclosures must be legible
• The disclosures shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related to the disclosures required on the TIL Statement
• The terms “finance charge” and “annual percentage rate,” when required to be disclosed together with a corresponding amount or percentage rate, must be more conspicuous than any other disclosure, except the creditor’s identity
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Au
to, B
oat
, Mo
bile
Ho
me
Referred to as the “Fed Box”
❑ Required Deposit: The annual percentage rate does not take into account your required deposit
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TIL
Dis
clo
sure
for
Clo
sed
-en
d
Loan
s (n
on
-TR
ID)
• Disclosures must be clear, conspicuous, and grouped together or segregated as required, in a form the consumer may keep
• Disclose:
• Identity of the creditor
• Amount financed
• Itemization of amount financed
• Finance charge, including description such as “the dollar amount the credit will cost you”
• Brief description of the APR
• Variable rate information
• The circumstances under which the rate may increase;
• Any limitations on the increase;
• The effect of an increase; and
• An example of the payment terms that would result from an increase
• Payment schedule: number, amounts, and timing of payments scheduled to repay the obligation
• Total Payments, including a brief description such as, “the amount you will have paid when you have made all scheduled payments”
• If transaction involves a single payment (bullet pay), need not disclose the total of payments
• Demand feature
• Description of total sales price in a credit sale
• Late payment amount or percentage
• Prepayment penalty
• Description for security interest
• Insurance and debt cancellation, if applicable, in order to carve out as a finance charge
• Certain security interest charges, if applicable, in order to carve out as a finance charge
• Contract reference
• Information about nonpayment, default, the right to accelerate the maturity of the obligation, and prepayment rebates and penalties
• Required deposit, including statement that the annual percentage rate does not take into account your required deposit
• For mobile home only loans, interest rate, payment summary
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Am
ou
nt F
inan
ced
• Itemization of amount financed must be provided, separate from the other disclosures• Must include:
• Amount of any proceeds distributed directly to the consumer in the form of cash, check or deposit
• Amount credited to any loan account the consumer has with the creditor
• Any amounts paid to other persons by the creditor on the consumer's behalf• Those persons are identified by name, except that public officials, government agencies, credit
agencies, appraisers and insurance companies can be described in general terms
• The prepaid finance charge
• At creditor's option, this may be further itemized and described
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Vari
able
Rat
e
Only required if rate can increase after closing/consummation
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Required Deposit (12CFR 1026.18(r))
• A required deposit, with certain exceptions, is one that institution requires consumer to maintain as a condition of the specific credit transaction
• Including a compensating balance or a deposit balance that secures the loan
• A required deposit is NOT a deposit that earns at least 5 percent (>5%) per year
• Effect of a required deposit• NOT Reflected in the APR• NOT a finance charge since it is eventually released to the consumer
• Must disclose • “The annual percentage rate does not take into account your required deposit”
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Personal Secured with Certificate of Deposit/Deposit Account
• Usually a separate agreement
• Not a hold notice
• Be clear as to lack of availability of funds• Entire amount for the term or rolling reduction as principal paid down
• Ensure no debit card or checks on the account
• Ensure no transfer from the account
• Ensure may not be used for OD fund transfers
• Make certain that your system can actually hold the funds, alerts to staff if attempt to withdraw
FYI
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➢ Consumer Mortgage Loan Process
➢ Coverage
➢ Key definitions
➢ Overview of forms• Purpose• Product• AP and AIR tables
➢ Disclosure timing
➢ Fee Placement
➢ Tolerances
➢ Changed circumstances
Regulation Z - TRID
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TRID Consumer Mortgage Loan Process
Prior to Application Initial Communication Application Intent to Proceed
Loan Processing / Underwriting
Changed CircumstanceConsummationServicing
IntroModule
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Key Coverage Summary
LOAN TYPE TRID DISCLOSURESGENERAL TILA DISCLOSURE
REQUIREMENTS
Closed-End Consumer Credit Secured by Real Property YES NO
• 25-Acre Loans YES NO
• Construction-Only Loans YES NO
• Vacant-Land Loans YES NO
• Family estate and tax planning entities (e.g.,Hamilton Family Trust) IF for consumerpurpose
Yes No
Reverse Mortgage NO Sec. 1026.33
HELOCs NO Sec. 1026.40
Chattel-Dwelling Loans(using some sort of movable personal property—possessions other thanland, buildings, or any permanent fixture—as security)
NO YES
Mobile Home Only (no dirt) NO Sec. 1026. 18
FYI
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TRID Coverage
No DIRT = No TRID
FYI
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Record Retention
• Loan Estimate• Must maintain records of compliance with LE for (3) years after the later
of:• Date of consummation,
• Date disclosures are required to be made, or
• Date the action is required to be taken
• Closing Disclosure• Must maintain records of compliance with CD for (5) years after
consummation • Includes all documents related to CD
• Transfer of Servicing• If sell, transfer or otherwise dispose of interest in a mortgage and no
longer services the loan,• Must provide a copy of Closing Disclosure to new servicer as part of loan file
• New servicer required to retain CD for remainder of 5-year period
• Originator must still retain for 5-year period after consummation
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TRID Key Definitions
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Key Definitions
• TRID Application1. Name2. Monthly income3. SSN for pulling credit report4. Property address5. Estimated value of the property 6. Loan amount
• Triggers timing for Loan Estimate disclosure• No additional items permitted to be considered an “application” for triggering the
requirement to provide LE
• May add additional requirements for credit-decisioning • But not for providing the Loan Estimate
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Key Definition: Business Day
• General Definition• Any day the financial
