Frequently Asked Questions
Effective October 3, 2015
If you have additional questions or comments please contact the Acopia Capital Compliance desk at
Q: Where can I find additional resources that will help me understand the TILARESPA rule?
A: Resources to help you understand and comply with the Dodd-Frank Act mortgage reforms and our regulations, including downloadable compliance guides, are available through the CFPB’s website at www.consumerfinance.gov/regulatory-implementation. If after reviewing these materials you have a specific TILA-RESPA regulatory interpretation question, submit a detailed message, including your name, contact information, details about your regulatory question, and the specific title, section, or subject matter of the regulation you are inquiring about, to CFPB_RegInquiries@cfpb.gov.
Q: What is the TILA-RESPA rule about?
A: The TILA-RESPA rule consolidates four existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms: a Loan Estimate (LE) that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a Closing Disclosure (CD) that must be provided to the consumer at least three business days prior to consummation.
Q: What transactions are covered by the TILA-RESPA rule?
A: The TILA-RESPA rule applies to most closed-end consumer credit transactions secured by real property, but does not apply to:
Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling that is not attached to real property (i.e., land).
Q: When do I have to start following the TILA-RESPA rule and using the new Integrated Disclosures?
A: The new LE and CD forms are required for all applications taken on or after October 3, 2015 provided the loan program requires it. At this time all Acopia Programs will require.
Q: How many days are required between the date the LE is provided and the date of consummation?
A: The initial LE must be provided no less than 7 business days prior to consummation.
Q: For loans with an application date prior to October 3, 2015, will the Loan Estimate and Closing Disclosure be required?
A: No. For transactions where the application is received prior to October 3, 2015, creditors will still need to follow the current disclosure requirements under Regulations X and Z, and use the existing forms (TIL, GFE, HUD-1).
Q: Are there any requirements of the Rule that take effect on October 3, 2015 regardless of whether an application has been received on or after that date?
A: Yes. The TILA-RESPA rule includes new restrictions on certain activity prior to a consumer’sreceipt of the Loan Estimate. These restrictions take effect on the calendar date October 3, 2015, regardless of whether an application has been received on that date. These activities include:
Imposing fees on a consumer before the consumer has received the Loan Estimate and
The consumer has indicated an intent to proceed with the transaction.
Providing written estimates of terms or costs specific to consumers before they receive the Loan Estimate without a written statement informing the consumer that the terms and costs may change.
Requiring the submission of documents verifying information related to the consumer’s application before providing the Loan Estimate.
Q: Can a loan originator email a Loan Estimate to a borrower?
A: Yes; as long as the borrower has given their consent and the other specific requirements under the ESIGN Act have been met.
Q: If you are emailing and there are two consumers, is emailing to one email considered sufficient?
A: There are different rules for each document provided. They are as follows:
Loan Estimate: If there is more than one consumer then the Loan Estimate may be provided to any consumer who is primarily liable on the obligation. If one consumer is merely a surety or guarantor then the Loan Estimate must be given to the principal debtor.
Closing Disclosure: In contrast to disclosure of the Loan Estimate the Closing Disclosure must be provided to each consumer who has the right to rescind in rescindable transactions. Citation(s):§1026.17(d) and Commentary ¶17(d)-2; §1026.23
Q: What is the difference between a General Business day and a Specific Business Day?
A: General Business Day: Is a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.
Specific Business Day: is all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. § 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
Q: If an application was taken and a GFE was disclosed in September, but the closing is after October 3, will a HUD-1 and final TIL be used at closing or will a Closing Disclosure we required?
A: The rule goes into effect for applications take on or after October 3, 2015, not for closings on or after October 3, 2015. If a GFE was disclosed prior to October 3, 2015, a HUD-1 and final TIL will be required.
LOAN ESTIMATE (LE):
Q: When is the Loan Estimate required to be disclosed?
