TILA / RESPA

Disclosures Required Under TILA

100

three-page document containing an estimate of credit terms and closing costs.

delivered at the time of application

What is a LOAN ESTIMATE

200

Required for borrowers with high-cost loans

Provides all the final costs of the transaction

Must be given to the borrower at least 3 business days prior to consummation

What is a HOEPA DISCLOSURE (COVERED LOAN NOTICE)

300

Purchase Transactions Only

• Must be delivered separately to the consumer AT APPLICATION (or within 3 business days if mailed)
• Informs the consumer of the mortgage process Includes:
• Explanation of affordability
• How to shop for a mortgage loan
• Review of the Loan Estimate and Closing Disclosure

HOME LOAN TOOLKIT (SPECIAL INFORMATION BOOKLET)

400

Required under Section 19: MDIA

• Educates the consumer on the specifics of their ARM (rate, adjustments, caps, index, etc.)
• Due to the borrower at application (or prior to the payment of a non-refundable fee)

EARLY ARM DISCLOSURE

500

Required under Section 23: 

Only available on primary residences for non-purchase transactions (reverse or refinance mortgages)

• Given to all parties with ownership (title) interest in the property (each gets 2 copies) at closing
• Borrower can do this within 3 business days of closing
• If a copy of the notice is not given to an individual with ownership interest, then the right is extended to 3 years

NOTICE OF RIGHT TO CANCEL (RIGHT TO RESCIND)

600

Required under Section 19: MDIA

• Educates the consumer on risks and advantages of ARMs
• Due to the borrower at application (or prior to the payment of a non-refundable fee)

CONSUMER HANDBOOK ON ADJUSTABLE RATE MORTGAGES (CHARM BOOKLET)

700

Required under the general rules of TILA and the TILA-RESPA Integrated Disclosure Rule

• Provides all the final costs of the transaction
• Given to all borrowers 3 business days prior to consummation of the loan

CLOSING DISCLOSURE (CD)

TILA Open-End Mortgage Only Disclosures

100

• Provides an estimate of the costs for financing
• Must be delivered to the consumer at application (or within 3 business days if mailed) for reverse mortgages and HELOCS only

Includes:

• Interest Rate
• Financing Charges
• Annual Percentage Rate information

INITIAL TRUTH IN LENDING STATEMENT (TIL)

200

• Due at application or within 3 business days
• Educates the consumer on the structure of a HELOC as well as what to look for when shopping for a HELOC plan

WHAT SHOULD YOU KNOW ABOUT YOUR HELOC (WHEN YOUR HOME IS ON THE LINE)

300

• Due date at close or one day prior if requested by the borrower
• Used to compare the financing costs listed on the Initial TIL

FINAL TRUTH IN LENDING STATEMENT (TIL)

400

What are two monetary Penalties for the violation of TILA

• Monetary fines ranging from $400-$4,000
• Class action = up to $500,000 or 1% of the creditor’s net worth, whichever is less

500

Records relating to TILA must be retained for

2 years after the disclosure is made or action is required to be taken

600

Loan originator compensation records and records pertaining to ATR/QM must be retained for

3 years

700

Violations of the Loan Originator Rule can result in actual damages of

 3x the amount paid to the originator

Rate Adjustment Disclosures Provided Durning Servicing

100

• Required under Section 36: The Loan Originator Rule
• Due 60 to 120 days prior to rate adjustment
• Includes information about the servicer and possible alternatives to avoid paying the new interest rate
• Provides the effective date of the new interest rate and the new payment amount as well as any other changes to loan terms

ONGOING (SUBSEQUENT) INTEREST RATE ADJUSTMENT DISCLOSURE

200

Required under Section 36: The Loan Originator Rule

• Due 210 to 240 days prior to rate adjustment
• Includes information about the servicer and possible alternatives to avoid paying the new interest rate
• Provides the effective date of the new interest rate and the new payment amount as well as any other changes to loan terms

INITIAL INTEREST RATE ADJUSTMENT DISCLOSURE

300

• Willfully or knowingly breaking TILA rules may result in fines as high as 

$5000 and 1 year in prison

400

• What does TILA provide to borrowers 

the information needed to make an informed decision about consumer credit.

