1. TRID Truth in Lending/Respa Integrated Disclosure
Alaska Land Title Association Education Seminar
February 6, 2016
Presented by: John Martin

2. TRID – First Four months
Thirty two percent of closings have been delayed
Estimated added costs per loan -- $160/loan
CFPB estimates added cost to title insurance industry -- $67,800,000 per year for the next five years
CFPB estimates lenders added costs – $207,000,000 per year for the next five years

3. TRID – First four months
New normal – much increased lender communication
Lenders may have more questions than solutions;
Expect many changes to the Closing Disclosure;
Use whatever calculation figures they want or complete it with estimated figure and simply correct it later.

4. TRID – First Four months
Processes vary from lender to lender;
Escrow officers report that they are in the file making changes to the CD much more often than before TRID implementation.
Integration with lender customers through portals, such as Closing Insight, have been difficult.

5. TRID – First four months
Hidden benefit
More communication and collaboration with customer may improve relationships.

6. TRID – first four months
Simultaneous Issue Calculation
Many lenders take different approaches
Before TRID implementation, most lenders seemed to indicate that they would use the approach where the simultaneous issue calculation was shown on each side and a title adjustment shown on the third page.
In practice, many lenders want to show the Simultaneous issue as it was done pre-TRID

7. TRID – first four months
Simultaneous Issue Problem
When both a loan and owner’s title insurance policies will be purchased in a transaction (called “simultaneous issuance”) the TRID requires the lender or settlement agent to inaccurately disclose the title premiums on the Closing Disclosure.

8. TRID – First four months
LOAN POLICY
Under TRID, the loan policy must be shown on the Loan Estimate and Closing Disclosure at the full rate without adjustment for simultaneous issue, regardless of whether the filed or promulgated rate for a simultaneously issued loan policy is lower

9. TRID – first four months
Owner’s policy
Under TRID, the Owner’s policy must be shown on the Loan Estimate and Closing Disclosure according to the CFPB formula:
Owner full Loan policy Full Loan
Premium Simultaneous Premium
Premium

10. Sales Transaction Sales price -- $500,000, Seller pays Owners
Loan Policy -- $400,000, Buyer pays Lenders
Extended
Owner’s Standard premium -- $1,272
Lender’s premium (full) -- $1,017
Lender’s premium (Simultaneous) -- $517

11. Trid – first four months
Simultaneous Issue Disclosure TRID Actual Owner’s -- $ 774 $1,274 Loan -- $1,017 $ 517 Total $1,791 $1,791

12. TRID – First four months
CFPB has allowed three methods to disclose the simultaneous issue rates
Option One – Simultaneous issue rate shown in buyer’s column and the title premium adjustment amount shown on seller’s column. Seller’s owner’s policy is shown as per the TRID formula

14. TRid – First four months
Option two – The credit may be considered a general seller credit and disclosed as such on Summaries of Transaction on page three.

17. Option three -- Show premium as under the TRID formula on buyers side (full loan rate) and seller’s side (full owner’s premium minus discount for simultaneous issue rate) and give each side a Title Premium adjustment

20. TRID – First four months
Why does the correct disclosure matter?
Possible liability under:
Truth in Lending Act Statutory Liability
Dodd-Frank Act Regulatory liability and CFPB authority
Up to $1,000,000 in liability for violation

21. TRID – First four months
Investors very conservative on buying loans
Investors not buying loans on secondary market where there may be irregularities on CD

22. Loan Estimate (LE) and Closing Disclosure (CD) Issue Dates
Loan Estimate (LE) and Closing Disclosure (CD) Issue Dates. LEs and CDs in the file have the same issue date, indicating they were issued on the same day in violation of the rule.
Title Fees – The title fees do not have “Title - ” in the description (i.e., “Title - Settlement Agent Fee”). There have even been some issues with not having a space in between “Title” and the hyphen.
Settlement Agent File Number – The settlement agent’s “file number” is not included on page 1.
Simultaneous Issuance – Full owner’s title premiums on the LE and CD.
Optional - The “(optional)” designation is not being used correctly.

23. Trid – first four months
Lender Closing instructions
Asking title company to take very broad liability for errors in Closing Disclosure
Demonstrates the importance of carefully reading the closing instructions

24. 4. As soon as practical after issuance of the most recent CD and before consummation occurs, the Closing Agent will review to ensure the accuracy of fees disclosed on the most recent CD. The Closing Agent agrees to notify Guild immediately of any inaccuracies.

25. 4. As soon as practical after issuance of the most recent CD and before consummation occurs, the Closing Agent will review to ensure the accuracy of fees disclosed on the most recent CD. The Closing Agent agrees to notify Guild immediately of any inaccuracies to the best of the Closing Agent’s knowledge.

