New Rules and New Forms Effective August 1, 2015.
Combined the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL). The Loan Estimate form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application.
Combined the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) The Closing Disclosure is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. (Replacing the HUD-1 Settlement Statement and final Truth-in-Lending Disclosure).
This form must be provided to consumers at least three business days before consummation of the loan. The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.
Escrow Closing Notice.
Escrow Closing Notice. The Escrow Closing Notice and mortgage servicing transfer and partial payment notices. Provided no later than three business days before the consumer’s escrow account is canceled. This is when the Homeowner elects to pay insurance, for example, directly, and not via an impound.
Special Information Booklet.
The Special Information Booklet (RESPA Settlement Costs Booklet). Creditors must provide a copy of the special information booklet to consumers who apply for a consumer credit transaction secured by real property, except in certain circumstances. The special information booklet is published by the Bureau to help consumers applying for federally related mortgage loans understand real estate transactions. If the consumer is applying for a HELOC the creditor (or mortgage broker) can provide a copy of the brochure entitled “When Your Home is On the Line: What You Should Know About Home Equity Lines of Credit” instead of the special information booklet. The creditor need not provide the special information booklet if the consumer is applying for a real property-secured consumer credit transaction that does not have the purpose of purchasing a one-to-four family residential property, such as a refinancing, a closed-end loan secured by a subordinate lien, or a reverse mortgage. Creditors must deliver or place in the mail the special information booklet not later than three business days after receiving the consumer’s loan application.
Changes to Party Responsible for Disclosure
Escrow Now to Provide. The settlement agent is required to provide the seller with the Closing Disclosure reflecting the actual terms of the seller’s transaction. The settlement agent may comply with this requirement by providing the seller with a copy of the Closing Disclosure provided to the consumer (buyer) if it also contains information relating to the seller’s transaction. The settlement agent may also provide the seller with a separate disclosure, including only the information applicable to the seller’s transaction from the Closing Disclosure. However, if the seller’s disclosure is provided in a separate document, the settlement agent has to provide the creditor with a copy of the disclosure provided to the seller.
- Five Years. The creditor must retain copies of the Closing Disclosure (and all documents related to the Closing Disclosure) for five years after consummation.
- Two Years. The creditor, or servicer if applicable, must retain the Post-Consummation Escrow Cancellation Notice (Escrow Closing Notice) and the Post-Consummation Partial Payment Policy disclosure for two years.
- Three Years. For all other evidence of compliance with the Integrated Disclosure provisions of Regulation Z (including the Loan Estimate) creditors must maintain records for three years after consummation of the transaction.
Darren J. Welsh
Office of the General Counsel
Berkshire Hathaway HomeServices