institution is open to the
public for carrying
substantially all of its business
• Not further defined
• Do not take loan applications
• Do not close loans
• Memo post deposits
• Specific Definition• All calendar days except Sundays
and certain legal public holidays
• New Year’s Day, January 1;
• Martin Luther King, Jr.’s Birthday,
the 3rd Monday in January;
• Washington’s Birthday, the 3rd
Monday in February;
• Memorial Day, the last Monday in
May;
• Independence Day, July 4;
• Labor Day, the 1st Monday in
September;
• Columbus Day, the 2nd Monday in
October;
• Veteran’s Day, November 11;
• Thanksgiving Day, the 4th Thursday
in November; and
• Christmas Day, December 25
•
•
•
•
•
•
•
•
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Applying “Business Day”
General Definition
• The general definition applies to
delivering or placing in the mail the:
• Loan Estimate,
• Special Information Booklet, and
• Any revised Loan Estimate; and
• The time period in which the consumer
must respond with an intent to proceed
before closing costs expire
Specific Definition (aka “Precise Rule”)
• The specific definition applies to the:• Seven-business-day waiting period from delivery or
mailing of early disclosure (Loan Estimate) to consummation;
• Early disclosure (Loan Estimate) considered received three business days after delivery or mailing;
• Restriction on imposition of fees (other than credit report) within three business days of receipt of early disclosure (Loan Estimate);
• Receipt of revised early disclosure (Loan Estimate) prior to consummation;
• Provision of final disclosure (Closing Disclosure) three business days prior to consummation; and
• Final disclosure (Closing Disclosure) considered received three business days after delivery or mailing
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Key Definition: Purpose
• Consumer’s intended use for the credit
• Purchase
• Refinance
• Construction
• Home Equity Loan
• If the purpose is not known, the
creditor may rely on the consumer’s
stated purpose
“Investment” is notan option for loan
Purpose field
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Loan
Pu
rpo
se W
ater
fall
Met
ho
do
logy
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Key Definition: Product
• Comprised of (2) features• Loan Features
• Interest Rate Features
• As applicable, Product description must be preceded by:
• Duration of any introductory rate or payment period
• and
• First adjustment period
• Except for Seasonal payment and Fixed rate
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Product
• Loan features• Description of loan features that
may change the periodic payment
1. Negative amortization
2. Interest only
3. Step payment
4. Balloon payment
5. Seasonal payment
• Interest Rate features• Description of the interest rate
1. Adjustable rate
2. Stepped rate
3. Fixed rate
For example, if loan has both
interest only and balloon features,
select Interest only because it
appears first in the list
Comprised of (2) featuresDisclose only the first applicable feature in each category regardless of how many features your
loan product may have from the following feature orders (Waterfall Methodology)
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Loan Features• Negative amortization
• If principal balance may increase due to addition of accrued interest to principal balance
• Interest only• If one or more regular periodic payments may be applied only to
interest accrued and not to the loan principal
• Step payment• If scheduled variations in regular periodic payment amount occur
that are not caused by changes to interest rate during term of the loan
• Balloon payment• If payment is not a regular payment and is more than 2 times any
one regular periodic payment during the term of the loan
• NOTE: compare to all payments, not most recent payment
• Example: if contract provides for $300 payment during years 1-3, then $700 for years 4-15, a final payment of $1,000 would be considered a balloon as it is more than 2 times the amount of the $300 payment
• Seasonal payment• If terms of legal obligation expressly provide that regular periodic
payments are not scheduled between specific unit-periods on a regular basis
Pro
du
ct D
efin
itio
ns
Interest Rate Features• Adjustable rate
• Interest rate may increase after consummation, but rate that will apply or periods for which they will apply are not known at consummation
• Step rate
• If interest rate will change after consummation, and rates that will apply and periods for which they apply are known.
• Fixed rate
• If interest rate will not change after consummation
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Product Examples
• 5/3 Adjustable rate • No loan feature and only interest rate feature with introductory
period
• 0/3 Adjustable rate • No loan feature and no introductory period
• Fixed rate• No loan feature
• 5 Year Interest Only, Fixed Rate • With loan feature
• Year 7 Balloon Payment, 3/1 Step Rate• Loan feature and interest rate feature
• 11 mo. Interest Only, Fixed Rate• Loan feature and rate feature
• Special note when term is less than 24 months, use• Decimals up to 2 points
• 30 months = 2.5/1 Adjustable Rate
• 31 months = 2.58/1 Adjustable Rate
• Interest only • 12-month term, fixed rate loan =
• 11 mo. Interest Only, Fixed Rate
• 11 months because last month is all principal plus the interest
• 2 year term, fixed rate loan = • 23 mo. Interest Only, Fixed Rate
• 23 months because last month is all principal plus the interest
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IBA
Lo
an P
rod
uct
Gu
ide
–TR
ID
IBA Handout
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Key Definition: Changed Circumstance
• For purposes of a revised LE, a changed circumstance is:• An extraordinary event beyond the control of any interested party or other
unexpected event specific to the consumer or transaction (i.e. war or natural disaster);
• Information specific to the consumer or transaction that the creditor relied upon when providing the Loan Estimate and that was inaccurate or changed after the disclosures were provided; or
• New information specific to the consumer or transaction that the creditor did not rely on when providing the Loan Estimate
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Changed Circumstances: Revised Disclosures
• Six events that justify revised LE/CD:• Changed circumstances that cause an increase to settlement charges
• Changed circumstances that affect the consumer’s eligibility for the loan or affect the value of the property securing the loan
• A change request by the consumer
• Locking of the interest rate (if not locked at application)• Includes re-locks, modifications, extensions
• Expiration of the original Loan Estimate
• Construction loan settlement delays
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Changed Circumstance
