Monthly Archives: September 2018

State Compliance Updates for the Mortgage Industry


Military Families Financial Relief Act – The state of California amended its provisions relating to deferment of financial obligations for reservists by removing the requirement under the Military Families Financial Relief Act to provide a signed letter, under penalty of perjury, and instead require a written request. These provisions are effective on January 1, 2019 (AB 2521).


Consumer Credit Licenses – Connecticut has modified provisions under its Banking Law concerning consumer credit licenses. The new provisions expand the authority granted to the Banking Commissioner in various circumstances. The effective dates for these provisions range from July 1, 2018 to July 1, 2019 (HB 5490).


Consumer Credit Fees – The Indiana Department of Financial Institutions published its annual consumer credit fees schedule. These fees are effective from July 1, 2018 through June 30, 2019 (schedule).


Anti-Money Laundering – Effective July 17, 2018 the Georgia Department of Banking and Finance adopted multiple provisions relating to mortgage lenders, brokers and servicers that include lenders and brokers that satisfy the definition of “loan or finance company” under the Bank Secrecy Act must have an anti-money laundering program; and various updates to its mortgage servicing standards (80-11-6).


Notary Provisions – The state of Michigan amended its provisions relating to notaries that include performance of notarial acts; remote electronic notarization; and signature of notary public. These provisions are effective immediately and this act takes effect on September 30, 2018 (HB 5811).


Foreclosure Provisions – Effective December 17, 2018, Pennsylvania has enacted provisions regarding the foreclosure of vacant and abandoned properties (PA HB 653).

Rhode Island

Mediation Conference – The state of Rhode Island modified its provisions relating to mediation conference prior to mortgage foreclosure by extending certain sunset provisions as well as limiting the amounts a HUD-approved agency may receive for a mediation and filing fee. These provisions are effective immediately (HB 7385).

Electronic Recording Act – Effective July 1, 2019, the state of Rhode Island enacted provisions relating to its Uniform Real Property Electronic Recording Act (HB 7080).


TRID 2.0 Talking Points

Introduction to TRID 2.0

An explanation of what to expect with our video series, the purpose of TRID 2.0, and a quick overview of major clarifications of TRID 2.0 as well as how to test them inside DocMagic.

Rounding and Truncation on LE & CD

Friday, September 7th, 2018
In episode 2 we review the original TRID rule for disclosing precentages, DocMagic’s rule for disclosing decimal places, and we address rounding and truncating trailing zeroes.

Seller Credits

Tuesday, September 11th, 2018
In episode 3 of TRID Talks we will be going over seller credits: how to send in XML & enter into DocMagic Online as well as the impact and changes on forms when Seller Credit.

Trusts and Non-borrowers

Thursday, September 13th, 2018
TRID Talks episode 4 will be about Trusts. Topics covered in this episode include: rescindable transactions – borrower title owner no longer to appear on pg. 1, and borrowers as ‘individuals’.

Closing Costs Expiration Date

Tuesday, September 18th, 2018
TRID Talks episode 5 will cover Closing Costs Expiration Date (CCED) over ten days – how to get plan feature set and CCED on redisclosed LE when ‘Intent to Proceed Date’ is present.

Simultaneous, Subordinate Lien Loans

Thursday, September 20th, 2018
TRID Talks episode 6 addresses simultaneous, subordinate lien loans. We will explain the new flag and the consequence of the flag which equals true.

Construction/CTP Changes

Tuesday, September 25th, 2018
In episode 7 we’ll discuss after consummation contruction inspection and fees including: the integration update and the impact on LE & CD as well as all other construction/CTP changes.

Principal Reduction

Thursday, September 27th, 2018
In our final episode of TRID Talks we’ll discuss how to indicate principal reduction is specifically for a tolerance cure. Also, the impact on display of items on the LE & CD.


Is This Bottle of Wine Still Drinkable ?

I studied in France in college and brought a decent amount of French wine home with me. Some of that wine got consumed with friends pretty much immediately, but a few bottles I’ve held on to and moved from apartment to apartment over the years, saving them for a “special” occasion.

College for me was… a while ago, so looking at the bottles now, there’s a big question: are these still drinkable?

I’ve been very careful about how the wines have been stored through the years, and aside from a few brief power outages during storms in summer months, everything has been kept cool and stored properly. The Washington Post recently ran a story explaining what else is worth looking for in those dusty bottles you’ve been keeping in the basement

Check the Cork

One of the first things you should do when determining whether a bottle of wine is still good is to look at the space between the cork and the wine. Most bottles should have roughly a quarter-inch between the cork and the wine in the bottle. You don’t need to pull out your measuring tape for this if you have another bottle of wine in the house for comparison. If your old bottle has more space than it should, there’s a good chance the wine has oxidized, evaporated or seeped out through the cork.

Look for Leakage

Another good sign things have gone south? If you see what looks like leakage on the outside of the bottle. If the bottle was leaking at any point in its journey, that wine isn’t going to be too tasty now.

Do Your Due Diligence

It never hurts to look up the producer and vintage and just see what’s out there. You can see what others have said about the bottle (and when), and get a decent idea for how things are progressing. For instance, if all the reviews of the bottles have started to get worse in recent years, that’s a good sign that the bottle is starting to pass its prime and it might be time to drink it.

When in doubt, the best solution is always the easiest: just crack the bottle and try it.


TRID 2.0 Subordinated Liens – What You Need to Know

As I have discussed in previous articles, the October 1st mandatory compliance date for the 2017 TRID Rule is quickly approaching. I hope you have taken some time to review these requirements during this “Optional Compliance Period.” If not, you still have approximately three months to ensure your policies and procedures are up to standard with the new requirements before they become the new law of the land.

With this new wave of requirements comes a slew of technical revisions and clarifications that I like to describe as a “reboot” of the existing TRID Rule. Since the implementation of the original rule in October 2015, the industry has faced certain challenges with the disclosures for certain types of transactions such as construction loans and simultaneous subordinate lien loan closings in connection with a first lien purchase loan.

These simultaneous subordinate lien loans are commonly referred to as “piggyback” loans, as they are typically originated in order to assist with the down payment of the 1st lien purchase loan. Per the clarifications by the new 2017 Rule, in a purchase transaction that involves a subordinate lien loan, if the Closing Disclosure for the first lien loan has all of the required disclosures related to the seller, then the settlement agent, or the financial institution acting as settlement agent, may provide the seller with only the first lien CD instead of both the 1st and subordinate lien CDs. As such, the Seller’s Summaries of Transactions table does not have to be included, or can be left blank, for the subordinate lien loan disclosure.

You are also permitted to use the alternative disclosures for the subordinate lien transaction since the seller’s information is not necessary to be included on the subordinate lien disclosures. Keep in mind, if you use the alternative disclosure on the Loan Estimate, then you must also use the alternative disclosure tables for the Closing Disclosure. Prior to this clarification in the Final Rule, the alternative disclosures were optional only when a seller wasn’t involved. In this case, a seller is involved, but not specifically in connection with the subordinate lien transaction. This means you may also omit the seller’s name and address for the subordinate lien disclosures as it will already be reflected on the 1st lien purchase disclosures.

However, there are some additional things to note as clarified by the 2017 Rule –

The disbursement date on the Closing Disclosure for a simultaneous subordinate lien transaction is the date that some or all of the loan amount is expected to be paid to the consumer or a third party other than the settlement agent

The simultaneous subordinate lien will also be disclosed as a purchase purpose even though you are not required to reflect seller information on the subordinate lien disclosures as previously mentioned

Funds from the subordinate lien transaction are included in the Adjustments and Other Credits Section of the Loan estimate for the 1st lien disclosure, and are then disclosed under the Borrower’s Summaries of Transactions Table on page three of the 1st lien Closing Disclosure

Additionally, if you’re using the standard disclosure, the sales price is not disclosed under the Borrower’s Summaries of Transactions table on the CD for simultaneous subordinate lien loan. Therefore, the sales price is also not included in the Calculating Cash to Close calculations on the Loan Estimate or Closing Disclosure for the simultaneous subordinate lien loan transaction.

As a result of the many technical clarifications and amended provisions imposed by the 2017 TRID Rule, it will be important for you to perform a review of your loan operating system to ensure your software is up-to-date with these revisions. As the creditor, you are ultimately responsible for the accuracy and timeliness of the disclosures. It will be you, and not your third party software vendor, that will be held responsible for compliance with the new rules. So, take these last couple of months of the “Optional Compliance Period” to test your system and ensure it is compliant.

TRID 2.0 Beware of These Common Issues

Karl Dahlgren is managing director of BAI, Chicago, a nonprofit independent organization that delivers actionable insights for the financial services industry.

In October 2015, the first iteration of TRID took effect, which integrated the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures and regulations, under the Know Before You Owe (KBYO) Mortgage Initiative.

Two years later, the Consumer Financial Protection Bureau issued amendments to TRID that will go into effect this year, impacting loan applications received on or after October 1. While this updated regulation will have a significant impact on the industry, it will not require massive adjustments to processes and procedures, new training models or changes in vendors or suppliers.

