1. Teaching Aid for Closing Statement Exercise for Prelicensing

2. There are many similarities between the old and new forms.

3. Objectives At the end of this presentation, you should be able to:
explain the purpose of the TRID rule.
identify critical dates for delivery of the CD.
explain the broker’s responsibility for CD.
explain similarities between the HUD-1 & BCD.
explain the calculations and entries required to complete a closing statement exercise using the Closing Disclosure Core.

4. Abbreviations CFPB: Consumer Financial Protection Bureau
TRID: TILA-RESPA Integrated Disclosures
TILA: Truth-In-Lending Act
RESPA: Real Estate Settlement Procedures Act
TIL: Truth-in-Lending (Statement)
GFE: Good Faith Estimate
HUD-1: Settlement Statement
LE: Loan Estimate
CD: Closing Disclosure
BCD: Borrower’s Closing Disclosure
SCD: Seller’s Closing Disclosure

5. What WAS the Problem?
BEFORE October 2015: Duplicate forms required by TILA and RESPA
Dodd-Frank Act was tasked with
consolidating the forms

6. New Disclosure Forms Loan Estimate Early TIL (LE) GFE Closing
(CD)
HUD-1
Final TIL

9. LOAN APPLICATIONS RECEIVED
New rules apply to
LOAN APPLICATIONS RECEIVED
on or after
October 3, 2015.

10. If a transaction begins with the OLD forms, it will end with the OLD forms. If a transaction begins with the NEW forms, it will end with the NEW forms.

11. Who’s Responsible?
LENDERS are responsible for knowing which transactions are subject to TRID rule. Real estate brokers should have a GENERAL understanding.

12. May lenders use the new Loan Estimate and Closing Disclosure forms in excluded transactions (when the forms are not required)?

13. It will still be used in some transactions.
The HUD-1 is…
Stayin’ Alive.
It will still be used in some transactions.

14. THE CLOSING DISCLOSURES (CDs)

15. 2 Separate Closing Disclosures: Borrower (Buyer) and Seller
Information has been reorganized …but has not changed.

16. Why are there 2 separate Closing Disclosure forms?
Borrower’s confidential loan information
is not shared with Seller.

17. “What HIPAA did to medical offices, TRID has done to closing attorney offices.”

18. The Biggest Impact for Brokers:
The Borrower’s Closing Disclosure must be
RECEIVED BY THE BORROWER
at least 3 BUSINESS DAYS
before Settlement

19. What is a “Business” Day?
A Business Day is Monday-Saturday Sundays and 10 federal public holidays are excluded

20. Definition of “RECEIVED”
If delivered IN PERSON:
The CD is “received” on the same day it is provided.
If MAILED or delivered ELECTRONICALLY:
The CD is “received”
on the 3rd business day after delivery OR
when lender has EVIDENCE of receipt.

21. Example
If the BCD is RECEIVED BY THE BORROWER on Monday, what is the earliest possible date settlement may occur? Answer: Thursday (unless a federal holiday occurs during the period)
Monday
Tuesday
Wednesday
Thursday
Delivery
Day 1
Day 2
Settlement
(3rd business day)

22. Rules apply to delivery of BCD ONLY No requirements for delivery of SCD to Seller

23. BCD must be delivered to BORROWER
Delivery to Broker / Buyer Agent is NOT Sufficient

24. only show the BCD to the Buyer and only show the SCD to the Seller.
If the lender decides to issue 2 separate closing disclosures, a broker acting as a dual agent should…
only show the BCD to the Buyer and only show the SCD to the Seller.

25. Settlement Statement: Broker Obligations
Broker must Disclose AND Confirm Accuracy of all entries of which s/he has direct knowledge

26. Settlement Statement: Broker Obligations
Broker must Review AND Confirm Accuracy of all calculations

27. Which changes require a new 3-day review of CD?
APR increases by MORE than:
1/8% for fixed-rate
1/4% for adjustable
Prepayment penalty added
Basic loan product changes

28. Quick Comparison of HUD-1 and Borrower Closing Disclosure

29. Page 1 of HUD-1 is now Page 3 of Borrower CD
HUD-1 page 1
BCD page 3

30. BCD page 3 – ALMOST IDENTICAL TO HUD-1
$216,000.00
BCD page 3 – ALMOST IDENTICAL TO HUD-1

31. Page 2 of HUD-1 is now Page 2 of Borrower CD
HUD-1 page 2
BCD page 2

32. BCD page 2 (top half of page)
Loan Fees
POC items
Attorney & Title Fees
BCD page 2 (top half of page)

33. Recording Fees & Excise Tax Inspections & Other Fees
Loan Escrows
Inspections & Other Fees
Brokerage fees
BCD page 2 (bottom half of page)

34. Sample Closing Statement Exercise for Prelicensing (Exercise based on 360-day calendar)

35. Closing Disclosure Core, Page 1

36. Loan Costs

37. Loan Costs: A. Origination Charges
Discount Points:
1 point = 1% of loan amount
$212,000 x 1% = $2,120.00
Origination Fee:
$212,000(loan amount) x 0.75%
= $1,590.00
Application Fee: $280.00