• Must document• Original estimate
• Reason for revision
• How affected costs
• Only increased to extent of change
• Timing requirements met • Within 3 business days become aware of
change/triggering event
• No model form
• Not subject to eSIGN
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Key Definition: Good Faith
• “Good Faith”
• Good faith estimate of costs of credit and transaction terms consistent with the best
information reasonably available to the creditor at the time disclosed
• To determine good faith:
• Look at difference between estimated charges originally provided in LE (or last valid LE or CD) and actual
charges paid by or imposed on the consumer
• Generally, if the charge paid by or imposed on consumer exceeds amount originally disclosed on LE (or last
valid LE or CD), not in good faith
• True regardless of whether creditor later discovers technical error, miscalculation, or underestimation of a
charge
• Except if falls within Tolerances
• All amounts must still be made based on best information available at time LE issued
• More on Tolerances and Changed Circumstance later
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Key Term: Tolerance
• General Rule • (no specific definition to the word “tolerance”)
• If amounts paid by consumer at closing exceed amounts disclosed on LE beyond applicable tolerance threshold
• What is disclosed on the LE is the ‘baseline tolerance’• For example, Appraisal fee estimated on LE = $450; actual fee = $500; the $50 difference exceeds the baseline tolerance
• Baseline tolerance may be re-set if permissible changed circumstance
• Cures• If tolerance cure required, creditor must:
• Refund excess no later than 60 days after consummation, and
• Deliver or place in the mail a corrected CD that reflects such refund
• Generally, must be refunded to consumer if post closing• If the product does not permit “cash back” or the amount of a cure exceeds any “cash back” limit, cure with a principal curtailment
(reduction) and list as “POC”
• Else, refund must be provided to the consumer
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Tolerance Baseline
• The tolerance baseline is established by what is disclosed on the Loan Estimate• Baselines may only be re-set if expressly permitted or a valid changed circumstance
• General Rule
• Bound by Loan Estimate and
• May not issue revisions because later discover technical errors, miscalculations, or underestimations of charges
• But not a commitment to lend
• Permitted only in certain specific circumstances
• Changed circumstances occurs:
• After LE provided and event causes settlement charges to increase more than permitted
• After LE provided affects consumer’s eligibility for terms applied for (creditworthiness) or value of collateral
• Consumer requests revisions
• Interest rate not locked when LE provided, and locking rate causes points or lender credits disclosed to change
• Consumer indicates intent to proceed more than 10 general business days after LE originally provided
• New construction loan and settlement is delayed
• Subject to having provided “special construction statement” on original LE
- 62 -© 2021 Professional Bank Services, Inc.
Zero Tolerance Threshold
• Creditor may never charge more than estimated amount
unless “changed circumstance” (or other triggering event)
• Fees paid to creditor, mortgage broker, or an affiliate of either
• Fees paid to an unaffiliated third party if creditor did not permit
consumer to shop
• Transfer taxes
• Fee not considered “paid to” if
• Person does not retain the fee; or
• Person retains the fee as reimbursement for amount already paid to
another part
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10% Tolerance Threshold
• Some charges subject to a 10% cumulative tolerance• Recording fees
• Charges for third-party services where• Charge is not paid to creditor or creditor’s affiliate
• Consumer is permitted by creditor to shop but selects a third-party service provider on creditor’s written list of service providers
• Must meet “Tipping Point” to re-set the tolerance baseline
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Variations Permitted
• Certain charges may exceed amount disclosed on LE or CD by any amount• Prepaid interest; property insurance premiums; amounts placed into an escrow, impound,
reserve or similar account;
• Services required by creditor if creditor permits consumer to shop and consumer selects 3rd party service provider not on creditor’s written list of service providers; and
• Charges paid to 3rd party service providers for services not required by creditor (may be paid to affiliates of creditor)
• However . . .• Creditors may only charge more than amount disclosed when original estimate, or lack
thereof, was based on best information reasonably available at the time of disclosure• Good faith
• Due diligence
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Tole
ran
ce B
uck
ets Provided
that disclosed based on
best information reasonably available to
creditor
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TRID Tolerances, Good Faith & Due Diligence
- 67 -© 2021 Professional Bank Services, Inc.
Tolerance Buckets & Due Diligence
• 0%• 10%• None
• “I didn’t ask for the P&S”
• “They didn’t have a copy of the P&S with them”
• “They refused to give me a copy of the P&S”
• “I didn’t think we would need a survey on this one”
• “My bad, I forgot to include it”
• “It’s a new subdivision. How would I know what the estimated taxes would be?”
• “It’s a new house in the middle of nowhere. • How would I know what the insurance premiums would be or the
property taxes?
• How was I supposed to know that the appraisal needed to be ‘rural’ and not single family?”
- 68 -© 2021 Professional Bank Services, Inc.
Don’t forget …
(iii) Variations permitted for certain charges. An estimate of any of the charges specified in this
paragraph (e)(3)(iii) is in good faith if it is consistent with the best information reasonably available to the creditor at the time it is disclosed,
regardless of whether the amount paid by the consumer exceeds the amount disclosed under paragraph (e)(1)(i) of this section. For purposes of paragraph (e)(1)(i) of this section, good faith is determined under this paragraph (e)(3)(iii) even if such charges are paid to the creditor or affiliates of the creditor, so long as the charges are bona fide:
(A) Prepaid interest;
(B) Property insurance premiums;
(C) Amounts placed into an escrow, impound, reserve, or similar account;
(D) Charges paid to third-party service providers selected by the consumer consistent with paragraph (e)(1)(vi)(A) of this section that are not on the list provided under paragraph (e)(1)(vi)(C) of this section; and
(E) Property taxes and other charges paid for third-party services not required by the creditor.
