Amla - Lesson 2 ' Unit 4

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U4 Additional requirements and prohibitions

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Additional requirements and prohibitions Limits on fees that may be charged prior to disclosure or application:May not impose any fee on a consumer in connection with the consumer’s application for a mortgage transaction until the consumer has received the Loan Estimate and has indicatedintent to proceed with the transaction. (TILA 12 CFR Part 1026.19(e)(2)(i)(A)) This restriction includes limits on imposing:1. Application fees;
2. Appraisal fees;
3. Underwriting fees; and
4. Other fees imposed on the consumer.****The only exception to this exclusion is for a bona fide and reasonable fee for obtaining a consumer’s credit report. (TILA 12 CFR Part 1026.19)(e)(2)(i)(B); Comment 19(e)(2)(i)(A)-1 through -5 and Comment 19(e)(2)(i)(B)-1)

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1 Intent to Proceed

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How does a consumer indicate an intent to proceed with a transaction?
(TILA 12 CFR Part 1026.19(e)(2)(i)(A))A consumer indicates intent to proceed with the transaction when the consumer communicates, in any manner, that the consumer chooses to proceed after the Loan Estimate has been delivered, unless a particular manner of communication is required by the creditor/broker. (TILA 12 CFR Part 1026.19(e)(2)(i)(A)) This may include:1. Oral communication in person immediately upon delivery of the Loan Estimate;2. Oral communication over the phone,3. Written communication via email,4. Signing a pre- printed form after receipt of the Loan Estimate.

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2 Impose a Fee

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Impose a fee: Requiring a consumer to provide a method for payment, even if the payment is not made at that time. (Comment 19(e)(2)(i)(A)-5) This would include, for example:A creditor or mortgage broker requiring the consumer to provide a check to pay for a any fee before the consumer receives the Loan Estimate, even if the check is not to be cashed until after the Loan Estimate is received and the consumer has indicated an intent to proceed.Requiring a
credit card number for any 
fee before the consumer receives the
Loan Estimate, even it the credit
card will not be charged until after the
Loan Estimate is received and the consumer has indicated an intent to proceed.***As discussed above, a creditor or other person may impose a fee for a credit report. The TILA-RESPA rule does not prohibit a creditor or other person from providing a consumer with estimated terms or costs prior to the consumer receiving the Loan Estimate. 
(TILA 12 CFR Part 1026.19(e)(2)(ii)) If an estimate of costs is issued prior to the Loan Estimate it must clearly and conspicuously state at the top of the front of the first page of the written estimate “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing the loan.” (TILA 12 CFR Part 1026.19(e)(2)(ii); Comment 19(e)(2)(ii)-1) There are other restrictions on the form of this statement to assure it is not confused with the Loan Estimate:1. Must be in font size no smaller than 12-point font.
2. May not have headings, content, and format substantially similar to the Loan Estimate or the Closing Disclosure.(TILA 12 CFR Part 1026.19(e)(2)(ii); Comment 19(e)(2)(ii)-1)

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2 Impose a Fee

QUESTION

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TILA-RESPA prohibits creditor/broker from providing a consumer with estimated terms or costs prior to the consumer receiving the loan estimate.( )True( )False ← Wrong answer Explanation:U4 Additional Requirements: 2 Impose a FeeThe TILA-RESPA rule does not prohibit a creditor or other person from providing a consumer with estimated terms or costs prior to the consumer receiving the Loan Estimate. 
(TILA 12 CFR Part 1026.19(e)(2)(ii)) If an estimate of costs is issued prior to the Loan Estimate it must clearly and conspicuously state at the top of the front of the first page of the written estimate “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing the loan.” (TILA 12 CFR Part 1026.19(e)(2)(ii); Comment 19(e)(2)(ii)-1) There are other restrictions on the form of this statement to assure it is not confused with the Loan Estimate: 1. Must be in font size no smaller than 12-point font.
2. May not have headings, content, and format substantially similar to the Loan Estimate or the Closing Disclosure. (TILA 12 CFR Part 1026.19(e)(2)(ii); Comment 19(e)(2)(ii)-1)

