Topic: CFPB TILA-RESPA Integrated Disclosure (TRID) Rule
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Do we have to disclose an owner’s title insurance premium on the Loan Estimate, even if we have a copy of the purchase agreement and it states that the seller will pay the premium? If we do need to disclose it, can we include a “Seller Credit” in Section H (Other) with a negative amount to offset the owner’s policy premium? Also, should we disclose the premium amount with or without the “simultaneous issuance” discount?
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Yes, we believe that you should include the owner’s title insurance premium on the Loan Estimate. Regulation Z requires the Loan Estimate to include the owner’s optional title insurance charges under “Other” (assuming that your bank does not require the borrower to purchase owner’s title insurance). It also is appropriate to list the owner’s title…
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We do not require borrowers to purchase owner’s title insurance. On our Loan Estimates, we disclose the owner’s title insurance premium under the heading for “Other.” Because this is paid by the seller, we also list it as a “Seller Credit” in the “Calculating Cash to Close” section. However, on the borrower’s Closing Disclosure, we do not include the owner’s title insurance premium; we include it only when providing a separate Closing Disclosure to the seller. Is that correct?
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We believe that you should include the owner’s title insurance premium on the borrower’s Closing Disclosure. Regulation Z requires the Closing Disclosure to include optional title insurance charges, even if they are paid by the seller, under “Other,” in the “Seller-Paid” column. We believe that your bank is correctly disclosing the owner’s title insurance premium…
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We issued a Loan Estimate for a mortgage loan secured by a mobile home. We did not disclose any property taxes due at closing, but we just learned today that for mobile homes, the borrower will have to pay property taxes at the closing for the remainder of the year. Do we have to reimburse the borrower for that charge, since we did not disclose it? Also, the estimated title insurance costs were inaccurate – the owner’s title policy cost decreased by $127, but the lender’s policy increased by $130. Do we have to reimburse for $130, or can we offset that amount by the decreased cost of the owner’s policy? We do not permit borrowers to shop for the lender’s title insurance provider.
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We believe that you should reimburse the customer for the increases in both cases, since there have not been any changes that would qualify as a “changed circumstance” permitting you to issue a revised Loan Estimate. Regulation Z does permit lenders to revise the charges disclosed in a Loan Estimate, but only if there is…
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Does a Closing Disclosure (CD) ever expire? We issued a CD, but the closing now has been delayed for 60 days. We plan to issue revised CDs if there are any changed circumstances, but we want to confirm that whatever we issue will not expire.
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Closing Disclosures do not have an expiration date. Regulation Z establishes a minimum but not a maximum number of days before closing that a CD generally must be provided. However, a CD must be accurate, so any changes that occur before closing — including a new closing date — must be disclosed on a revised…
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We make fewer than fifty closed-end, first-lien residential mortgage loans per year, which we keep in our portfolio, and we have under $2 billion in assets. Can we make “small creditor” qualified mortgages (QMs)? Also, are QMs required to have a loan-to-value (LTV) ratio under 80%? Our previous compliance officer said this was a requirement.
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Since your bank has less than $2 billion in assets, and it originates and sells less than 2,000 residential mortgages in each previous calendar year, the bank meets the definition of a “small creditor” under Regulation Z. Generally, QMs are subject to a number of requirements, including a maximum 43% debt-to-income (DTI) ratio. However, as…
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For which type of “dwelling” must we provide the appraisal notice required under ECOA? We use the definition of “dwelling” in Regulation B, but were recently told that the notice requirement also applies to apartment complexes and vacant land where a 1 – 4 family “might be built.”
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We believe you should use Regulation B’s definition of “dwelling” with regard to the ECOA’s appraisal notice requirements. Although the ECOA does not define “dwelling,” its implementing rule, Regulation B, defines the term to mean “a residential structure that contains one to four units whether or not that structure is attached to real property. The…
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A borrower requested a loan secured by vacant land to pay for the nursing home expenses of an elderly parent. The loan is not a refinance because there is no existing loan, and it is not a home equity loan because there is no home on the property. What should we list as the loan’s purpose on the Loan Estimate?
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We believe that you should list the loan’s purpose as a home equity loan. Closed-end “consumer purpose” loans secured by vacant land are subject to the TILA-RESPA integrated disclosure requirements of Regulation Z, including the requirement to provide a loan estimate. Loan estimates must identify the loan’s purpose as either “purchase,” “refinance,” “construction,” or “home…
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A borrower requested two separate loans secured by a first and a second mortgage to finance the purchase of his primary residence. Are both loans considered a “Purchase” transaction for the purpose of the Loan Estimate? Or would the second mortgage be considered a “Home Equity Loan”?
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In our view, you should list “purchase” as the purpose of both loans. Under Regulation Z’s Loan Estimate provisions, the term “home equity loan” should be used to describe only those loans that are not for a purchase, refinance or construction of the real estate securing the loan. In this case, both mortgages are for…
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If an LLC enters into a loan for the purpose of constructing the primary residence for the LLC’s owner, do the TILA-RESPA Integrated Disclosure (TRID) rules apply?
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No, the TRID rules do not apply to loans made to an entity “other than a natural person.” A loan extended to a business entity, such as an LLC, would be exempt. For resources related to our guidance, please see: Regulation Z, 12 CFR 1026.3(a)(2) (Regulation Z does not apply to “an extension of credit to…
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We are funding the purchase of a mobile home not attached to dirt. We understand that because the mobile home is not attached to real property, the loan is not subject to the TILA-RESPA integrated disclosure (TRID) requirements, but do we have to send any early disclosures, such as a Good Faith Estimate?
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No, a mortgage secured by a mobile home not attached to real property is not subject early disclosures. However, under Regulation Z, you should provide an interest rate and payment summary, together with a specialized disclosure required for non-TRID mortgage loans prior to consummation of the loan. Additionally, other Regulation Z disclosures required for loans…