- 69 -© 2021 Professional Bank Services, Inc.
Challenge
• Your system probably will not know whether you estimated in good faith• It should catch 0% and 10%
• May have a user-defined field or other field to check-off to tell system not in good faith
• Be sure you test to ensure functionality and accuracy
• You may have a manual process in place to review amounts disclosed in the “None” bucket• You do not want an auditor or examiner telling you Whoops!
- 70 -© 2021 Professional Bank Services, Inc.
➢ Safe Harbor
➢ Formatting
The TRID Disclosures
- 71 -© 2021 Professional Bank Services, Inc.
Dodd-Frank Protection
• Dodd-Frank Section 1032(d)• (d) SAFE HARBOR.—Any
covered person that uses a model form included with a rule issued under this section shall be deemed to be in compliance with the disclosure requirements of this section with respect to such model form.
- 72 -© 2021 Professional Bank Services, Inc.
Formatting
• Standard forms
required
• Loan Estimate baseline
Model Form H-24
• Closing Disclosure
baseline Model Form H-
25
• May not include any
other information
unless expressly
permitted
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Formatting
• Clear and conspicuous (legible and in a readily understandable form); • in writing; and
• grouped together, • segregated from everything else, and
• provided on (physically) separate pages that are not commingled with any other documents or disclosures,
• including any other disclosures required by State or other laws
• State law disclosures must be physically separate from LE/CD
• May not include is same pdf file
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• Must use designated order and grouping
• May omit certain non-applicable sections• May not omit all, even if not applicable
• So . . . Check twice before you do!
• Some items are to be left blank if not applicable
• Some require enter zero “0” if not applicable
• Rounding rules
• Dollar amounts must be rounded to the nearest whole dollar where noted in the rule• 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
• Decimal point rules• Percentage amounts are disclosed by rounding to three decimals and then dropping any trailing zeros
that occur to the right of the decimal place, except where otherwise noted in the rule
• Page Options
• More on that later when we get to the actual formsForm
atti
ng
- 75 -© 2021 Professional Bank Services, Inc.
Formatting: Preliminary Estimates/Worksheets
• Preliminary worksheets or estimates• May provide preliminary worksheet or estimate
• Must avoid worksheets that could create confusion and cause the consumer to think it is the Loan Estimate form
• Expressly prohibited to use model Loan Estimate form headings, content and format substantially similar
• Must include mandatory disclosure - H-26• Clear and legible text and uses the required formatting, including bold font
• Must be on the top of the page
• May not be smaller than 12-point font
• Changes that are not expressly permitted may cause loss of protection from civil liability under TILA
Model Form H-26:
Your actual rate, payment, and costs could be higher. Get an
official Loan Estimate before choosing a loan.
4-38
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Formatting: Addenda
• Addenda• Very limited circumstances where an
addendum is permitted
• Must have format similar to LE/CD
• Must use same terminology as in applicable section
• If an addendum is used, include a reference to the addendum, such as “See attached page for additional information,” in the applicable section of the LE or CD (as applicable)
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Pre-disclosure Activity
- 78 -© 2021 Professional Bank Services, Inc.
Pre-Disclosure Activity
• Fee restriction• May not charge or
otherwise impose a fee, other than a reasonable credit report fee, before applicant has• Received Loan Estimate (or
GFE, if applicable)• and
• Provided intent to proceed
• May not collect post-dated checks or credit card information for such other fees
• May not collect (pre)application fee
• Written estimates• If provide applicant with
written estimate of fees, must include statement
• Model Form H-26• Top of the first page• Clear and conspicuous• Minimum 12-point font
• Not required for lists of fees, typical closing costs or rates
• Estimate headings, content, and format may not be substantially similar to Loan Estimate
• Verification of information• May not require, as a
condition of providing Loan Estimate, provision of verification documents
• Applicant may submit documents contemporaneous with application provided not required to do so
• Once have (6) items constituting an application under TRID, providing LE is triggered
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- 79 -© 2021 Professional Bank Services, Inc.
• Loan Estimate
• Closing Disclosure
• Written List of Providers
Let’s take a look at the forms
- 80 -© 2021 Professional Bank Services, Inc.
Loan Estimate
- 81 -© 2021 Professional Bank Services, Inc.
Loan Estimate
• Baseline Model Form H-24 = Standard Form• Must contain accurate good faith estimate of the transaction terms and costs
• Good faith estimate of costs of credit and transaction terms consistent with the best information reasonably available to the creditor at the time disclosed
• Must be in writing and separate from any other disclosures
• Not required to be signed by consumer, however, if signed, LE must contain disclosure:
• If mortgage broker receives initial application, either creditor or mortgage broker may provide• Creditor is responsible for ensuring LE complies with the content and delivery requirements
• You may not contract away your obligations
“By signing, you are only confirming you have received this form. You do not
have to accept this loan because you have signed or received this form.”
