by Amanda McCurtrey, DocuTech
The Bureau of Consumer Financial Protection has proposed some amendments to the TILA-RESPA Final Rule. The Bureau is proposing to relax the timing requirement for a creditor to redisclose interest rate dependent charges and loan terms, as well as provide for placement of language relating to certain new construction loans on the Loan Estimate form. The Bureau is also proposing several corrections, updates, and wording changes for clarification purposes. The proposed amendments are as follows:
- A revised Loan Estimate must be provided no later than the next business day after an interest rate lock agreement is executed. If an interest rate lock agreement is not executed the proposed timing requirement is not applicable.
- A new disclosure for new construction loans, where settlement is not expected to occur for more than 60 days after the Loan Estimate is provided, will be added under the heading “Other Considerations” on page 3 of the Loan Estimate, which states: “You may receive a revised Loan Estimate at least 60 days prior to consummation.” The Bureau is also proposing that the placement of this language under the heading “Other Consideration” to be “clear and conspicuous.”
- All monthly amounts disclosed in Section G of the Loan Estimate are not to be rounded.
- Clarification that the text disclosed in the “Did this change?” column for the “Closing Costs Paid Before Closing” row of the “Calculating Cash to Close” table on the Closing Disclosure should indicate that the consumer paid for the disclosed Closing Costs before closing. Currently the regulatory text requires “a statement that the consumer included the closing costs in the loan amount, which increased the loan amount.”
- In regards to the amount disclosed in the “Final” column, row “Total Payoffs and Payments (K)”, in the “Calculating Cash to Close” table on the Closing Disclosure, this should be the same as the amount disclosed in the “K. Total Payoffs and Payments” row from the “Payoffs and Payments” table, disclosed as a negative number. Currently the regulatory text requires the amount to be “the total amount of payoffs and payments made to third parties not otherwise disclosed” in the “Payoffs and Payments” table.
- The “Payoff of First Mortgage Loan” and “Payoff of Second Mortgage Loan” rows in the “N. Due From Seller at Closing” section of the “Summaries of Transaction” table on the Closing Disclosure should reflect the first and second liens, respectively. Currently the regulatory text requires the reverse.
- Clarification that Model Form H-24(G) contains only one variation of page one, rather than two.
- Clarification that the time periods disclosed in the “Can this amount increase after closing?” column of the “Loan Terms” table should be disclosed in one of two ways. For time periods of less than 24 months, but which do not equate to a whole number of years or within a number of days less than a week, then the periods should be disclosed in the same manner that they are disclosed under “Product” (e.g. “18 mo.” Or “0/weekly”). For periods of 24 months or more, the periods should be disclosed in whole years.
- The Bureau intended to state that the amount for “Mortgage Insurance” and “Estimated Escrow” in the “Projected Payments” table should be disclosed as “0” if no escrow account is established. If an escrow account is established for any amounts under “Taxes, Insurance & Assessments” in the “Projected Payment” table, but no payment is required with a particular periodic payment, then “-“ should be disclosed.
- Currently a disclosure of whether the creditor will pay some of the amounts disclosed in the “Estimated Taxes, Insurance &Assessments” row of the “Projected Payments” table must be made, excluding payments for property taxes or homeowner’s insurance. The exclusion has been removed.
- Clarification that the amount disclosed as “Closing Costs Financed” in the “Calculation Cash to Close” table on the Loan Estimate should be disclosed as a negative number only to the extent that it does not exceed “J. Total Closing Costs,” rather than “Lender Credits” as it does now.
- Clarification that the signature acknowledgment language on the Loan Estimate should print on any additional pages used for additional signatures, rather than the liability after foreclosure disclosure.
- Clarification that if there is more than one property securing the credit transaction, then the addresses of all properties securing the transaction need to be disclosed on the Closing Disclosure. If there is not enough space on the Closing Disclosure, then an addition page with the additional addresses may be appended to the end of the form.
- In regards to the “Did this change?” column, “Loan Amount” row of the alternative “Calculating Cash to Close” table on the Closing Disclosure, the text disclosed should be “This amount Increased” (or decreased, as applicable) rather than “You increased this amount.”
- New Commentary in regards to the “Did this change?” column, “Total Closing Costs (J)”, of the alternative “Calculating Cash to Close” table that a statement be made when the “Final” amount increased from the “Loan Estimate” amount, which discloses how much of the increased amount exceeds legal limits and a statement directing the consumer to the disclosure of lender credits, if a credit is provided.
We will continue to monitor the Final Rule and make the necessary changes as amendments are finalized. We will be posting additional amendments as they are proposed and additional information as it is made available on our website. The notice of these proposed amendments can be found here.