A: A Loan Estimate must be issued no later than three business days after receiving an application or information sufficient to complete an application. Note above the new definition of an application.
Q: If a loan contains mortgage insurance that is paid by the lender (LPMI) and will not be charged separately to the borrower, should the creditor disclose it on the Loan Estimate?
A: No, because the LPMI has already been captured in the interest rate and is not charged separately to the borrower, it is not disclosed on the Loan Estimate. The LPMI disclosure is required to be provided to the borrower.
Q: If at the time a Loan Estimate is issued it is known the seller will pay settlement charges typically paid by the borrower, how are the charges disclosed on the Loan Estimate?
A: All charges typically paid by the borrower must be disclosed on the Loan Estimate regardless of whether the charges will be paid for by the borrower, the seller, or other party.
Q: When does a Loan Estimate expire?
A: If a borrower does not express an intent to proceed with an application within 10 business days after the Loan Estimate is provided (or such longer time period specified by the creditor), the creditor is no longer bound by the Loan Estimate.
Q: What is the last day to disclose a revised Loan Estimate if the closing date has been determined?
A: The last revised Loan Estimate must be provided no later than four business days prior to consummation.
Q: Section 1026.37(a)(12) indicates that the creditor must disclose a unique loan ID number. If the creditor is unknown, is the broker required to generate and disclose a unique ID number?
A: No. A broker would not be required to generate and disclose its own unique loan ID on a Loan Estimate, and assuming the creditor’s unique ID is not available to the broker, the disclosure may be left blank. The loan ID number must be a unique identifier that should be determined by the creditor, and must remain the same throughout the loan transaction.
Q: Can a revised Loan Estimate be provided to the consumer once a Closing Disclosure has been delivered?
A: No. The Loan Estimate must not be provided after the Closing Disclosure has been provided to the consumer.
Q: Section 1026.37(a)(12) indicates that the creditor must disclose a unique loan ID number. If the creditor is unknown, is the creditor required to disclose its own unique loan ID once there is a creditor for the loan?
A: Yes. The creditor is required to include a unique loan ID on any subsequent disclosures it provides, such as revised Loan Estimates or the Closing Disclosure. The creditor is ultimately responsible for the disclosures and that includes providing its own unique loan ID.
Q: If a creditor charges an origination fee that is a percentage of the loan amount, but it is not a “point paid to the creditor to reduce the interest rate,” may the creditor identify it as a point in some way to preserve its tax deductibility for the consumer?
A: No. Section 1026.37(f)(1)(i) provides that only points paid to the creditor to reduce the interest rate may be labeled as points. The Loan Estimate form is meant to provide accurate disclosures to consumers, not to document eligibility for tax benefits or other purposes.
Q: How must discount points be disclosed on the Loan Estimate?
A: Points paid to the creditor to reduce the interest rate must be disclosed as a separate line item on page two under Origination Charges. They must also be listed as both a dollar amount and as a percentage of the loan amount. Discount points used to pay for Loan Level Pricing Adjustment assessed on the lender must be itemized separately.
Q: Are the adjustable payments and adjustable interest tables disclosed for a fixed rate loan?
A: The adjustable payments table (APT) is used only when there are adjustable payment features. If there are no such features in the legal obligation the APT table is not disclosed. Accordingly, the APT table will only be disclosed if the fixed rate loan has adjustable payment features. The adjustable interest rate (AIR) table is only disclosed when interest rates can change, which would be contrary to the definition of a fixed rate loan. Therefore, the AIR table should never be disclosed with a fixed rate loan.
Q: Is the consumer required to sign the Loan Estimate?
A: No. The signature statement on page 3 of the Loan Estimate is optional. The signature statement can be utilized as alternative documentation to prove receipt of the Loan Estimate prior to the three business day presumption. FCM will require the use of the signature statement. It is important to remember, a signature on the Loan Estimate does not constitute an intent to proceed by the borrower.