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Loan
Est
imat
e -
Page
1Heading information
Loan Terms
Projected Payments
Costs at closing
CFPB website reference
4-65
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LE P
age
1 -
Loan
Te
rms
PREPAYMENT PENALTY
ADJUSTABLE RATE
BALLOON PAYMENT
Examples
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LE P
age
1 -
Pro
ject
ed P
aym
ents
INTEREST ONLY WITH ADJUSTABLE
RATE WITHOUT ESCROW
FIXED RATE WITH PMI WITH ESCROW
FIXED RATE WITH BALLOON PAYMENT
Examples
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Loan
Est
imat
e –
Page
2Loan Costs
A. Origination Charges
B. Services You Cannot Shop For
C. Services You Can Shop For
D. Total Loan Costs
Other CostsE. Taxes and Other
Government FeesF. PrepaidsG. Initial Escrow
Payment at ClosingH. OtherI. Total Other
Adjustable Payment (AP) Table Adjustable Interest
Rate (AIR) Table
Calculating Cash to Close
••
•
•
4-89
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LE P
age
2:
Loan
Co
sts
With points and origination fee
With points and no origination fee
Examples
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LE P
age
2:
Oth
er C
ost
s
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LE P
age
2: O
ther
Co
sts
Exam
ple
s
1
3
24
5
6
PURCHASE WITH NO MIP OR ESCROW
Must include Owner’s title on PurchasePURCHASE WITH NO ESCROW
3
REFINANCE WITH MIP, ESCROW
No Owner’s title required on Refi
Examples
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Adjustable Payments (AP) table
• Principal and interest payment may change after consummation but not based on an adjustment to the interest rate, or
• Transaction is a seasonal payment product
• Example
• 25 year fixed rate with first 5 years interest only
• Construction to perm loan with interest only first 12 months, fixed rate for entire term
• Construction loan with 50% advanced at closing, fixed rate for 12 month term
AP
vs.
AIR
Tab
les
Adjustable Interest Rate (AIR) table
• Only if the interest rate may increase after consummation,
either based on changes to an index or scheduled changes to
the interest rate
• Example
5/3 ARM
10/1 ARM
• NOT: Construction to perm loan at 6% during construction
phase, 4.5% perm phase (no because rate decreased)
4-103
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Loan
Est
imat
e –
Page
3Lender/Broker Information
5 Year Comparisons
Additional Disclosures
Confirmation of Receipt
4-106
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• ExamplePa
ge 3
: Lo
an E
stim
ate
REFINANCE: LOAN ACCEPTANCE, LIABILITY AFTER FORECLOSURE
Construction Loans
You may receive a revised Loan Estimate at any time prior to 60 days before
consummation.
- 92 -© 2021 Professional Bank Services, Inc.
Closing Disclosure
4-112
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Closing Disclosure (CD)
• Baseline Model Form H-25 = Standard Form• Reflect actual costs and terms of credit
• Certain changes are permitted when necessary to describe the actual terms of the loan (e.g. payment periods or additional line items for costs)
• May not be modified to state N/A even if you never offer a particular product
• Either creditor or mortgage broker may provide• Creditor is responsible for ensuring CD complies with the content and delivery requirements
• You may contract with settlement agent to provide CD• But lender still responsible for accuracy
• Settlement agent must provide CD to the Seller
• May provide revised CD only in certain circumstances• May not provide revised LE once CD is provided
• Cures – more on that later
4-113
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Page
1: C
losi
ng
Dis
clo
sure
Heading information
Loan Terms
Projected Payments
Costs at closing
4-113
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• ExampleC
D P
age
1:
Hea
din
g In
form
atio
n
PURCHASE, FIXED RATE
•
Example
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• Could be same as LE; must reflect final terms
CD
Pag
e 1
:Lo
an T
erm
sFIXED RATE, PREPAYMENT PENALTY
REFINANCE
Examples
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CD
Pag
e 2
: C
losi
ng
Co
st
Det
ails
Borrower/Seller Paid At/Before ClosingPaid by Others
Total Closing CostsLender Credits
Loan CostsA. Origination
ChargesB. Services You
Cannot Shop ForC. Services You Can
Shop ForD. Total Loan Costs
Other CostsE. Taxes and Other
Government FeesF. PrepaidsG. Initial Escrow
Payment at ClosingH. OtherI. Total Other
4-117
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• Alternate Loan Costs • Single page
Option
CD
Pag
e 2
a: C
losi
ng
Co
st D
etai
ls
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• Alternate Other Costs• Single
page
CD
Pag
e 2
b: C
losi
ng
Co
st D
etai
ls
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Clo
sin
g D
iscl
osu
re:
Page
3
Totals for Cash to Close
Calculating Cash to Close• LE/CD Comparison/Changes
Summary of Transaction• Borrower• Seller
4-125
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CD
Pag
e 3
:C
alcu
lati
ng
Cas
h t
o C
lose
LIST AT TOP OF PAGE WHEN USING SUMMARIES OF TRANSACTIONS
REFINANCE
Examples
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CD
Pag
e 3
:C
alcu
lati
ng
Cas
h t
o C
lose
REFINANCE WITH OUT OF TOLERANCE
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CD
Pag
e 3
: Alt
ern
ate
No
Sel
ler
Payo
ffs
and
Pay
men
tsREFINANCE TRANSACTION WITH ALTERNATE PAYMENTS AND PAYOFFS TABLE – NO SELLER
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Clo
sin
g D
iscl
osu
re –
Page
4More Loan Disclosures
Adjustable Payment (AP) Table
Adjustable Interest Rate (AIR) Table
Escrow Table• Property Costs
for Year 1 (whether or notescrow account)
Future costs may rise statement
4-151
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CD
Pag
e 4
: Esc
row
Acc
ou
ntESCROW REQUIRED
ESCROW NOT REQUIRED AND DECLINED
x x
$3,275
$200
Examples
Escrow waiver fee goes in Block A –Origination charge if Lender charges it
4-153
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Clo
sin
g D
iscl
osu
re –
Page
5Loan Calculations Table• Like the TIL Fed
Box
More Disclosures• Appraisal• Contract Reference• Liability after
Foreclosure• Ability to Refinance• Tax deductibility
Who to contact for questions
Contact Info
Confirmation of Receipt
4-157
- 107 -© 2021 Professional Bank Services, Inc.