500

TILA Does Not Govern

• Those who extend business, agricultural or organizational credit
• Transactions involving credit in excess of $61,0003 if not secured by real property or a dwelling
• Public utility credit that includes any credit that covers services provided via wire, pipe or connected facilities
• Credit extended by a broker registered with the Securities Exchange Commission or the Commodity Futures Trading Commission
• Home fuel budget plans
• Student loans made, insured, or guaranteed by the Higher Education Act of 19654

600

What Regulation so TILA fall under

Regulation Z

700

Name two ways TILA ensures borrowers can make an educated decision about their loan

through the timing requirements for disclosures, and mandatory waiting periods between disclosure delivery and loan closing

Disclosures Required Under RESPA

100

Must be delivered to the borrower 15 days prior to the transfer of servicing AND 15 days after the servicing is transferred

Informs the borrower that their loan is being placed with a new servicer Includes:

• Contact information for current servicer
• Contact information and payment address information for new servicer
• Provision that during the 60-day period following the transfer, a late fee cannot be charged to the borrower for payments sent to the previous servicer

NOTICE OF TRANSFER STATEMENT (NTS) Required under Section 6: Servicing

200

Initial Escrow Statement:

• Due AT CLOSING or within 45 calendar days of establishment of escrow account
• Explains the amount needed for escrow and breaks down each payment Annual Escrow Statement:
• Due within 30 days of analysis
• Determines any overages or shortages

INITIAL AND ANNUAL ESCROW STATEMENTS

300

• Must be delivered to the consumer AT APPLICATION (or within 3 business days if mailed)
• Informs the borrower of local counseling organizations
• The lender is ultimately responsible for ensuring that the consumer receives the list
• Reverse mortgages and timeshares are exempt from receiving the list
• Must have at least 10 organizations listed within the vicinity of the subject property

HOMEOWNERSHIP COUNSELING ORGANIZATIONS LIST

Required under the general rules of RESPA

400

This disclosure is for HELOC & Reverse Mortgages Only Required under the general rules of RESPA

• Must be delivered to the consumer AT APPLICATION (or within 3 business days if mailed)
• Informs the consumer of expected costs of the complete transaction and is good for 10 business days

GOOD FAITH ESTIMATE (GFE)

500

This disclosure is for HELOC & Reverse Mortgages Only Required under the general rules of RESPA

• Must be delivered to the borrower AT CLOSING (or 1 day prior if requested)
• Informs the borrower of the final costs for the entire transaction

HUD-1 SETTLEMENT STATEMENT (HUD-1).

600

• Must be delivered to the consumer at the TIME OF REFERRAL if the originator is affilliated with the service provider
• Informs the consumer of the business arrangement between the two parties Includes:
• Description of the business arrangement as well as ownership interest
• An estimate of costs
• Statement that the consumer is not required to use the affiliate for the service and may instead choose their own provider

AFFILIATED BUSINESS ARRANGEMENT DISCLOSURE (ABA, AfBA)

Required under Section 8: Referrals

700

Must be delivered to the consumer AT APPLICATION or within 3 days (excluding legal public holidays, Saturdays and Sundays) on first lien mortgages

Informs the borrower that their loan may be assigned to another company for servicing Includes:

• Likelihood of the loan’s servicing rights being sold
• Explains the borrower’s rights for complaint resolution

Applicant acknowledgment signature line

MORTGAGE SERVICING DISCLOSURE STATEMENT (MSDS)

Required under Section 6: Servicing

RESPA Penalties and Record Keeping

100

Failure to provide an Annual Escrow Statement = $75 per violation ($130,000 annual limit)

Intentional violations = $110 per violation (no limit)

Section 10: Escrows

200

The Good Faith Estimate (GFE) must be kept for

3 years from the date of settlement

300

Fines up to $10,000 and up to 1 year in prison

Section 8: Referrals

400

The Loan Estimate and Closing Disclosure are two forms that

 must be used when a borrower is in process for a closed- end mortgage.

500

Borrower can sue for up to 3x amount charged for title insurance

Section 9: Title Agent

600

The following disclosures must be retained for 5 years from settlement:

• The HUD-1 Settlement Disclosure
• The Affiliated Business Arrangement Disclosure (ABA or AfBA)
• Mortgage Servicing Disclosure Statement (MSDS)

700

Damages not to exceed $1,000

Class Actions: Penalties up to $1,000 for each member, total damages not to exceed

$500,000, or 1% of net worth, whichever is less

Section 6: Servicing