June 12, 2015

TILA-RESPA Integrated Disclosures

Loan Estimate Overview

Loan Estimate form: General QuestionsQ: Is there a required font and font size for the Loan Estimate?

A: No, N/A may not be used when no value is to be disclosed. It’s either completed or blank.

Q: Can the designation “N/A” be used where no value is to be disclosed on the Loan Estimate?

A: The form is not a model but a standard mandated form. You cannot modify ANY part of the form.

Q: Is there a required naming convention used for charges on the Loan Estimate?

A:

Q: Does the creditor have to disclose an itemization of the amount financed with the Loan Estimate?

A: No, no name convention has been mandated outside of the general use, i.e. taxes, prepaids, however some specific fees must be identified. Some examples are: Points charged to creditor to reduce interest rate, Points, Title Insurance Services.

A: No. The amount financed (no longer itemized) and finance charge are now on the Closing Disclosure.

Q: When the Sale Price of the property is not yet known, does the creditor disclose a label other than "Sale Price" for the Sale Price on the Loan Estimate?

A: No, this label does not change for “estimated value” for refinances.

Q: If a loan product consists of a combination of two product types – e.g. a step rate for a set period of time, followed by an adjustable rate for the remaining term of the loan – how is the product to be described? Should it be described as an Adjustable Rate loan or as a Step Rate loan?

A: Hybrids/Steps should be marked as Adjustable.

Q: Is the mailing address for each Applicant the U.S. postal mailing address or can it be some other type of address?

A: Must be the applicants U.S. Postal Mailing Address, cannot use email address here.

Term Loan Estimate cannot be used for any other form

Descriptions cannot be used on any other form

Date received by Borrower

Borrower NameBorrower mailing address

Subject Property AddressContract Sales Price or Value for Refi-nance

Loan Term to MaturityPurchase/Refinance/Contruction/Home-EquityFixed/Adjustable

Loan NumberLock Expiriation Date

Fee Expiration Date

Loan Estimate Page 1

Brokered Transactions Q: If a broker is issuing a Loan Estimate but does not know the credi-tor, may the broker put its name in place of the creditor’s?

A: No, if creditor is unknown, leave creditor name blank.

Q: Section 1026.37(a)(12) indicates the creditor must disclose a unique loan ID number. If the creditor(lender) is unknown:

Is the broker required to generate and disclose a unique ID num-ber?

A: No, if creditor(lender) is unknown, leave blank. I known the creditor/le nder can provide to broker to disclose.

Is the creditor required to disclose its own unique loan ID once there is a

creditor for the loan? A: Yes, creditor/lender must include on any subsequent disclo-

sures

Loan Terms

Q: What interest rate should be disclosed where the initial interest rate is calculated using a different formula than that used for subsequent rate adjustments?

A: The initial rate at consummation is disclosed.

Q: How does a creditor disclose items in the Loan Terms table where the applicable dates for changes to interest rate, periodic payments, balloon payments, or prepayment penalties are not in whole years?

A: Disclosed as whole years except when they are fewer than 24 months. When fewer it would be disclosed as whole months followed by mo.

Amount of Credit Extended

Interest rate at time of consummation

Principal and Interest payment and applicable unit period and statement for consumer to refer to Pro-jected Payment table..

If applicable pre-payment terms

If applicable balloon terms

Projected Payments Table

Escrow Amounts

Mortgage Insurance Payment

Principal and Interest at time of con-summation

Total PITI

Mark and complete as applica-ble

Adjustable Payment Loans/MI Payments. Limited to 4 columns.

Fixed Term Loans

Projected Payments

Q: Can the amount disclosed for Estimated Taxes, Insurance & Assessments be for a time period of other than monthly? (bi-weekly)

A: Yes, if the terms of the transaction call for other periods. Then the term is changed from monthly.Q: If mortgage insurance will automatically terminate in the time period that would be included in the 4th column, how do I indicate that mortgage insurance will terminate before the end of the loan?

A: If not within the 4 column’s disclosed, the mi termination would not be disclosed.Q: Must the escrow row be shown if no escrow account is established?

A: Yes, but if no escrow account is established, the amount is zero.

Projected Payments 2

Projected Payments 2

Q: Are flood insurance premiums included in Homeowner’s Insurance for purposes of the Escrow disclosure and the Taxes, Insurance & Assessments disclosure on the Projected Payments table?

