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June 20, 2015

Un-TIL they make the change! — CFPB’s New Mortgage Disclosure Rule

Filed under: Technical & Legal — Tags: , , , — admin @ 10:22 am

Know Before You Owe!
“The CFPB will be issuing a proposed amendment to delay the effective date of the Know Before You Owe rule until October 1, 2015.”
You can owe without knowing for the time being!

Currently, loan document packages include a Truth in Lending and often a Good Faith Estimate. The problem is that these documents are confusing. The Good Faith Estimate, TIL and HUD-1 have overlapping information and it is often hard to know which document has the final information unless you are a seasoned Notary.

The New Document will be Called “The Loan Estimate.”
This document will cover the loan ammount, interest rate, monthly principal & interest, prepayment penalty info, balloon payment info, estimated monthly payments, tax, insurance, closing costs, and more.
http://files.consumerfinance.gov/f/201311_cfpb_kbyo_loan-estimate.pdf

The APR Revisited
In addition to starting the APR on page three, there will be yet another figure to make Notaries crazy called the TIP which is the Total Interest Percentage which reflects the total amount of interest you will pay over the life of the loan as a percentage of the loan amount.

Other Considerations
Late payment fees, servicing, assumption, and appraisal costs will also be covered in this new and exciting document.

Is Change Good?
Honestly, this new document is somewhat of a combination of the HUD-1 and the TIL with some elaborations and improvements. I believe it is not necessary to create a new name for a document. In my opinion, this information would be better off added to existing documents so that Notaries and borrowers don’t get any more confused than they already are.

What Do Notaries Think?
Deb on LinkedIn feels tha this new document will make life simpler.
Wendell on LinkedIn feels that the new forms are not any more complicated than the forms they replace.
Linda on LinkedIn feels the new forms will help Notaries as borrowers will have the chance to look the form over and learn the facts before the signing.
Kelly states that there will be a complete process change for loans in the industry and it will be more than just one new form.
https://www.linkedin.com/grp/post/4139192-6014441719272067073?trk=groups-post-b-all-cmnts

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2 Comments »

  1. This new form reveals very little that is not already included in the current Good Faith estimate, HUD-1 and TIL.
    The intent was to present the information in an easier to understand format. One bit of information that has been added is contact information for all parties involved in the transaction. This is a good addition.
    The change of format would be totally unnecessary if all loan officers would do their job and make sure their borrowers have a complete understanding of the loan terms.
    I have originated, processed, underwritten and closed many thousands of mortgage loans over the past 30 years. I have never had one recission. It’s all about communication.
    If the loan officer does their job and communicates well with client and the signing agent does their job of effective communication the borrower will be well informed and feel comfortable with their loan.

    Comment by Jim Benton — June 23, 2015 @ 4:48 am

  2. The statement near the end of this blog is not at all accurate. I do spend any time reviewing the GFE with the consumer. It does not require signatures and is an estimate of what the transaction is about. The “final” TIL and HUD have the information the borrower needs at the time of closing.

    What we know today as the “initial” TIL and GFE will be combined into the Loan Disclosure. This form will have little to no bearing on what signing agents do on a daily basis. This form has its own timeline which will not affect the notary at all. At this time and given the new rules for timing, I am not sure we will see one of these in our packages. http://files.consumerfinance.gov/f/201311_cfpb_kbyo_loan-estimate.pdf

    The form that we need to understand and get a grip on is the Closing Disclosure. This form is five (5) pages long and combines the “final” TIL and HUD (settlement statement). This form has to be in the hands of the borrower three (3) days before the signing can take place. In a training session that I went to at the local board of Realtors, they speculate that the lender will be forced to send this document out six (6) days prior to closing in order to meet the three day deadline of having it in the hands of the consumer.
    http://files.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdf

    It is important NOT to confuse these two documents. The Closing Disclosure is the form we need to focus our energy on learning.

    What I have not heard from anyone is whether the documents will be ready at the same time as the Closing Disclosure. If they are, it will change the dynamics of what we do tremendously. If the documents are ready it will allow an opportunity for lenders to overnight more documents!

    Comment by John Axt — June 23, 2015 @ 12:57 pm

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