Retail New TILA and RESPA Requirements Effective 7/30/2009 This information is not intended or should be construed as legal advice. Please consult your legal counsel for applicability.
New TILA and RESPA Requirements • Upfront fees cannot be collected, imposed or paid for on behalf of the borrower until the initial disclosures are received. • The earliest closing date for any loan is seven (7) business days after the initial disclosures are issued. • An increase or decrease of .125% (fixed rate loans) or .250% (adjustable rate loans) in the APR requires re-disclosure of the TIL. The re-disclosed TIL must be received by the borrower at least three (3) business days prior to closing.
How the New Requirements Impact You On Thursday July 30, 2009 federal regulations that amend the Truth in Lending Act (TIL) became effective.The intent of these changes is to help prevent deceptive lending practices and to improve communication of loan information to consumers. • The major changes that impact WMC are: • Upfront (application) fees cannot be collected, imposed or paid for on behalf of the borrower until the TIL and GFE disclosures have been received by the borrower. • Three business days if delivered through the postal mail • Same business day if hand delivered in a face to face interview • Same business day if delivered electronically (via email) • Next business day if delivered by overnight express
How the New Requirements Impact You • The earliest closing date for any loan is seven business days after the TIL and GFE disclosures have been issued. • Any difference in terms and fees that results in a change to the APR of .125% for fixed rate loans and .250% for adjustable rate loans requires the TIL and GFE to be re-disclosed and reissued to the customer. • If re-disclosure is required, the revised disclosures must be provided to the customer at least three days prior to loan closing. • All loan files must contain a copy of the appraisal invoice and a copy of the itemized title company invoice.
Scheduling Closings • Once the loan is approved by underwriting, the closing may be scheduled. • Loan closing may not occur until seven (7) business days after the initial application disclosures are issued. • If re-disclosure is required, the borrower must receive the disclosures no less than three (3) business days prior to loan closing. • Changes in the APR that are the result of a difference between estimated and actual per diem interest only do not require re-disclosure.
Scheduling Closings • The Settlement Agent or Title Company must forward the sample HUD-1 to the WMC Closing Department no less than 96 hours prior to closing to allow sufficient time for re-disclosure, if necessary. • For Streamline Refinance loans, be sure to back into your closing date, and allow enough time for re-disclosure. Often times, this will be approximately ten (10) business days prior to the scheduled closing date. • The “wait period” is between disclosure and closing, not funding/disbursement. Branches in escrow states will need to obtain the initial HUD-1 before closing documents are released. In addition, fees can no longer be estimated. If fees change and result in an increase or decrease in the APR of more than .125% (fixed rate) or .250% (ARM), it will result in re-disclosure of the TIL and a further delay to the closing date.