Q: What is listed in the “Other Considerations” section of the Loan Estimate?
A: This section contains some initial required disclosures such as Right to Receive Appraisal and Servicing. This may be used in lieu of separate disclosures provided the Loan Estimate has been completed and disclosed with the model form verbiage under the rule.
Q: Does the creditor have to disclose an itemization of the amount financed with the Loan Estimate?
A: No. A creditor would not disclose an itemization of the amount financed with the Loan Estimate and Closing Disclosure. The CFPB also advised that some disclosures are required to be made only on the Closing Disclosure and not the Loan Estimate. These include some of the fed box disclosures, such as the amount financed and the finance charge. These disclosures are required to be on the Closing Disclosure pursuant to sections 1026.38(o)(2) and (o)(3), but are not required to be included on the Loan Estimate. However, note that even for the Closing Disclosure, the amount financed is not itemized. Section 1026.38(o)(3) requires that only the amount financed itself (which is calculated in accordance with section 1026.18(b)) be disclosed
Q: When the sale price of the property is not yet known, does the creditor disclose a label other than “sale price” for the sale price on the Loan Estimate?
A: No. The label should state the sale price, and the label does not change when the creditor uses an estimated sales price as described in commentary section 1026.37(a)(7)-1. For transactions without a seller, such as a refinance, because there is no sale, the estimated value of the property is disclosed in place of the sales price, and labeled “property value” with “property” abbreviated as “prop.”
Q: If owner’s title insurance is not required by the creditor is it subject to the 10% cumulative tolerance?
A: No. Owner’s title insurance not required by the creditor is not subject to the 10% cumulative tolerance. The CFPB is aware that the preamble to the final rule contains potentially conflicting language, but advises that the final rule text is what should be followed. Under §1026.19(e)(3)(ii), the 10% cumulative tolerance category includes recording fees and charges paid to unaffiliated third party service providers when the consumer is permitted to shop for a settlement service provider, but chooses a provider from the creditor’s written list of providers. Owner’s title insurance is not a charge that is assigned to a particular tolerance category. Therefore, the applicable tolerance category depends on other factors, including whether the creditor requires the insurance and, if so, whether the consumer may shop for the provider of the insurance. To the extent owner’s title insurance is not required by the creditor and is disclosed as an optional service, under the rule the insurance is not subject to any percentage tolerance limitation, even if paid to an affiliate of the creditor.
Q: Does a creditor have to show an appraisal fee (or other fee) paid to a third party on the Loan Estimate even if the creditor wants to cover 100% of the fee?
A: Yes. The creditor must list all required third party services on the Loan Estimate regardless of whether the charge is paid by the borrower, seller, creditor, or any other party.
Q: Is the creditor required to disclose on the Loan Estimate that it will be transferring servicing even if the transfer is not immediate, but will happen at some later point in time during the life of the loan? In the case that the servicing is being transferred to the creditor’s subsidiary or affiliate, is it still require?
A1: Yes. The creditor must disclose on the Loan Estimate that it will transfer servicing if the creditor’s intent at the time the Loan Estimate is issued is to transfer servicing at some point during the life of the loan. Section 1026.37(m)(6) requires disclosure of a statement of when the creditor intends to service the loan or transfer the loan to another servicer. This means that a creditor is required to disclose whether it intends to service the loan directly or transfer servicing to another servicer at any time after consummation. A creditor complies with the rule if the disclosure reflects the creditor’s intent at the time the Loan Estimate is issued.
A2: Yes. The creditor must disclose that it will transfer servicing, even if the transfer will be to a subsidiary or affiliate, if that is the creditor’s intent at the time the Loan Estimate is issued. As with the previous question, Section 1026.37(m)(6) requires a creditor to disclose a statement of whether the creditor intends to service the loan directly or transfer servicing to another servicer. A creditor’s subsidiary or affiliate is another servicer for the purposes of this requirement if it is a person responsible for receiving scheduled periodic payments from a borrower.
