July 28, 2014
The new TILA-RESPA Integrated Disclosure requires in 1026.18(e)(2)(i)(A), and I’m paraphrasing, that lenders and others are restricted from imposing a fee on a consumer in connection with an application for a mortgage transaction:
(a) unless the consumer has already received the Loan Estimates, and
(b) the consumer has indicated an intent to proceed.
The comments to this section clarify no fees may be charged to the consumer prior to (a) and (b) above, with the exception of a credit report fee. Digging a little deeper into the comments, if a “third-party,” presumably, a broker, is shopping for a deal on behalf of the consumer and the broker presents the application to a lender who denies the transaction, (or by the same token, the consumer withdraws from the transaction with the lender to whom the broker originally presented the consumer’s application) and then the broker presents the consumer’s application to another lender, neither the broker nor the new lender can charge another credit report fee; presumably, because the broker already has access to the previously ordered credit report.
July 21, 2014
This past week, IDS Compliance attended a roundtable sponsored by an industry-leading mortgage company regarding the TILA-RESPA Integrated Disclosures vis-à-vis with attorneys, mortgage compliance consultants, mortgage compliance advisors, LOS providers, title agents, brokers, loan originators, real estate agents, and document generators (viz. IDS). One of the hot-topic points of discussion revolved around “waivers,” specifically, waivers prior to consummation.
If you are not aware, § 1026.19(e)(1)(iii)(B) requires the lender to deliver or mail the Loan Estimate for a specific* seven-business-days prior to closing, written into the rule as a “waiting period.” A separate rule, § 1026.19(f)(1)(ii)(A), with a timing requirement that may run parallel to § 1026.19(e)(1)(iii)(B), states that the consumer also receive and be holding in-hand the Closing Disclosures for a specific* three-business-days prior to closing, also written into the rule as a “waiting period.”
July 14, 2014
IDS Compliance noticed that page 142 of the preamble to the final rule states:
"The Bureau understands that some creditors require a purchase and sale agreement prior to
issuing the RESPA GFE and the early TILA disclosure. While this practice may be permissible
under current Regulation X in some cases, it would conflict with final § 1026.19(e)(2)(iii), which
prohibits a creditor from requiring verifying documentation before issuing a Loan Estimate. See
the section-by-section analysis of § 1026.19(e)(2)(iii)."
On this point, IDS Compliance recently heard an employee of the CFPB provide an "unofficial
verbal guidance" reminder for the industry, which went as follows:
We assume that in most cases, creditors will seek additional information
about the loan product or products that the consumer is considering before providing the loan
estimate. I just will let you know that there are a few pre-disclosure restrictions at 1026.19(e)
(2). For example, prior to a consumer receiving a Loan Estimate and indicating an "intent to
proceed" with the transaction, a creditor may not ask the consumer for verifying documentation,
or charge the consumer for anything other than a reasonable fee to obtain a credit report.
Comment 19(e)(2)(i)(A)-5 gives an example of the creditor requiring a consumer to provide a
check that the creditor holds but does not cash or a credit card number that the creditor requires
the consumer to provide but does not charge until the consumer has received a Loan Estimate
and indicated an "intent to proceed," and the commentary explicitly explains that these practices
violate the rule.
July 7, 2014
IDS Compliance is well into the process of preparing its proprietary software system for the TILA-RESPA Integrated Disclosures (“TRID”). As such, from time to time over the next year, IDS Compliance will do posts with information regarding some of the industry hot topics creating a buzz; and where applicable, how IDS plans on tackling disclosure-related hot topics with its system.
Today’s hot topic relates to a question IDS Compliance recently heard asked by a member of the industry to an industry expert. The question posed went as follows: “on the same Loan Number, can a lender provide two or more loan estimates to the borrower for different loan types?”