TILA-RESPA Integrated Disclosures

Question 1

What is an application?

Answer 1

An application is defined as the submission of the following items by the consumer to a creditor for the purpose of obtaining an extension of credit: -Name -Monthly income -Social Security Number for purposes of obtaining a credit report -Property address -Estimate of the value of the property -Loan amount sought

Question 2

When must a creditor deliver a loan estimate?

Answer 2

A creditor must mail or deliver the Loan Estimate within three business days of submission of an application

Question 3

What must the creditor do if the loan estimate change?

Answer 3

If the creditor obtains information which qualifies as a “changed circumstance,” a revised Loan Estimate must be provided within three business days of the creditor’s receipt of that new information.

Question 4

What is a business day when it comes to the delivery of loan estimates?

Answer 4

For the purposes of delivery of the Loan Estimate (or a revised Loan Estimate), a business day is any day on which the creditor’s offices are open to the public “for carrying out substantially all of its business functions.”

Question 5

How can the creditor deliver a loan estimate?

Answer 5

The creditor may either hand-deliver the Loan Estimate or put it in the mail no later than the third business day after receipt of an application. If mailed, the consumer is deemed to have received it three days after it is mailed. If actual delivery is documented, it may be used for compliance purposes.

Question 6

Can a lender deliver a loan estimate electronically?

Answer 6

A lender may deliver the Loan Estimate electronically so long as it complies with all of the requirements of the federal E-Sign Act (i.e., the consumer must agree to receive the disclosures electronically).

Question 7

How many days before the consumation of the loan must the loan estimate be delivered?

Answer 7

The Loan Estimate must also be provided to the borrower no later than seven business days before consummation of the loan (though the seven-day period does not apply to a revised Loan Estimate).

Question 8

What are the only things a lender can charge until the borrower received the loan estimate?

Answer 8

A lender or broker may not charge the borrower anything other than a reasonable credit report fee until the borrower has received the Loan Estimate and expressed his or her intent to proceed with the transaction.

Question 9

What are the methods a borrower can use to communicate intent to proceed?

Answer 9

After receipt of the Loan Estimate, a borrower may communicate intent to proceed: -Orally over the phone -In person, or -In writing via e-mail or a pre-printed form

Question 10

Changes in amounts of fees on the loan estimate can change under what circumstance?

Answer 10

Under Regulation Z, a change in the amount of fees quoted in the Loan Estimate is allowed so long as the change falls within tolerances established by law.

Question 11

What fees cannot vary on the loan estimate?

Answer 11

However, the following fees may not vary at all from the amount set forth in the Loan Estimate (i.e., there is zero tolerance): -Fees paid to the creditor, mortgage broker, or an affiliate of either -Fees paid for third-party provider services for which the consumer was NOT allowed to shop (i.e., choose the provider), and -Transfer taxes

Question 12

What fees on the loan estimate can only vary by 10%?

Answer 12

The following fees and charges, in total, may differ from the total amount of these specific fees and charges set forth in the Loan Estimate by no more than 10%: -Recording fees, and -Third-party provider fees for which the consumer was allowed to shop off of the creditor’s list of service providers

Question 13

What must the written list of providers from which the loan applicant can shop have/contain?

Answer 13

The written list of providers from which the loan applicant can shop must: -Be provided if the borrower is allowed to shop for services -Include at least one provider for each service that is available -State that the consumer may select another provider -Correspond with required services listed on the Loan Estimate -Include contact information by which the applicant can reach the providers

Question 14

What fees can change and are not subject to tolerance limitations?

Answer 14

Certain charges may change from the amount set forth in the Loan Estimate without being subject to a tolerance limitation. Those include: -Prepaid interest -Property insurance premiums -Property taxes -Amounts required to be placed into escrow accounts -Third-party service providers for which the consumer was allowed to shop and which were NOT on the provider list offered by the lender, and -Charges for third-party service providers NOT required by the creditor

Question 15

What are considered the “changed circumstances” under which a revised oan estimate can be provided?

