On November 18, 2014, the CFPB staff and Federal Reserve Board co-hosted a webinar that addressed questions about the Final TILA-RESPA Integrated Disclosure Rule that will be effective for applications received by creditors or mortgage brokers on or after August 1, 2015. The webinar focused on the Closing Disclosure and addressed specific questions regarding the content of the Closing Disclosure.
The webinar is the fourth in a series to address implementation of the new rule. Topics covered in the past include an overview of the final rule, frequently asked questions, and the loan estimate form. Many of the issues covered were in response to questions received by the CFPB from mortgage industry stakeholders and technology vendors who need additional information in order to facilitate the development of compliance and quality control procedures and software.
During the webinar the CFPB staff provided a high-level walk through of the Closing Disclosure Form and addressed several issues, including the following:
• For transactions with a seller, the staff advised that the sales price should be disclosed at the top of page 1, and that for transactions without a seller, such as a refinance, a creditor should disclose the appraised value and label it “appraised prop value” (assuming there is an appraisal). In addition, the CFPB staff referred to comment § 1026.38(a)(3)(vii)-1 and said that in cases where the creditor has not yet obtained an appraisal, the rule provides some degree of flexibility and allows creditors to disclose an estimated value as long as it is labeled “estimated prop value.”
• The staff also said that although the categories identified on page two of the Closing Disclosure are the same as those on the Loan Estimate, the Closing Disclosure allows greater flexibility for revisions to the spacing. For example, the number of rows can be reduced or added by the creditor for each category based on need. According to the CFPB staff, if the rows provided are not sufficient to disclose all the items, page two may be broken into two pages – page 2(a) and page 2(b), with loan costs listed on 2(a) and other costs on 2(b). The CFPB staff noted that Form H-25(h) in Appendix H is an example of how to divide page two into separate pages. The staff referred to the CFPB’s TILA/RESPA Integrated Disclosure—Guide to the Loan Estimate and Closing Disclosure form that is available on its regulatory implementation website, along with sample forms, for additional guidance.
• The staff advised that charges disclosed in one category of the Loan Costs section in the Loan Estimate may need to be disclosed in a different category of the section in the Closing Disclosure. For example, if title charges were disclosed in the Services You Can Shop For category of the Loan Costs section in the Loan Estimate and the borrower selected the title company identified by the creditor on the written list of providers, the title charges would have to be disclosed in the Services Borrower Did Not Shop For category of the Loan Costs section the Closing Disclosure (because the borrower would not have actually shopped for a provider under the rule).
• The staff said that under “Other Costs” on page two of the Closing Disclosure, general lender credits not associated with any particular item must be listed at the bottom of the page as a negative number. The lender credit must be listed along with a narrative description if any refund is being provided by the creditor pursuant to the good faith analysis of charges. Notably, the CFPB staff said that lender credits associated with specific closing costs must be disclosed as paid by others and have an “L” for lender designation.
• The CFPB staff pointed out that the Loan Estimate contains less detail with regard to transfer taxes than the Closing Disclosure. The main difference between the two forms in this respect is that transfer taxes are itemized on the Closing Disclosure as opposed to aggregated into a single sum on the Loan Estimate. The itemization is for each tax and for each government entity because multiple taxes may be assessed by each government entity.
In addition to giving a detailed walkthrough of the Closing Disclosure Form, the CFPB staff used the webinar as an opportunity answer a variety of questions posed by the industry. We have prepared below an unofficial summary of the questions addressed by the CFPB staff. More >