TILA/RESPA Integrated Disclosures Flashcards
Special Mortgage Rules: TILA/RESPA
How is “application” defined? How does having a completed application impact the delivery requirements for the Loan Estimate?
Submission of consumer’s financial information for the purposes of obtaining an extension of credit.
› Consumer’s name
› Consumer’s income
› Consumer’s SSN to obtain a credit report
› Property address
› An estimate of the value of the property
› Mortgage loan amount sought
If a credit union has those six pieces of information and a consumer is seeking a covered loan, the Loan Estimate must be delivered to the consumer or placed in the mail no later than the 3rd business day AFTER the credit union receives the information.
Special Mortgage Rules: TILA/RESPA
Business Day: General Definition/Business Function Test
Business day” is a day on which the credit union’s offices are open to the public for carrying on substantially all of its business functions. This could include Saturdays for some credit unions.
Special Mortgage Rules: TILA/RESPA
Business Day: Specific Definition
“Business day” means all calendar days except Sundays and the legal public holidays
Special Mortgage Rules: TILA/RESPA
Timing requirements for Loan Estimate
Loan Estimate must be delivered to the consumer or placed in the mail no later than the 3rd business day (GENERAL/BUSINESS) after receiving an application
- If the Loan Estimate is not provided to the consumer in person, the consumer is considered to have received the Loan Estimate 3 business days (SPECIFIC) after it is delivered or placed in the mail
- Must be provided at least 7 business days (SPECIFIC) before consummation, unless the consumer waives the waiting period
Special Mortgage Rules: TILA/RESPA
Timing requirements for Closing Disclosure
Received by the consumer no later than 3 business days (SPECIFIC) before consummation of the loan.
- If the Closing Disclosure is not provided to the consumer in person, the consumer is considered to have received the Closing Disclosure 3 business days (SPECIFIC) after it is delivered or placed in the mail
- If the credit union has evidence that the consumer received the Closing Disclosure earlier than 3 business days after it is mailed or delivered, it may rely on that evidence and consider it to be received on that date.
Special Mortgage Rules: TILA/RESPA
What are the restrictions on activities, or actions a credit union may not take before the borrower receives the Loan Estimate and indicates an intent to proceed with the loan?
- Prohibits imposing any fee on a consumer
- Prohibits providing written estimates of terms or costs specific to consumers unless the credit union also provides a written statement that the terms and costs may change
- Does not allow credit unions to require submission of documents verifying information in the consumer’s application before providing the Loan Estimate
Special Mortgage Rules: TILA/RESPA
What does it mean to provide the disclosures in the Loan Estimate in good faith?
A Loan Estimate is considered to be made in good faith if the credit union charges the consumer less than the amount disclosed on the Loan Estimate, even if the amounts in the Loan Estimate were overestimated in excess of any tolerance limitations.
The LE was made in good faith if there is 0% change
between the LE and the CD
– Some fees fall in a 10% tolerance
– Some fees have no tolerance and can change with no limit between the LE and CD
Special Mortgage Rules: TILA/RESPA
No Tolerance Limitation
› Prepaid interest
› Property insurance premiums
› Amounts placed into an escrow, impound, reserve or similar account
› Third‐party services selected by the consumer:
• When consumer can shop and picks provider NOT ON LIST
• When consumer picks services NOT REQUIRED by creditor
Special Mortgage Rules: TILA/RESPA
10% Cumulative Tolerance
May charge the consumer more than the amount disclosed as long as the total sum of the charges does not exceed the sum of those same charges disclosed on the Loan Estimate by more than 10%
› Recording fees
› If the credit union permitted the consumer to shop, fees paid to an UNAFFILIATED third-party service provider on the credit union’s written list
Special Mortgage Rules: TILA/RESPA
Zero Tolerance (6 types)
Not permitted to charge consumers more than the amount disclosed on the Loan Estimate under any circumstances
› Fees paid to the credit union
› Fees paid to a mortgage broker
› Fees paid to an affiliate of the credit union or mortgage broker
› Fees paid to an unaffiliated third party if the credit union DID NOT permit the consumer to shop for settlement services
› Transfer taxes
› Lender credits
Special Mortgage Rules: TILA/RESPA
What tolerance applies if the member is permitted to shop for a mortgage related service? What tolerance applies to a mortgage related service if the member is not permitted to shop?
PERMITTED TO SHOP
- 10% Tolerance
- No Tolerance (when consumer shops AND picks a provider not on the list)
NOT PERMITTED TO SHOP
- Zero Tolerance
Special Mortgage Rules: TILA/RESPA
If the credit union allows a member shop for a particular mortgage related service, what impact does that have on the tolerance that applies? What tolerance applies if the member can shop and chooses a provider that is not on the written list of service providers?
- If a consumer chooses a provider for a required third-party service that is on the credit union’s written list, the charge is subject to the 10% cumulative tolerance.
- If the consumer chooses a provider that is not on the credit union’s written list, the credit union will no longer be limited in the amount that may be charged for the service.
- The charge is removed from consideration under the 10% tolerance level and instead would fall under the NO TOLERANCE limitation.
Special Mortgage Rules: TILA/RESPA
In what kinds of circumstances may a credit union issue a revised Loan Estimate and use those costs instead of the original Loan Estimate to determine whether costs charged to the borrower are in good faith?
– Extraordinary event beyond control of any party
– Information specific to the consumer or transaction that the creditor relied on was inaccurate or changed
– New information specific to consumer or transaction that the creditor did not rely on
– Consumer requested change to credit terms or settlement
– Interest‐rate dependent changes (if rate is locked)
