UNDERSTANDING the New Loan Estimate and Closing Disclosure

Disclaimer  This presentation is for general informational and educational purposes only and should not be construed or relied upon as legal advice. The information in this presentation is provided “as is” without any representations or warranties, express or implied, including, but not limited to, any representation that the information is complete, true, accurate, up-to-date or non-misleading. If you have specific questions about any information provided herein, you should consult your attorney or other professional legal services provider.

TILA/RESPA Integrated Mortgage Disclosure Forms Final Rule  Congress passes Dodd-Frank Act in 2010 to address financial crisis  Law includes establishment of the Consumer Financial Protection Bureau  CFPB tasked with bringing all consumer protection statutes under one regulator  Dodd-Frank requires integration of the TILA and RESPA mortgage disclosure requirements  In 2013, CFPB publishes final rule integrating the Good Faith Estimate, Truth in Lending disclosure and the HUD- 1 Settlement form, to take effect October 3, 2015*  *On June 24, the CFPB issued a proposed amendment to extend the original Aug. 1 TILA/RESPA Integrated Disclosure implementation deadline to Oct. 3. This date is subject to final approval from the CFPB, following the expiration of the public comment period, which concludes on July 7.

Why Were the TILA and RESPA Forms Integrated? All parties – consumers, industry professionals and regulators – agreed the current forms were confusing. The CFPB created and tested the forms to protect the consumer:  Making the terms of the loan clearer and more transparent  Ensuring the buyer can readily shop and compare loans  Creating similarity between forms to make sure the consumer can easily compare the loan promised to them with the final closing disclosure IT’S ALL ABOUT THE CONSUMER

October 3, 2015*, Implementation Date Forms will go into effect on October 3  All lenders and settlement providers will begin using the new forms on the same day  Early use of the integrated disclosures is NOT permitted  If application is received on Oct. 2, the early TIL and GFE will be used at application, and the final TIL and HUD-1 will be used at closing  For all applications received on or after Oct. 3, the new Loan Estimate and Closing Disclosure will be used  Settlement Agents must be in a position to produce the new Closing Disclosure form as well as the old HUD-1 during the transition *On June 24, the CFPB issued a proposed amendment to extend the original Aug. 1 TRID implementation date to Oct. 3. This date is subject to final approval by the CFPB, following the expiration of the public comment period, which concludes on July 7.

Providing the Loan Estimate  Lender must deliver or place the Loan Estimate in the mail within 3 business days after receipt of the application  Homebuyer is considered to have received the disclosures 3 business days after they are sent or placed in the mail  The Loan Estimate must be delivered to the potential borrower at least 7 business days before consummation. (In unusual circumstances, a bona fide personal financial emergency waiver can override the 7-day rule)

LOAN ESTIMATE

LOAN ESTIMATE (Replaces the GFE) Page 1  Terms  Payments  Closing costs

LOAN ESTIMATE Page 2  Alphabetical itemization

LOAN ESTIMATE Page 3  TIP new from Dodd-Frank Act  Appraisal and RESPA servicing disclosures included

PROVIDING THE CLOSING DISCLOSURE

Providing the Closing Disclosure  Closing Disclosure required to be received by the consumer no later than 3 business days before consummation (what constitutes consummation may vary, depending on state regulation)  Definition of business day for purposes of Closing Disclosure: All calendar days except Sunday and certain federal holidays, including: New Year’s Day, Martin Luther King Jr. Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day  Three-day rule exception: Bona fide personal financial emergency with written statement by consumer When must lender re-disclose:  The APR becomes inaccurate  APR changes beyond allowable limit (.125)  The loan product changes  Adjustable rate to fixed-rate mortgage  A prepayment penalty is added  This effectively increases the interest paid on the loan and the costs to consumer to refinance at a later date

SETTLEMENT AGENTS AND THE CLOSING DISCLOSURE

Settlement Agents and the Closing Disclosure  Creditor/lender is ultimately responsible for providing the Closing Disclosure  This includes the HUD-1 information for which the settlement agent was previously responsible  Settlement agent may provide the Closing Disclosure  But the creditor is still ultimately liable  Creditor and settlement agent can divide responsibilities for providing the Closing Disclosure at different times, or for different portions of the Closing Disclosure  Discussions are ongoing between agents and lender clients to identify best flow of disclosures between the agent and lender  Wells Fargo, Bank of America, and other major lenders are providing closing agents with information on how these lenders will handle the delivery of the Closing Disclosure to their consumers

Settlement Agents and the Closing Disclosure (Seller Specific)  Settlement agent is responsible for providing the Closing Disclosure to the seller  Required to be provided no later than the day of consummation (may vary depending on state regulations)  Required to provide a copy to the creditor if on different disclosure than borrower  If within 30 days after consummation, an event causes the Closing Disclosure to be inaccurate with respect to an amount the seller pays, the settlement agent must provide a corrected Closing Disclosure within 30 days after learning of the change

Closing Disclosure Page 1  Terms  Payments  Closing costs  Cash to Close

Closing Disclosure Page 2  No HUD-1 line numbers  Alphabetical order within categories Loan Costs Origination Services Borrower DID NOT shop for Services Borrower DID shop for Other Costs

Closing Disclosure Page 3  Calculating Cash to Close  Summary of Transaction includes both Borrower’s Transaction and Seller’s Transaction

Closing Disclosure Page 4  New Dodd-Frank disclosures

Closing Disclosure Page 5  New Dodd-Frank disclosures

NORTH AMERICAN TITLE COMPANY As the facilitator of the real estate transaction, North American Title agents, escrow officers and closers are dedicated to being a valued and knowledgeable resource from the moment a title order is open until the transaction is closed. Our training and expertise with the new forms will help smooth the transaction process, as we work through the intricacies of the new forms with you. If you require more in-depth information about the new forms, please contact your own legal counsel or visit the Consumer Financial Protection Bureau website at Resources for your clients As your home buyers and sellers enter into the real estate transaction, they will have many questions and concerns. We have provided resources for them on our website under Products & Services at: We have specific resources concerning the new forms at: or invite them to check out our educational videos at:

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