WRITTEN LIST OF SERVICE PROVIDERS:
Q: The borrower chooses a settlement service that is not on the written list, does the tolerance apply?
A: No, if the borrower chooses a settlement service provider that is not on the written list of providers, the amount paid for that service is not subject to a tolerance, so long as the service provider is not an affiliate of the creditor/mortgage broker.
Q: Is the borrower required to select a settlement service provider from the written list of settlement service providers?
A: No. If the borrower is permitted to shop for a settlement service provider, the borrower may choose a qualified provider that is not on the provided written list.
Q: At what point does the written list of service providers need to be provided?
A: When the borrower is permitted to shop for third-party settlement services, the written list of services providers must be provided with the Loan Estimate, on a separate sheet of paper.
Q: May a loan originator state on the written list of providers that the loan originator is not endorsing the quality of a settlement service provider’s service?
A: Yes, the loan originator may include a statement on the written list that the listing of a service provider on the written list does not constitute an endorsement of that service provider.
Q: The borrower chooses to use a provider identified on the written list, is the lender subject to tolerances for those services?
A: Yes, the lender is subject to the tolerances for the services in which the borrower chooses to use the identified provider.
Q: In lieu of providing the written list of providers, may the loan originator disclose to the borrower that if they specifically wish to shop for their own provider, but have difficulty finding a provider for a service at the disclosed price that they may contact the loan originator to ask the loan originator to identify a provider?
A: No. Where a loan originator permits a borrower to shop for third party settlement services, the loan originator must provide the borrower with a written list of settlement service providers at the time of the Loan Estimate, on a separate sheet of paper.
CHANGE IN CIRCUMSTANCE:
Q: If a Loan Estimate has been provided and the interest rate has not been locked, can the creditor provide a revised Loan Estimate when the borrower later locks the interest rate?
A: Yes, if a borrower locks the interest rate after the Loan Estimate has been issued, a revised Loan Estimate must be issued within 3 days of the interest lock reflecting the date that the interest rate lock is good through. Any interest rate-dependent charges and terms that changed must also be updated on the revised Loan Estimate.
Q: Would the discovery of additional documents (such as releases) that must be recorded causing an increase in government recording fees be considered a changed circumstance allowing the loan originator to provide a revised Loan Estimate?
A: The discovery of previously undisclosed circumstances affecting settlement costs such as unreleased liens could be considered a changed circumstance. A loan originator may choose to issue a revised Loan Estimate reflecting only the increased charges resulting from the changed circumstance or may choose not to reissue a Loan Estimate if the increase is minimal. If the loan originator chooses to issue a revised Loan Estimate, only the increase in recording fees may change on the Loan Estimate: all other charges must remain the same.
Q: Once a rate is locked, how many days does the loan originator have to issue a revised Loan Estimate for the initial rate lock?
A: A revised Loan Estimate must be provided within three business days of the Lock Date.
Q: Once a Loan Estimate is issued, what if any, circumstances under are there which the loan terms or charges can change?
A: The terms or charges can change in the event that there are changed circumstances.Changed circumstances is defined as:
(1) Acts of God, war, disaster, or other emergency;
(2) Information particular to the borrower or transaction that was relied on in providing the Loan Estimate and that changes or is found to be inaccurate after the Loan Estimate has been provided, which information may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the
(3) New information particular to the borrower or transaction that was not relied on in providing the Loan Estimate; or
(4) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.
None of the information collected by the loan originator prior to issuing the Loan Estimate may later become the basis for a changed circumstance upon which a loan originator may offer a revised Loan Estimate, unless the loan originator can demonstrate that there was a change in the particular information or that it was inaccurate, or that the loan originator did not rely on that particular information in issuing the Loan Estimate. In addition, the loan originator is presumed to have relied on the borrower’s name, the borrower’s monthly income, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any information contained in any credit report obtained by the loan originator before providing the Loan Estimate. The loan originator cannot base a revision of the Loan Estimate on this information, unless it changed or is later found to be inaccurate.