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U4 Your Home Loan Toolkit

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Special Information Booklet (RESPA Settlement Costs Booklet), Will be REPLACED OCTOBER 3, 2015 with“YOUR HOME LOAN TOOLKIT” (TILA 12 CFR Part 1026.19(g))Your Home Loan Toolkit (designed for web posting and interactivity) is available at:http://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf 1. Provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services,2. Defines what affordable means to them, and find their best mortgage.3. Features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders,4. Provides research tips to help consumers seek out and find important information.5. Designed to be used in connection with the new Loan Estimate and Closing Disclosure forms that will be effective on October 3, 2015.6. Creditors must provide the toolkit to mortgage applicants as a part of the application process7. Both printed and electronic versions are available8. The electronic version meets federal accessibility standards to ensure that all consumers, including those with disabilities, can use the resource.9. The CFPB encourages lenders to keep this level of accessibility when delivering the PDF to consumers. A Spanish language version will also be made available later in 2015.10. The toolkit has been made available well ahead of the October effective date for the “Know Before You Owe” mortgage disclosure rule to give industry time to order and receive or print the new toolkit and integrate electronic versions into their mortgage origination systems.11. The Toolkit must have the Company Name and Company Unique Identifier Number on the cover. The electronic version of the toolkit is available here: http://www.consumerfinance.gov/learnmore/#respa Copies can also be ordered from the GPO website:Large: http://bookstore.gpo.gov/products/sku/048-013-00009-1Small: http://bookstore.gpo.gov/products/sku/048-013-00010-4

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U4 Your Home Loan Toolkit

QUESTION

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The electronic version of the Home Loan Toolkit is NOT meet Federal accessibility standards to ensure that all consumers can use the resource. ( )True( )False ← Wrong answer

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1 Toolkit Requirements

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Copy of the “Toolkit” must be provided to consumers who apply for a consumer credit transaction secured by real property. (TILA 12 CFR Part 1026.19(g)(1))Creditors must deliver electronically or place in the mail the “Toolkit” not later than three business days after receiving the consumer’s loan application. (TILA 12 CFR Part 1026.19(g)(1)(i)) 
If the creditor denies the consumer’s application or if the consumer withdraws the application before the end of the three-business-day period, the creditor need not provide the“Toolkit”. (TILA 12 CFR Part 1026.19(g)(1)(i); Comment 19(g)(1)(i)-3)When two or more persons apply together for a loan, the creditor may provide a copy of the “Toolkit” to just one of them. (Comment 19(g)(1)-2)If the consumer uses a mortgage broker, the mortgage broker must provide the “Toolkit” and the creditor need not do so. (TILA 12 CFR Part 1026.19(g)(1)(i))Creditors generally are required to use the booklets designed by the Bureau and may make only limited changes to the “Toolkit”. (TILA 12 CFR Part 1026.19(g)(2)).The Bureau may issue revised or alternative versions of the “Toolkit” from time to time in the future. Creditors should monitor the Federal Register for notice of updates.(Comment 19(g)(1)-1) The “Toolkit” is NOT required on the following:HELOC (TILA 12 CFR Part 1026.40), instead must provide a copy of the brochure entitled “When Your Home is On the Line: What You Should Know About Home Equity Lines of Credit”. (TILA 12 CFR Part 1026.19(g)(1)(ii)) 
Close-end 2nd MortgageReverse mortgage. 
(TILA 12 CFR Part 1026.19(g)(1)(iii))


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2 Implementation

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Practical implementation and compliance issuesYou should consult with legal counsel or your compliance officer to understand your obligations under the TILA-RESPA rule and to devise the policies and procedures you will need to have in place to comply with the TILA-RESPA rule’s requirements. When mapping out your compliance plan, in addition to understanding your obligations under the TILA-RESPA rule, you should consider practical implementation issues. Identifying affected products, departments, and staffIdentifying the business-process, operational, and technology changes that will be necessary for complianceIdentifying impacts on key service providers or business partners (software, compliance, quality-control, and record keeping protocols)Identifying training needs.Consider the training that will be necessary for your loan officer, processor, closing, compliance, and quality-control staff, as well as anyone else who accepts applications, processes loans, or monitors transaction compliance. Training may also be required for other individuals that you, your agents, or your business partners employ. You will find the TILA-RESPA rule on the Bureau’s website athttp://www.consumerfinance.gov/regulatory-implementation/tila-respa/ In addition to a complete copy of the TILA-RESPA rule, that web page also contains:The preamble, which explains why the Bureau issued the rule, the legal authority and reasoning behind the rule, responses to comments, and analysis of the benefits, costs, and impacts of the rule; 
Official Interpretations of the rule; 
The TILA-RESPA Guide to Forms; and 
Other implementation support materials (including proposed rule amendments, if applicable). 


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2 Implementation

QUESTION

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The electronic version of the Home Loan Toolkit is NOT meet Federal accessibility standards to ensure that all consumers can use the resource. ( )True( )False ← Wrong answer