Answer 15

However, the following represent specific “changed circumstances” under which a revised Loan Estimate may be provided: -Changed circumstance affecting settlement charges: 1, An extraordinary event beyond the control of any party which specifically affects the transaction 2. Information relied upon by the creditor at the time of disclosure that is later found to be inaccurate, or 3. New information specific to the transaction that is provided to the creditor -Any changes which affect the consumer’s eligibility for the terms for which the consumer applied -Requested revisions by the consumer -A change in points or lender credits based on a change in an interest rate that was not locked -Failure of the consumer to communicate an intent to proceed within ten days of issuance of a Loan Estimate -If a construction loan, the expectation that loan closing will be occurring more than 60 days from issuance of a Loan Estimate

Question 16

How long is a Loan Estimate good for?

Answer 16

A Loan Estimate is good for ten business days, after which a revised Loan Estimate may be issued without having to meet one of the changed circumstances set forth in the Rule.

Question 17

What must saved documentation contain and how long must it be retained for?

Answer 17

Creditors must also retain documentation regarding any change made to a Loan Estimate in order to prove compliance with the TRID Rule. Documentation must be retained for three years after the later of: -The date of consummation -The date on which disclosures are required to be made, or -The date on which action is required

Question 18

When can a revised loan estiamte not be provided to the consumer?

Answer 18

A creditor must provide a revised Loan Estimate within three business days of receiving the information that qualifies as a valid change. However, a revised Loan Estimate may not be provided to the consumer: -On or after the date on which he or she receives the Closing Disclosure from the creditor -Later than four business days prior to consummation

Question 19

If a changed circumstance occurs fewer than four business days prior to consummation, where will the revised charges be provided to the consumer?

Answer 19

If a changed circumstance occurs fewer than four business days prior to consummation, the revised charges may be provided to the consumer on the Closing Disclosure

Question 20

What is guaranteed once the interest rate locks?

Answer 20

Once the interest rate is locked in pursuant to a lock-in agreement and disclosed in a revised Loan Estimate, points and lender credits are guaranteed

Question 21

What is the Closing Disclosure?

Answer 21

The Closing Disclosure is the document setting forth the final terms and conditions of a mortgage loan transaction.

Question 22

When must the Closing Disclosure be given to the borrower?

Answer 22

Generally, it must be given to the borrower no later than three business days (i.e., any day other than Sunday or a legal holiday) prior to consummation

Question 23

What is consummation?

Answer 23

The term “consummation” is defined in state law and thus may vary from state to state; however, it generally refers to the date the borrower becomes legally obligated on the loan

Question 24

Who is ultimately responsible for ensuring the borrower received their documents?

Answer 24

The creditor is ultimately responsible for ensuring that the borrower receives the document

Question 25

What is the settlement agent responsible for providing to the seller?

Answer 25

Settlement agents are responsible for providing the seller with a copy of the Closing Disclosure. The settlement agent may provide the seller with the same form provided to the borrower, so long as it contains all of the borrower and seller information (12 C.F.R. §1026.19(f)(4)). Alternately, the agent may provide the seller with a Closing Disclosure containing just the seller information. In either case, the settlement agent must ensure that the lender (if it is not also the settlement agent) is provided with a copy of the Closing Disclosure containing the seller’s information.

Question 26

If changes must be made after the closing disclosure document has been provided to the borrower, depending on the type of change, what happens?

Answer 26

If changes must be made after the document has been provided to the borrower, depending on the type of change, a new waiting period may or may not be required.

Question 27

What are the three circumstances under which a revised Closing Disclosure must be issued and the waiting period restarted?

Answer 27

The three circumstances under which a revised Closing Disclosure must be issued and the waiting period restarted are as follows: -The loan’s disclosed APR becomes inaccurate -Changes in the terms of the loan product offered, or -Addition of a prepayment penalty

Question 28

What happens to the closing disclosure if the changes do NOT fall ubder the 3 circumstances?

Answer 28

If changes affect amounts previously disclosed but do not fall under these three specific circumstances, the borrower must still be given a revised Closing Disclosure prior to consummation, though a new waiting period is not required.

Question 29

True or False: A creditor may not provide a revised Loan Estimate and Closing Disclosure on the same day.

Answer 29

True.