38. Loan Costs: B. Services Borrower Did Not Shop For
Borrower-Paid BEFORE Closing
Appraisal: $450.00
Credit Report: $55.00

39. Loan Costs: C. Services Borrower Did Shop For
Borrower-Paid
Title Insurance: $570.00
$ (Lender) + $64.60 (Owner) = $570.00
Attorney: $650.00
Survey: $400.00
Pest Inspection: $65.00 (Paid BEFORE closing)

40. Loan Costs: C. Services Borrower Did Shop For
Seller-Paid
Deed Prep: $85.00

41. Other Costs

42. Other Costs: E. Taxes and Government Fees
Borrower-Paid
Recording Fees:
$26.00 (Deed) + $56.00 (Deed of Trust) = $82.00
Seller-Paid
Excise Tax:
$249,650 rounds up to $250,000
$250,000 / 500 = $500

43. Other Costs: F. Prepaids
Homeowner’s Insurance: $684.00
Mortgage Insurance: $840.00
Interim Mortgage Interest:
$212,000 (loan) x 6.5% (interest)
= $13, (interest per year)
$13,780 / 360 days = $ (interest per day)
$ x 8 days (Nov 23-Nov 30) = $306.22

44. Other Costs: G. Initial Escrow Payment at Closing
Homeowner’s Insurance:
$684 / 12 months = $57.00 per month
$57.00 x 2 months = $114.00
Mortgage Insurance:
$840 / 12 months = $70.00 per month
$70.00 x 2 months = $140.00
Property Taxes:
$2471 / 12 months = $ per month
$ x 4 months = $823.67

45. Other Costs: H. Other Seller-Paid Brokerage Commission:
$249,650 (sale price) x 6% = $14,979.00

46. Other Costs: H. Other (continued)
Borrower-Paid
Home Inspection: $325 (paid BEFORE closing)
Courier Fees: $30.00
Seller-Paid
Home Warranty: $450.00
Courier Fees: $30.00

47. Total Closing Costs

48. Borrower-Paid At Closing column
Add all numbers
in the
Borrower-Paid At Closing column
and enter total in
J. Total Closing Costs
Add all numbers
in the
Seller-Paid At Closing column
and enter total in
J. Total Closing Costs

49. Exam Items 1 & 2: Borrower & Seller Total Closing Costs

50. Closing Disclosure Core page 2

51. Borrower’s Transaction: Due from Borrower at Closing

52. Due from Borrower at Closing
Sales Price: $249,650.00
Closing Costs (from page 1): $8,629.89

53. Due from Borrower at Closing
Real Property Taxes:
Seller paid taxes for full year.
Buyer must repay Seller for
37 days (Nov 24-Dec 30).
Tax Calculation:
$2471 / 360 = $ per day
$ x 37 days = $253.96

54. Due from Borrower at Closing
$258,533.85
Add UP the numbers in this section
and insert the total on Line K.

55. Borrower’s Transaction:
Paid Already by or on Behalf of Borrower at Closing

56. Paid Already by or on Behalf of
Borrower at Closing
Earnest Money Deposit: $3,500.00
Loan Amount: $212,000.00
Due Diligence Fee: $500.00

57. Paid Already by or on Behalf of Borrower at Closing
$216,000.00
Add UP the numbers in this section
and insert the total on Line L.

58. Borrower’s Transaction: CALCULATION

59. Borrower’s Transaction: CALCULATION
$258,533.85
Copy the Totals on lines K and L to the Calculation section.
$216,000.00

60. Borrower’s Transaction: CALCULATION
Subtract to determine Cash to Close.

61. Exam Item 3:
Cash to Close
From/To Borrower

62. Seller’s Transaction: Due to Seller at Closing

63. Due to Seller at Closing
Sales Price: $249,650.00
Real Property Taxes: $253.96

64. Due to Seller at Closing
$249,903.96
Add UP the numbers in this section
and insert the total on Line M.

65. Seller’s Transaction: Due from Seller at Closing

66. Due from Seller at Closing
Closing Costs from page 1: $16,044.00
Payoff of First Mortgage: $138,425.00
Due Diligence Fee: $500.00

67. Due from Seller at Closing
$154,969.00
Add UP the numbers in this section
and insert the total on Line N.

68. Seller’s Transaction: CALCULATION

69. Seller’s Transaction: CALCULATION
Copy the Totals on lines M and N to the Calculation section.

70. Seller’s Transaction: CALCULATION
Subtract to determine Cash From/To Seller.

71. Exam Item 4:
Cash From/To Seller

72. Additional Info for Post 302: Quick Review of Seller’s Closing Disclosure

73. The Seller’s Closing Disclosure (SCD)
SCD page 1
(seller’s total debits & credits)
SCD page 2
(seller’s costs/expenses)

74. SCD page 1 (bottom portion of page)
Total Seller Credits
Broker Info
Total Seller Debits
Settlement Agent Info
SCD page 1 (bottom portion of page)

75. Seller Costs/Debits & Seller-Paid Items
SCD page 2 (bottom portion of page)
Seller Costs/Debits & Seller-Paid Items

76. Thanks for your participation
Technology Questions: Content Questions: