Topic: CFPB TILA-RESPA Integrated Disclosure (TRID) Rule
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For a residential mortgage loan Closing Disclosure, should we show the charge for the owner’s title insurance policy as being paid by the seller or the buyer? Some title companies are showing the charge as paid by the buyer, and then giving the buyer a credit from the seller. Is that still acceptable?
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When the seller is paying for the owner’s title insurance policy, we believe that the best approach is to disclose the policy cost in the seller-paid column (under “Other Costs” in the Closing Disclosure), although the TRID rules do not specify exactly which column to use. The TRID rules simply require you to designate title…
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The TRID rules permit us to remove certain seller information from the Closing Disclosure that we provide to the buyer. However, the rules do not permit us to remove some of the seller’s information, such as the amount paid for a broker’s commission and home inspection and home warranty fees. Doesn’t the inclusion of that information violate the seller’s privacy rights?
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We do not believe that sharing limited information about the seller in the Closing Disclosure for a consumer mortgage transaction will create any privacy issues, primarily for two reasons. First, the financial privacy protections under state and federal law apply only to a customer who has obtained a financial product or service from you. Because…
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Would we violate a customer’s privacy rights by providing a copy of the customer’s Closing Disclosure to the seller and the seller’s realtor in advance of the closing (so that they can check it for accuracy)?
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Yes, we believe it would violate your customer’s privacy rights if your bank were to provide a full Closing Disclosure to the seller, unless your customer agrees to providing this disclosure. Alternatively, the TRID rules provide a modified Closing Disclosure form that redacts certain personal financial information of the buyer for purposes of providing to…
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Does Illinois law dictate how title charges are to be described and itemized?
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No, we are not aware of any Illinois law that addresses how you should disclose title insurance charges. When disclosing title insurance charges in Illinois, your institution should follow the TRID rules. For more information on the TRID requirements for title insurance disclosures, we recommend reading the following IBA Q&As: What is the correct way…
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If we pay property taxes on behalf of a delinquent borrower, can we add those amounts to the loan principal and charge interest? Our loan agreement requires borrowers to pay the taxes. It does not expressly permit us to add the taxes to the loan principal, but it does generally permit us to add amounts advanced on behalf of a borrower to the loan principal and charge interest on those amounts.
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It may be possible to add the property taxes to the loan principal, but it would depend on the specific language in your loan agreement. Our advice is to ask your bank counsel to review the note and mortgage document for an answer to this question. Going forward, we recommend establishing a uniform policy for…
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What is the correct way to disclose a seller-paid owner’s title insurance policy on the Closing Disclosure?
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You should disclose the owner’s title policy under “Other Costs” in the “Seller-Paid” column. The Closing Disclosure rules require you to disclose title insurance charges, even if they are paid by the seller, under “Other.” For resources related to our guidance, please see: Regulation Z, 12 CFR 1026.38(g)(4) (“Under the subheading “Other” and in the…
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In the new Closing Disclosure, where should we disclose a seller’s payment for the owner’s title insurance policy? What if the title insurer discounts the owner’s policy when it is purchased at the same time as the lender’s policy? For example, the lender’s title policy is $300, the owner’s title policy is $400, and a $35 discount is applied to the owner’s title policy, making it $365.
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You should disclose the discounted amount of the owner’s title policy, $365, under “Other Costs” in the “Seller-Paid” column. The Closing Disclosure rules require you to disclose title insurance charges, even if paid by the seller, under “Other.” Based on informal guidance we received from a CFPB attorney, you may disclose the owner’s policy as…
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Are we required to fill out a Loan Estimate for a bridge loan to purchase a new home? The loan term would be one year – 11 months interest only, with a final balloon payment. The loan would be secured by the borrowers’ current residence and the purchased property. On the Loan Estimate, what should we disclose as the Property, Property Value, Purpose, and Product?
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Yes, the new Loan Estimate is required for every “closed-end consumer credit transaction secured by real property,” including bridge loans. Property: The Loan Estimate should list both property addresses, because both properties secure the transaction. The Official Interpretations to Regulation Z state that “where more than one property secures the credit transaction, § 1026.37(a)(6) requires…
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In Illinois, the seller usually pays for the owner’s title policy. Should we disclose the owner’s policy premium on the Loan Estimate?
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You are not required to disclose the owner’s title policy on the Loan Estimate if the borrower is not going to pay for it. Only fees paid by the borrower are disclosed on the Loan Estimate. In most cases, the borrower will not be paying for the owner’s title policy, and consequently Regulation Z does…
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We currently use verbal rate lock agreements and do not use written agreements. In the new Loan Estimate, is it correct to disclose that no rate lock is in place, unless we have a written rate lock agreement? If we enter into a verbal rate lock agreement after providing the Loan Estimate, do we have to reissue the Loan Estimate? What if the rate lock agreement is in writing?
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The supplementary information for the final TRID rules clarify that the rate lock disclosure applies only to written agreements. Without a written agreement executed by your institution and the borrower, you should disclose that no rate lock agreement is in place — even if you have agreed to honor a rate lock in a verbal…