Written List of Providers (WLP)
4-441
- 108 -© 2021 Professional Bank Services, Inc.
Written List of Providers (WLP)
• May use Model Form H-27 to comply
• May make changes in format or content
provided that changes do not affect substance,
clarity, or meaningful sequence of the form
• Permitted changes
• Delete column for estimated fee amounts
• May include statement on WLP that listing of a
settlement service provider does not constitute an
endorsement of that service provide
• Failure to provide WLP results in
settlement service automatically
subject to 10% tolerance
The listing of a settlement service provider does not constitute an endorsement of that service by <Institution>
4-441
- 109 -© 2021 Professional Bank Services, Inc.
Written List of Providers (WLP)
• Loan Estimate Services Can Shop For
• Must identify at least one provider for each settlement
service required by the institution for which a
consumer can shop
• Applies even if can only shop from a limited list of providers
• May omit “Estimate” column
• Do not have to include amounts if leave column in
• Must be a provider available to consumer
• Must include a statement that consumer may choose a
different provider if they wish (hard coded on form)
• Must be a separate document
• Must be provided separate from Loan Estimate but at
same time as LE
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•
Exam
ple
: Wri
tten
Lis
t o
f Pr
ovi
der
s C
anSh
op
for
•
•
- 111 -© 2021 Professional Bank Services, Inc.
Written List of Providers (WLP)
• Permitted changes• May identify on WLP services for which
the consumer is not permitted to shop, provided that the creditor clearly and conspicuously distinguishes those services from the services for which the consumer is permitted to shop
• May be accomplished by placing such services under different headings
• WHY???? • Would not recommend doing this as it
would cause greater consumer confusion
• Opportunity for errors
You CANNOT Shop For
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Rem
embe
r …
Loan Estimate - Block CWritten List of Providers
If it is on the LE (or added to a CD)
in Block C (Can Shop),MUST have a WLP
- 113 -© 2021 Professional Bank Services, Inc.
Fee Placement
IBAHandout
- 114 -© 2021 Professional Bank Services, Inc.
Loan Estimate Common Fees
IBAHandout
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LE F
ee P
lace
men
t:
Blo
ck A
: Pay
able
to
Len
der
or
Bro
ker Fee/Service Payable to:
If Lender selected
provider, place fee in
section & table:
Administrative fees (related to origination) Lender A - Loan Costs
Application fee Lender or Broker A - Loan Costs
Appraisal or Property Evaluation fee Lender A - Loan Costs
Appraisal Review Fee Lender A - Loan Costs
Appraisal Waiver fee Lender A - Loan Costs
Assumption fee Lender A - Loan Costs
Closing Fee Lender A - Loan Costs
Commitment fee Lender A - Loan Costs
Doc Prep fee Lender A - Loan Costs
DU Underwriting fee Lender or Broker A - Loan Costs
Escrow Waiver Fee Lender A - Loan Costs
Flood determination Lender A - Loan Costs
Inspection fee Lender A - Loan Costs
Loan handling fee Lender or Broker A - Loan Costs
Loan level price adjustments (charge/not in
rate)
Lender A - Loan Costs
Mortgage broker fee (paid directly by Broker A - Loan Costs
Origination fee Lender or Broker A - Loan Costs
Points - to reduce interest rate Lender A - Loan Costs
Processing fee Lender or Broker A - Loan Costs
Property Inspection Waiver (PIW fee) Lender A - Loan Costs
Title - Lien Search Lender A - Loan Costs
Title - Settlement fee Lender A - Loan Costs
Underwriting fee Lender or Broker A - Loan Costs
Rate Lock Extension Lender or Broker A- Loan Costs
Title - Closing fee Lender A- Loan Costs
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LE F
ee P
lace
men
t:
Blo
ck B
: Pay
able
to
3rd
Part
y an
d
Bo
rro
wer
Can
no
t Sh
op
Fee/Service Payable to:
If Lender selected
provider, place fee in
section & table:
Administrative fees (related to origination) 3rd party B - Loan Costs
Appraisal Management Fee 3rd party B - Loan Costs
Appraisal or Property Evaluation fee 3rd party B - Loan Costs
Appraisal Review Fee 3rd party B - Loan Costs
Credit report 3rd party B - Loan Costs
Doc Prep fee 3rd Party B - Loan Costs
FHA Mortgage Insurance Premium paid at FHA B - Loan Costs
Flood determination 3rd party B - Loan Costs
Inspection fee 3rd party B - Loan Costs
Life of Loan flood monitoring fee 3rd party B - Loan Costs
MERs Registration fee 3rd party B - Loan Costs
RD guaranty fee RD B - Loan Costs
Subordination Fee 3rd party B - Loan Costs
Survey (Required by Lender) 3rd party B - Loan Costs
Tax Service fee 3rd party B - Loan Costs
Tax Transcript fee (4506T fee) 3rd party B - Loan Costs
Termite Inspection (required by lender) 3rd party B - Loan Costs