26. 14. Closing Agent shall fully indemnify and hold harmless (collectively "indemnify" and "indemnification") Guild and its directors, officers, employees, agents, partners, stockholders, representatives and affiliates (collectively, "Indemnified Parties") from and against all causes of action, claims, demands, orders, suits, damages, liabilities, losses, settlements, judgments, costs and expenses (including but not limited to reasonable attorney's fees and costs in responding to civil investigative demands or other inquiries by administrative agencies), whether or not involving civil litigation by a consumer or an enforcement action by a federal or state regulatory agency (to the extent permitted by such enforcement action), as well as voluntary reimbursements to consumers provided by Guild based on the good faith belief that a particular transaction might lead to the institution of any such action, suit or other proceeding hereinabove listed, or a third party claim, which arise out of or relate to any failure to comply with these Closing Disclosure Instructions or the master Closing Instructions provided to Closing Agent by Guild that were in effect at the time of the closing, in each case whether or not caused by the negligence of the Closing Agent or any other Indemnified Party and whether or not the relevant Claim has merit. In connection with this indemnification, the Indemnified Parties are presumed to be entitled to indemnification, and presumed to have acted under good faith belief in the provision of voluntary reimbursements to consumers. The Closing Agent shall have the burden of proof to overcome the presumption. This indemnification shall be binding upon the Closing Agent and its successors and assigns and shall inure to the benefit of the Indemnified Parties and their estate, heirs, legal representatives and assigns.

27. Try to limit the indemnity to lender’s direct damages as a result of the settlement agent’s failure to comply with closing instructions
Settlement Agent shall immediately indemnify the Creditor, its officers, directors,
employees, successors, or assigns (together the “Indemnified Parties”) and hold the
Indemnified Parties harmless from and against all claims, demands, liabilities, losses,
costs and damages (including court costs and attorneys’ fees) that Indemnified Parties
may incur or suffer as a result of damages arising under or related to these Closing
Instructions and caused by the actions or inactions of the Settlement Agent or its employees that constitute a breach of these Closing Instructions or negligent or willful
misconduct. This indemnification applies only to actual damages, shall not exceed the amount of the loan in the applicable transaction, and shall exclude incidental, consequential, indirect, punitive or other special damages

28. Other provisions of the closing instructions ask settlement agent to certify the accuracy of the fees listed in the Closing Disclosure.
Suggested revision – only certify the accuracy of the title and escrow fees; not the other fees in the CD.

29. TRID – First four months
Seller/Private Financing
TRID applies if private financier or seller makes more than five loans in a calendar year
In that case, must use TRID disclosures and is subject to the timing and delivery requirements of TRID
Stewart has developed affidavit for seller/Private financier to fill out

30. AFFIDAVIT REGARDING PRIVATE LENDER AND/OR
SELLER FINANCED TRANSACTIONS
The undersigned hereby attests and affirms that:
1. I am an authorized to sign for and in my individual and representative capacity on behalf of ________________________________________________ (“Lender”), and that Lender is providing financing for the purchase/refinance of the property, (“Property”) described as follows:
[Enter Property Description]

31. 2. Lender gives this sworn affidavit to ___________________, as settlement agent (“Settlement Agent”) to induce Settlement Agent to issue title insurance and/or perform escrow closing services in regard to the transaction referenced above. I understand that Settlement Agent is relying on this affidavit to provide these services.
3. Lender is providing financing (“Financing”) to the buyer(s)/borrower(s) for:
□ The Financing is for commercial or business purposes. No part of the Financing is for personal, family, residential or household purposes of the buyer(s)/borrower(s).
□ The Financing is for personal, family, residential or household purposes of the buyer(s)/borrower(s).
□ The Financing is not for construction of a residence nor has Lender acted as contractor for construction of a residence on the Property.
□ The Financing repayment schedule does not result in negative amortization for the Property.

32. 4. Lender is knowledgeable of and aware of its rights and obligations under the Dodd Frank Welfare Reform Act (“Dodd Frank”), the Truth-in- Lending Act (“TILA”), the Real Estate Settlement Procedures Act (“RESPA”) and the TILA-RESPA Integrated Disclosure Rule (TRID) enforced by the Consumer Financial Protection Bureau (“CFPB”). Private Lender is providing financing (“Financing”) in connection with buyer(s) purchase of the Property. Lender acknowledges that Lender has been advised to seek the counsel of an attorney to review the terms of the financing and Lender’s responsibilities, if any, under state and federal law.
5. Lender hereby advises and instructs Settlement Agent that the above described transaction is exempt from and not covered by TRID and that Settlement Agent should proceed as it would for any non-TRID transaction.

33. TRID – first four months
Sellers and private lenders should always be advised to seek the advice of legal counsel for any loan transaction, especially as to any potential compliance requirements under TRID. There are other state and federal laws and regulations that may impact the residential loan transactions. RESPA still applies to those loans if they qualify as federally related mortgage loans under Regulation X.

34. Preparation and delivery of the Seller’s disclosure
TRID rules require that the settlement agent prepare the seller’s disclosure, deliver it to seller no later than the day of consummation and provide the lender a copy.
A settlement statement may be provided in addition to, but not in place of the Seller’s CD.

35. TRID – first four months

36. Questions?