TRID Totally “Rad” Integrated Disclosures AKA: TILA RESPA Integrated Disclosures

Layout  Brief Overview of TRID  The changes to rules/fees – Origination  The changes to rules/fees – Closing  The changes to rules/fees – Post Closing  Sample Loan Estimate  Sample Closing Disclosure  What will Encompass look like?  Questions

What is TRID?  “Know before you owe” – the CFPB’s slogan  New forms and regulations to better inform the consumer of the details of their transactions  GFE, TIL, Itemization are confusing and overwhelming – consolidate and integrate for consumer benefit

When is TRID?  TRID is effective starting August 1, 2015  All GFE Application dates (All 6 fields) on or after August 1 will be subject to the new forms/regulations  All loans with GFE App Dates prior to August 1, 2015 will operate using the GFE/TIL/HUD  First “TRID Closing” won’t happen until mid August

Is the world going to end?  NO! This is not 2010 GFE all over again  We’ve been testing, learning and growing in all facets of the company – we’re 95% ready and it’s only April  Other companies are looking at us as leaders in the industry – we’re getting requests to tutor other mortgage companies on TRID  We’re on the Encompass Panel for early release due to our efforts with TRID

So what’s changing?  Honestly, not much. TRID is more of a face lift for the industry than a total overhaul. Are there significant changes? Yes, there are – however, our goal is to explain to you how to overcome those changes and use them as tools to bring in business/get referrals.

Rules – Origination  Same 6 fields define application  Same 3 day requirement with delivery of initial disclosure  Same 3 day requirement with delivery of lock disclosure  Same 3 day requirement with delivery of other Change of Circumstances  Same Change of Circumstance Reasons  That seems pretty easy right?

Fees/Variances - Origination  Lender Credits are zero tolerance with the only exception being changes in pricing.  Appraisal, Credit Report Fee, Upfront MI are zero tolerance  Title Fees (with exception to Owners Title) are 10% tolerance along with Recording Fees  OTP is an “optional” fee and can change  Transfer Tax, Origination, etc…still zero tolerance

The Zero Tolerance Items  Appraisal – can only increase with a true change of circumstance (i.e. property type, scope). Rush fees are not a COC. Going to RELS is not a COC.  Monthly PMI is Zero Tolerance except for cases of ineligibility. I.e. if you do not pull a quote and put.5% in, UW final quote is.67, you are out that.17%. HOWEVER, if you pull a RADIAN quote and it is rejected, you can redisclose for this. PULL PMI QUOTES!!!!

Zero Tolerance – Cont…  Credit Reports – same rules as appraisal. A rescore could be a COC, depends on reason.  Lender Credits – if you disclose a $2,000 lender credit at initial disclosure, and your pricing at lock allows for this (i.e on a $250,000 L.A.), you must give the $2k. It cannot be reduced.  Lender Credits - $8k in closing costs, $6k in Seller Credit, $2k in Lender credit. Final Closing costs come in at $7500, you are STILL held to that $2k – must be in form of principal reduction.

Zero Tolerance Cont….  Zero Tolerance is based on line item fee, not total of box. E.g. in state of Washington it is illegal to charge an UW fee, must be in form of an Origination percentage. If you mess up and put $995 and $595 fees, you cannot switch that to origination and will be doing the loan without any origination fees.

10% Tolerance Items  Same rules apply as today – if borrower selects something on the Settlement Service Providers list then it is held to a 10% tolerance – otherwise it goes down into the items that can change.  Recording fees are the only 100% of the time 10% tolerance fee.

Items that can change  Escrows, Borrower Selected Settlement Services, Daily Interest, Insurance, Owners Title Policy  These should still be disclosed with as much accuracy as possible

Reduced Paperwork  On pg 3 of the Loan Estimate are several “Other Considerations”.  These will take the place of several individual disclosures and reduce the size of our initial disclosure package  E.g. Servicing Disclosure Statement, Notice of Right to Receive Appraisal, HOI disclosure, etc…

Closing Changes  You DO NOT have to push a closing back 3 days from Approval – IF you do things the right way.  The borrower must receive the Final closing disclosure 3 days prior to closing their loan.  Receipt = Signature  3 days = Signature on Monday, can sign on Thursday. Saturday is included  eSignable

The VanDyk Way  7 days from est Close date, Cond Approval milestone or later, the closer will prepare the closing disclosure, Mortgage and any riders as long as the required information is in the loan  HOI Policy (Flood if Applicable)  Title Preliminary HUD (should include seller fees, commissions, payoffs etc)  Any and all Lender Credits

The VanDyk Way Cont…  On days 7-5 prior to close, final HUD approval will take place (including input from branch/LO)  On day 5 or 4, Closer will deliver the CD to the borrower for signature in the way deemed best by the Originator.  Date of borrower signature determines beginning of the 3 day timing period

The VanDyk Way  Note, Final Approval may happen at anytime during this process, but loan may not close until the 3 day waiting period is up. There is NO waiver for this.  The only thing that will restart the 3 day timing period is a change of APR by more than.125% or an Amortization Change (i.e. Fixed to Arm)  If a fee changes, the borrower must receive a new CD (Change of Circumstances may happen with CD) prior to closing…will not restart 3 day period.

Post Closing  We are required to deliver a revised CD to the borrower (along with any applicable refund) on any change be it numerical or clerical within 30 days of consummation of the loan.  E.g. Borrowers present address is corrected 2 weeks after closing, a new CD is required to be sent.

Sample Forms  Loan Estimate _cfpb_loan-estimate_fixed-rate-loan- sample-H24B.pdf _cfpb_loan-estimate_fixed-rate-loan- sample-H24B.pdf  Closing Disclosure _cfpb_closing-disclosure_cover-H25B.pdf _cfpb_closing-disclosure_cover-H25B.pdf

Encompass  Encompass BETA tests began in February, we were involved and have met with them regularly about changes and implementation  Changes to itemization will require company wide training – Compliance will handle at first.

Changes in Process  Compliance next month to begin disclosing all Change of Circumstances  Compliance to be doing all disclosures by end of July  Possibility to earn back disclosure rights after August roll out with individual training/proof of understanding – the new itemization is everything  Motivity monitoring of COC compliance