Title - Abstracting 3rd party B - Loan Costs
Title - Administration fees 3rd party B - Loan Costs
Title - Attorney Fees 3rd party B - Loan Costs
Title - Closing Fee 3rd Party B - Loan Costs
Title - IFA Title Guaranty IFA B - Loan Costs
Title - Lenders Title Insurance 3rd party B - Loan Costs
Title - Lien Search 3rd party B - Loan Costs
Title - Notary fees (related to clearing title) 3rd party B - Loan Costs
Title - Owner's Title Insurance 3rd party B - Loan Costs
Title - Settlement fee 3rd party B - Loan Costs
Title - Title Opinion fee 3rd party B - Loan Costs
USDA guaranty fee USDA B - Loan Costs
VA funding fee VA B - Loan Costs
Verification of Deposit fee 3rd party B - Loan Costs
Verification of Employment fee Applicant's Employer B - Loan Costs
- 117 -© 2021 Professional Bank Services, Inc.4/26/2021 117
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Fee/Service Payable to:If Borrower can shop2,
place fee in section &
table:
Survey (Required by Lender) 3rd party C - Loan Costs
Termite Inspection (required by lender) 3rd party C - Loan Costs
Title - Abstracting 3rd party C - Loan Costs
Title - Administration fees 3rd party C - Loan Costs
Title - Attorney Fees 3rd party C - Loan Costs
Title - Closing Fee 3rd Party C - Loan Costs
Title - Lenders Title Insurance 3rd party C - Loan Costs
Title - Lien Search 3rd party C - Loan Costs
Title - Notary fees (related to clearing title) 3rd party C - Loan Costs
Title - Settlement fee 3rd party C - Loan Costs
Title - Title Opinion fee 3rd party C - Loan Costs
LE F
ee P
lace
men
t:
Blo
ck C
: Pa
yab
le t
o 3
rdPa
rty
and
B
orr
ow
er C
an S
ho
p
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LE F
ee P
lace
men
t:
Oth
er C
ost
s B
lock
s E,
F, G
, H
Fee/Service Payable to:If Borrower can shop2,
place fee in section &
table:
Deed Stamps (Transfer taxes) Govt. Entity E - Other Costs
Recording fees Govt. Entity E - Other Costs
Recording Subordination Agreement Govt. Entity E - Other Costs
Revenue Stamps (required by Iowa law to be paid by seller) Govt. Entity E - Other Costs
Flood insurance FEMA or insurance F - Other Costs
Earthquake insurance 3rd party F - Other Costs
Homeowner's insurance 3rd party F - Other Costs
Escrow aggregate adjustment Lender G - Other Costs
Escrow deposit of flood insurance Lender G - Other Costs
Escrow deposit of hazard insurance Lender G - Other Costs
Escrow deposit of Private Mortgage Insurance premiums Lender G - Other Costs
Escrow deposit of taxes Lender G - Other Costs
Total Escrow deposit Lender G - Other Costs
Title - Owner's Title Insurance 3rd party H - Other Costs
Administrative or Transaction Fee Realtor H - Other Costs
Condominium certificate and questionnaire 3rd Party H - Other Costs
Credit Life & Disability Insurance Insurance company H - Other Costs
Survey (Borrower's option/not Lender required) 3rd party H - Other Costs
Transaction fee (realtor fee per purchase agreement) 3rd party H - Other Costs
Home buyers inspection (not required by lender) 3rd party H- Other Costs
Homeowner's Association Certification 3rd party H- Other Costs
Mortgage Credit Certificate Fee Govt. Entity H- Other Costs
Block E: Taxes and Other Government Fees
Block G: Escrows Amounts
Block H: Other Costs
Block F: Prepaids
- 119 -© 2021 Professional Bank Services, Inc.
Closing Disclosure Common Fees
IBAHandout
- 120 -© 2021 Professional Bank Services, Inc.4/26/2021 120
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CD
Fee
Pla
cem
ent:
B
lock
A: P
ayab
le t
o L
end
er o
r B
roke
r
Fee/Service Payable to: If Lender-
required
provider, place
fee in section &
table:
Administrative fees (related to loan
origination)
3rd party B - Loan Costs
Appraisal Management Fee 3rd party B - Loan Costs
Appraisal or Property Evaluation fee 3rd party B - Loan Costs
Appraisal Review Fee 3rd Party B - Loan Costs
Credit report 3rd Party B - Loan Costs
Doc Prep fee Third party B - Loan Costs
FHA Mortgage Insurance Premium
paid at closing
FHA B - Loan Costs
Flood determination 3rd party B - Loan Costs
Inspection fee 3rd party B - Loan Costs
Life of Loan flood monitoring fee 3rd party B - Loan Costs
MERs Registration fee 3rd party B - Loan Costs
RD guaranty fee RD B - Loan Costs
Subordination Fee 3rd party B - Loan Costs
Survey (Required by Lender) 3rd party B - Loan Costs
Tax Service fee 3rd party B - Loan Costs
Tax Transcript fee (4506T fee) 3rd party B - Loan Costs
Termite Inspection (required by
lender)
3rd party B - Loan Costs
Title - Abstracting 3rd party B - Loan Costs
Title - Administration fees 3rd party B - Loan Costs
Title - Closing Fee 3rd Party B - Loan Costs
Title - IFA Title Guaranty fee IFA B - Loan Costs
Title - Lenders Title Insurance 3rd party B - Loan Costs
Title - Lien Search 3rd party B - Loan Costs