A: Yes

Costs at Closing

Q: Are the modifications to the Loan Estimate for transactions without a seller required?A: No. These are optional.

Loan Estimate Form, Page 2Loan Costs 1 – Origination Charges

Q: Assume the creditor will pay a Loan-Level Price Adjustment (LLPA) to the secondary market purchaser:

Q: If a creditor charges an origination fee that is a percentage of the loan amount, but it is not a “point paid to

the creditor to reduce the interest rate,” may the credit or identify it as a point in some way to preserve its tax deductibility for the consumer?

A: No, only funds paid to reduce the interest rate and charged as a % of the loan amount are points.

If the creditor does not charge the consumer an upfront fee, but passes the cost of the LLPA on to the consumer through interest, is the creditor required to disclose the LLPA? A: No as it is not charged to the consumer as a $ amount.

If the creditor does charge the consumer an upfront fee, should it be disclosed as a “point” or an“origination charge”? A: It would itemized and labeled LLPA in the origination charge as it is a cost for the rate

If the creditor offers the borrower a zero or lower point option, and the consumer chooses to pay for discount points in an amount greater than the LLPA to obtain a lower rate, may the creditor disclose the amount paid as discount points rather than an origination charge? A: Yes, this would be included in the total discount points.

Only charges based on a %of the loan amount to the creditor to reduce rate.

Loan Costs 2

Q: Must a creditor disclose fees that are not allowed by FHA/VA? If so, where?A: FHA and VA will decide if unallowable fees can be listed and offset by Lender Credits, if so the fee will be disclosed in either “cannot” or “can” shop for section.

Q: How does the creditor disclose charges for third-party administrative and processing

fees that are currently rolled up into Block 1 of the GFE?A: Third party fees will be itemized and placed in “cannot” or “can” shop for section.

Q: Can a creditor change the number of lines for each category of costs if there are more or fewer

charges in each category?A: No, only “can shop for” items can be itemized in an addendum. Lump other costsin “cannot shop” together and disclose as other charges

Q: How should premium rate credit or “negative points” be disclosed? May the creditor add a separate addendum to detail the offset? A: Must be included in Lender Credits and will not be itemized.

Itemized costs for ser-vices required but the borrowercannot shop for

Itemized costs for ser-vices required but the borrowercan shop for

Other CostsQ: Recording fees and other taxes appear to encompass all government taxes which are not transfer taxes. Does this in-clude taxes on

separate services, such as title insurance?A: No, these are limited to costs associated with the record-

ing of documents.

Q: Credit life insurance is usually paid on a monthly basis, but is only

mentioned in the “Other” section of “Other Costs.” Is that where I

should disclose the premium? A: No, optional premiums will not be disclosed as these

cannot be financed and are paid monthly basis after consummation.

Cash to Close

Loan Estimate – AP & AIR Tables

Q: Are the adjustable payments and adjustable interest tables disclosed for a fixed rate loan? A: Only used when there are Adjustable Payments or Adjustable Rates.

Loan Estimate Page 3 – Contact Info

Q: In a loan with a mortgage broker, must both a creditor’s loan officer and a mortgage broker’s loan officer be listed?

A: Yes if applicable and known at the time of application. Creditor must provide if LO is

assigned.

Q: Should we use the same person’s NMSLR identification number that will be identified on the note and other documents?

A: Yes, the ID of the primary point of contact must be listed.

Loan Estimate Page 3 – Comparisons

Q: Is the Annual Percentage Rate disclosed as a rounded amount or is it truncated at three decimal places?

A: The APR is not rounded and must be disclosed with three decimal points.

Other Considerations

Q: Does the creditor need to disclose on the Loan Estimate that it will transfer servicing if the transfer is not immediate, but will happen at some later point in time during the life of the loan?

A: Yes, this must be marked.Q: Does the creditor need to disclose on the Loan Estimate that it will transfer servicing if the transfer is to the creditor’s subsidiary or affiliate?

A: Yes, this must be disclosed.Q: Does the Appraisal notice satisfy the requirements of Regulation B, or does the creditor need to provide a separate disclosure for that requirement?

A: Yes, this satisfies the requirement for disclosure, but creditor must still document delivery requirement.

Loan Estimate – Service Provider List

Q: How can a creditor communicate to the consumer that the identification of a service provider on the written list is not an endorsement of that service provider?

A: Creditors are allowed to add language that the list is not an endorsement.