Yet, even a few years after the initial ruling has gone into effect, many lenders and service providers still experience confusion about compliance with the rule. The CFPB continues to publish additional amendments and clarifications in an attempt to address much of the industry’s confusion about unique situations requiring disclosures. The main issue the industry struggles with is that the ruling, despite its staggering length, cannot possibly address all of the different scenarios that lenders continue to encounter.

When facing the upcoming regulations, many lenders have been concerned or confused about the following frequently asked questions.

Title and Escrow Fees
Can all fees associated with title and all fees associated with escrow be combined into one line each?
On the loan estimate form, all fees associated with title costs and closing can be rolled into one line if the lender prefers to do so. It is important to note, however, that this is not mandatory; it is an optional way of disclosing.

Appraisal Costs Changed Because Property Type Changed
If a borrower did not describe the property type correctly, such as confusing a condo and a duplex, and the appraisal charge must be increased as a result, is this considered a change of circumstances? Would this require a change in circumstance form for the higher cost of the appraisal?

The TRID amendments and clarifications have not altered the current definition of a change in circumstance. The regulation implies that you have three days to send the loan estimate. That time is intended to allow the creditor to perform the necessary investigations and due diligence to gather the necessary information to make the loan estimate in good faith. If a situation such as the one described occurred after the loan estimate was prepared, this would be considered a change in circumstances. The lender would need to issue a revised loan estimate in this scenario.

Defining Draw Fees
What is considered a “draw fee” under the new updates? Draw fees would also be synonymous with inspection fees if the lender requires an inspection before advancing more funds. There are several different terminologies for this fee used in different parts of the country. The small entity guides use “inspection and handling fees.”

Lender Paid Loans
How are most lenders disclosing a lender-paid loan? Does any lender-paid credit have to be disclosed at the time of the loan estimate?

Lenders may show the lender credit on the loan estimate and the item purchased by the loan credit, or they may decide not to disclose the cost of an item the lender-paid credit will pay for in the loan disclosure. The charge and the specific lender credit would need to be shown on the closing disclosure.

TRID 2.0 Quick Overview

The latest version of TRID provided the industry with much-needed clarification on a number of issues and practices facing lenders as they react and operationalize workflow to be in compliance with the revised rules of engagement. As a private-label fulfillment resource, my company has had the opportunity to speak with our clients in depth about our joint interpretation of the revised regulation and its impact on the origination process. As we all know, the original rule had many clear mandates, but left certain areas very gray.

From our viewpoint, the 2017 rule (TRID 2.0) broadly contained seven major changes and clarifications and five areas where the rule fell short of what the industry requested to be addressed.

Major Changes and Clarifications

TOP (Total of Payments) Calculation

Under TRID 1.0, there were different opinions on how the TOP calculation should be calculated. The 2017 rule provides clarification that TOP can exclude charges for principal, interest, mortgage insurance, or loan costs that are offset by another party through a specific credit. However, general credits,  may not be used to offset amounts for the purpose of TOP.

Tolerance Guidance in Conjunction with Good Faith Requirements

TRID 2.0 validates that the best information reasonably available standards apply to fees subject to 10 percent tolerance and allowable variations. The 2017 rule explains that if a charge subject to the 10 percent cumulative tolerance standards was omitted from the loan estimate (LE) but charged at consummation, it’s allowable if the sum of all charges subject to the tolerance is in good faith. For example, the lender must disclose the fee for services the lender requires. However, the lender is not required to provide a detailed breakdown of all related fees that are not explicitly required by the creditor, but may be charged to the consumer that are needed to perform the settlement services required by the creditor.

TRID 2.0 also explains that this standard applies to property taxes, property insurance (including homeowner’s insurance), amounts placed in escrow, impound, reserve or similar accounts, prepaid interest, and third-party services not required by the creditor, so long as the charges (or omission of charges) were estimated on the best information reasonably available.

Settlement Service Provider List (SSPL) Modifications and Good Faith Requirements

The 2017 rule provides that whether a consumer is permitted to shop is determined by the relevant facts and circumstances. It also identifies the tolerance standard for when the lender permits shopping for settlement services, but fails to provide the written SSPL. If a creditor fails to provide the written list to the consumer, but the facts and circumstances indicate the consumer was permitted to shop for the settlement service, the charges for which the consumer is permitted to shop are subject to 10 percent cumulative tolerance standard. However, if those charges are paid to the creditor or an affiliate, they are subject to 0 percent tolerance. Errors or omissions on the written list or untimely delivery of the written list may also impact tolerance standards. If the error or omission does not prevent the consumer from shopping, the charges are not to the creditor or an affiliate, and the consumer is otherwise considered to have shopped, the charges are subject to the 10 percent cumulative tolerance. If the error or omission does prevent the consumer from shopping, the charges are subject to the 0 percent tolerance standard.

Web Statistics