Integrated Disclosures: Challenges and Business Decisions 5 Best - - PowerPoint PPT Presentation

Integrated Disclosures: Challenges and Business Decisions

5 Best Aspects to Being an Ex-Regulator

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My speech bio is a lot shorter

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I haven’t been sued since I left the State

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I am not avoided at conferences

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Terry Jones can now buy me lunch

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Rick Accomazzo can no longer depose me!

Integrated Disclosures: Applicable Quotes

“ Reality is the leading cause of stress am ong those in touch w ith it.” Lily Tomlin

Lessons Learned – Past CFPB Rule Implementation

 There is no such thing as enough time  Vendors delays  Delayed investor guidance  Unearthing the “unknowns”  Training is vital  Importance of industry engagement

20 13 CFPB Rule Im plem entation 20 14 / 20 15 CFPB Rule Im plem entation

 Escrow Requirements under

TILA

 High Cost Mortgage &

Homeownership Counseling

 ATR/ QM  LO Compensation  Mortgage Servicing Rules  Appraisals for Higher Priced

Loans

 Appraisal disclosure and

delivery requirements

 Integrated Disclosures

Regulatory Fatigue

Integrated Disclosures: Important Dates

 Adopted November 20, 2013

 20 months to implement  In reality, only 16 months

 Effective date is August 1, 2015

 ONLY 9 months left to implement

How will you feel on August 1, 2015?

How will you feel on August 1, 2015?

Effective Date Challenges

 The effective date for a majority of the rule applies to applications taken

• n or after August 1, 2015.

 Prohibited from using disclosures prior – Similar to RESPA 2010  No transition period  Entire industry must go live this date. This includes:

 Mortgage companies  Vendors  Investors  Title companies  Real estate brokers

Triggers for Effective Dates

 Managing two (2) triggers for the effective date:

Majority of the rule is triggered by application Three (3) areas are not triggered by the

application:

New provisions regarding pre-disclosure

activities – disclaimer on pre-disclosure estimates

Restriction on collection of upfront fees or

payment information

Preemption of state laws

Definition of an Application

 “Application” means the submission of the following 6

pieces of information:

 Consumer’s name;  Consumer’s income;  SS#;  Property Address;  An estimate of the value of the property; and  Loan amount sought.

 Definition no longer includes the previous 7th catch all of

“any information deemed necessary by the loan originator.”

Loan Estimate – Same Day Disclosure

 Currently, if loan is locked after initial Loan Estimate

(L.E.), a new L.E. must be provided on the same day:

 CFPB has proposed to change this to within 1 business day  Still creates challenges. 3 day disclosures timelines can still be

difficult.

 Provides very little time from a monitoring perspective.  What controls are you going to put into place to ensure

compliance?

Current Future

 Origination charge;  While the borrower’s

interest rate is locked, the credit or charge for the interest rate chosen and any adjusted

• rigination charge;

 Transfer taxes.  Fees paid to the

creditor, mortgage broker or an affiliate

• f either;

 Fees paid to a third

party service provider selected by the creditor;

 Transfer taxes.

Zero Tolerance Fee Bucket

Managing Closings

 Proof of receipt.  How will title companies impact your ability to complete

disclosures?

 How will title companies impact waiting periods?  Who will manage your closings moving forward?

Managing Waiting Periods

 Waiting periods drive fee due diligence on the front end. If

not accurate:

 Delayed closings  Loan cures

 Two (2) new triggers for new waiting periods:

 Loan product is changed  A prepayment penalty is added

 Managing expectations:

 It isn’t enough to have your staff trained on this rule.  It is vital that referral sources are aware of the waiting

periods.

Term Consummation

 When the borrower(s) becomes legally obligated to

the loan.

 Determined at the state level = Inconsistency  Will have to manage waiting periods accordingly

from state to state

Managing Brokered Loans

 Creditor is ultimately liable  Ensuring accuracy of broker disclosures  Knowing all affiliate relationships  Making sure timelines are met: Application date trigger  Managing waiting periods:

 Confirmation of receipt of disclosures  Avoiding delayed closings

Training

 Who to train?

 Identifying which employees?

 Closers  LOs  Processors

 Real estate partners?  Title companies?  Builder partners?

 Ensuring enough time for implementation and training?

 Need to make business decisions early to know how to implement

and how to train.

 Will your vendor provide a test environment?

Evolving Clarity/ Guidance

 Last round, CFPB provided clarity and guidance in

October and November leading up to January implementation date.

 CFPB will continue to alter existing rules:

 Same day disclosure

 As vendors and the industry approach effective date,

more unforeseen circumstances will arise.

 Industry and vendors will need to be nimble in light of

evolving regulations.

Regulatory Leverage

 Regulator perspectives not supported by law:

 A Marketing Service Agreement is a thing of value – Lighthouse Title

consent order.

 Prohibition on collecting payment information for upfront fees.  Disparate Impact.

 Consent orders, as opposed to law, are driving today’s

regulatory landscape.

 Cost and risk of challenging regulators is too great.

 Industry has to find a way to challenge important topics

Consumer Leverage

 Complaint management is vital in today’s

environment:

 CFPB complaint portal:  Complaint data is open to the public  CFPB is considering publishing the actual complaint and

responses.

 Managing perceptions  Yelp, but without the positive reviews

 Not about who is right or wrong. Resolution is most

important.

 Who would you rather your customers complain to?

Resources

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CFPB’s Compliance Guide

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CFPB’s Guide to Forms

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Integrated loan disclosure forms and samples

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Model forms – blank and completed as samples (English and Spanish)

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All Can be found at: http:/ / www.consumerfinance.gov/ regulatory-implementation/ tila-respa/

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eRegulations – CFPB: easier way to review regulations. Only has Reg. E & Z currently.

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Sign up for CFPB webinars at: fedwebinar@sf.frb.org

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Freddie Mac and Fannie Mae have released industry datasets:



http:/ / www.freddiemac.com/ singlefamily/ sell/ ucd.html

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https:/ / www.fanniemae.com/ singlefamily/ uniform-closing-dataset

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