Title - Notary fees 3rd party B - Loan Costs
Title - Owner's Title Insurance 3rd party B - Loan Costs
Title - Settlement fee 3rd party B - Loan Costs
Title - Title Opinion fee Attorney B - Loan Costs
USDA guaranty fee USDA B - Loan Costs
VA funding fee VA B - Loan Costs
Verification of Deposit fee 3rd party B - Loan Costs
Verification of Employment fee Applicant's
Employer
B - Loan Costs
- 121 -© 2021 Professional Bank Services, Inc.4/26/2021 121
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CD
Fee
Pla
cem
ent:
B
lock
B: P
ayab
le t
o 3
rdPa
rty
and
B
orr
ow
er C
ann
ot
Sho
p
Fee/Service Payable to:
If Lender selected
provider, place fee in
section & table:
Administrative fees (related to origination) 3rd party B - Loan Costs
Appraisal Management Fee 3rd party B - Loan Costs
Appraisal or Property Evaluation fee 3rd party B - Loan Costs
Appraisal Review Fee 3rd party B - Loan Costs
Credit report 3rd party B - Loan Costs
Doc Prep fee 3rd Party B - Loan Costs
FHA Mortgage Insurance Premium paid at FHA B - Loan Costs
Flood determination 3rd party B - Loan Costs
Inspection fee 3rd party B - Loan Costs
Life of Loan flood monitoring fee 3rd party B - Loan Costs
MERs Registration fee 3rd party B - Loan Costs
RD guaranty fee RD B - Loan Costs
Subordination Fee 3rd party B - Loan Costs
Survey (Required by Lender) 3rd party B - Loan Costs
Tax Service fee 3rd party B - Loan Costs
Tax Transcript fee (4506T fee) 3rd party B - Loan Costs
Termite Inspection (required by lender) 3rd party B - Loan Costs
Title - Abstracting 3rd party B - Loan Costs
Title - Administration fees 3rd party B - Loan Costs
Title - Attorney Fees 3rd party B - Loan Costs
Title - Closing Fee 3rd Party B - Loan Costs
Title - IFA Title Guaranty IFA B - Loan Costs
Title - Lenders Title Insurance 3rd party B - Loan Costs
Title - Lien Search 3rd party B - Loan Costs
Title - Notary fees (related to clearing title) 3rd party B - Loan Costs
Title - Owner's Title Insurance 3rd party B - Loan Costs
Title - Settlement fee 3rd party B - Loan Costs
Title - Title Opinion fee 3rd party B - Loan Costs
USDA guaranty fee USDA B - Loan Costs
VA funding fee VA B - Loan Costs
Verification of Deposit fee 3rd party B - Loan Costs
Verification of Employment fee Applicant's Employer B - Loan Costs
• Did NOT Shop• Could not shop• Shopped but picked from WLP• Failed to provide WLP when could have shopped, regardless of
whether or not actually shopped
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Fee/Service Payable to: Borrower
shopped and did
not pick from
WLP
Survey (Required by Lender) 3rd party C - Loan Costs
Doc Prep fee Third party C - Loan Costs
Termite Inspection (required by
lender)
3rd party C - Loan Costs
Title - Abstracting 3rd party C - Loan Costs
Title - Administration fees 3rd party C - Loan Costs
Title - Lenders Title Insurance 3rd party C - Loan Costs
Title - Lien Search 3rd party C - Loan Costs
Title - Notary fees 3rd party C - Loan Costs
Title - Settlement fee 3rd party C - Loan Costs
CD
Fee
Pla
cem
ent:
B
lock
C:
Paya
ble
to
3rd
Part
y an
d
Bo
rro
wer
Did
Sh
op
• DID Shop• Did not pick from WLP
- 123 -© 2021 Professional Bank Services, Inc.4/26/2021 123
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Did
th
ey r
eally
sh
op
?
- 124 -© 2021 Professional Bank Services, Inc.4/26/2021 124
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CD
Fee
Pla
cem
ent:
O
ther
Co
sts
Blo
cks
E, F
, G, H
Fee/Service Payable to:
Deed Stamps (Transfer taxes) Govt. Entity E - Other Costs
Recording fees Govt. Entity E - Other Costs
Revenue Stamps (Iowa law requires
seller to pay)
Govt. Entity E - Other Costs
Daily Interest charges Lender F - Other Costs
Flood insurance premium FEMA or insurance F - Other Costs
Private Mortgage Insurance Premium
(MIP) (Paid at closing)
3rd party F - Prepaids
Escrow aggregate adjustment Lender G - Other Costs
Escrow deposit of flood insurance Lender G - Other Costs
Escrow deposit of hazard insurance Lender G - Other Costs
Escrow deposit of Private Mortgage
Insurance premiums
Lender G - Other Costs
Escrow deposit of taxes Lender G - Other Costs
Total Escrow deposit Lender G - Other Costs
Homeowner's Association
Certification
3rd party H - Other
Title - Owner's Title Insurance 3rd party H - Other
Block E: Taxes and Other Government Fees
Block F: Prepaids
Block G: Escrows
Block H: Other
- 125 -© 2021 Professional Bank Services, Inc. - 125 -
Len
de
r C
red
its
Fee/Service Payable to:
Yield Spread Premiums - used as credit
to reduce costs
Borrower J - Other Costs
(Lender Credits)
Lender Credits for closing costs or
tolerance cures
Borrower J - Total Closing
Costs - Lender
Credit
- 126 -© 2021 Professional Bank Services, Inc. - 126 -
Cu
res
- 127 -© 2021 Professional Bank Services, Inc.
Questions?