NEW CLOSING DISCLOSURE

NEW CLOSING DISCLOSURE

NEW CLOSING DISCLOSURE – EFFECTIVE 8/1/2015

TILA-RESPA Integrated Disclosures Rule will become effective August 1, 2015. A new rule was issued on 11/20/2013 for “Integrated Mortgage Disclosures”. It replaces the RESPA and TILA disclosures and HUD with one single disclosure as follows:

  • Loan Estimate replaces the current GFE and initial TIL (3 pages total)
  • Closing Disclosure replaces the current HUD and final TIL (5 pages total)

Implementation Date for the new closing disclosure: 8/1/2015

A NEW LANGUAGE!

WHAT ARE THE NEW TERMS WE WILL BE USING:

Current Term

New Term 8/1/15

GFE Loan Estimate
HUD Closing Disclosure
Escrow Agent or Closer Settlement Provider
Borrower Consumer
Signing Date Consummation
Lender Creditor
Bucket Category

WHAT IS A QUALIFIED MORTGAGE OR CLOSED END MORTGAGE?

QM – Qualified Mortgage = a loan that avoids risky requirements and lenders must assess the borrower’s ability to repay the loan under different guidelines, such as:

  • Debt-to-income ratio including mortgage payments must be 43% or less
  • No risky features such as negative amortization or interest-only payments
  • Points and fees cannot exceed 3% on a loan of $100,000.00 or more

WHAT TRANSACTIONS ARE AFFECTED BY THE NEW RULE?

  • New Single Family Residential (1-4 unit) bank loans and refinances.

WILL WE STILL USE THE OLD HUD1 FORM AFTER THE CLOSING DISCLOSURE GOES INTO EFFECT?

Yes, but only for the following transactions:

  • Home Equity Line of Credit
  • Reverse Mortgage
  • Mortgages secured by a Mobile Home
  • Loans made by a person who makes 5 or fewer mortgages in a year (see Rule for more detail)
  • Certain no-interest loans secured by subordinate liens (see Rule for more detail)

TIPS AND TOOLS

  • Loan Estimatereplaces initial Truth in Lending and Good Faith Estimate
  • Closing Disclosurereplaces Final Truth in Lending and HUD-1
  • New Closing Disclosure must be delivered to consumer three business days prior to signing
  • CFPB forms reflect purchasing owner’s title insurance is optional
  • Date of consummation means date the borrower becomes legally obligated under the loan
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