Q: There is a changed circumstance on the loan, when does the loan originator issue a new Loan Estimate?
A: When there is a changed circumstance and the loan originator intends to issue a revised Loan Estimate, the loan originator must do so within three business days of receiving the information sufficient to establish changed circumstances. A loan originator may only issue a revised Loan Estimate reflecting the increased charges resulting from the changed circumstance.
Q: What charges can change before the interest rate is locked?
A: With the exception of interest rate-dependent charges and terms, the charges and terms for all settlement services on the Loan Estimate must be available for 10 business days from when the Loan Estimate is provided, or for such longer period of time as the loan originator provides. The interest rate-dependent charges and terms cannot change before the expiration of the period indicated by the loan originator.
Q: If a Loan Estimate is revised to reflect a changed circumstance, may other charges on the Loan Estimate change to reflect market fluctuations?
A: No. A Loan Estimate may not be revised to reflect market fluctuations.
CLOSING DISCLOSURE (CD):
Q: How is consummation defined under the Rule?
A: Regulation Z defines consummation as: “the time that a consumer becomes contractually obligated on a credit transaction. See 12 CFR 1026.2(a)(13). The Commentary to Regulation Z states further that the point at which a “contractual obligation … is created” is a matter of state law. 12 CFR 1026.2(a)(13)-2.
Q: What are the timing requirements associated with the Closing Disclosure?
(i) The Closing Disclosure must be received no later than three business days prior to consummation.
(ii) The Closing Disclosure must be made available to the consumer one business day prior to consummation if requested by the consumer.
(iii) If the CD becomes inaccurate before consummation, a corrected CD must be provided at or
before consummation. If the APR changes by more than .125% on a regular transaction or .25% on an irregular transaction, the Loan Product Changes, or there is an addition of a prepayment penalty, a new 3 day waiting period is required.
Q: If there is more than one consumer involved in a transaction how is delivery of the Closing Disclosure handled?
A: In rescindable transactions, the Closing Disclosure must be given separately to each consumer who has the right to rescind under TILA. In transactions that are not rescindable, the Closing Disclosure may be provided to any consumer with primary liability on the obligation.
Q: What is TIP?
A: The TIP is the total amount of interest that the consumer will pay over the life of the loan, expressed as a percentage of the loan amount. TIP stands for “Total Interest Percentage.”
Q: Who will prepare the Closing Disclosure?
A: Acopia will be creating the Closing Disclosure with the help of the settlement agent. Acopia will also be delivering the Closing Disclosure to the borrower(s) and verifying receipt 3 days prior to consummation.
Q: Who is responsible for providing the Closing Disclosure to a seller on a purchase transaction?
A: The settlement agent is required to provide the seller with the Closing Disclosure reflecting the actual terms of the seller’s transaction.
Q: If terms or costs change after consummation are creditors required to provide corrected Closing Disclosures?
A: Yes, in some circumstances. Creditors must provide a corrected Closing Disclosure if an event in connection with the settlement occurs during the 30-calendar-day period after consummation that causes the Closing Disclosure to become inaccurate and results in a change to an amount paid by the consumer from what was previously disclosed. When a post-consummation event requires a corrected CD, the creditor must deliver or place in the mail a corrected Closing Disclosure not later than 30 calendar days after receiving information sufficient to establish that such an event has occurred.
Q: The Creditor discovers clerical errors after consummation, are these subject to the re-disclosure obligation?
A: Yes. Creditors also must provide a revised Closing Disclosure to correct non-numerical clerical errors and document refunds for tolerance violations no later than 60 calendar days after consummation. An error is clerical if it does not affect a numerical disclosure and does not affect the timing, delivery, or other requirements imposed by the Rule.
Q: Can loan documents be kept electronically and still meet the record retention requirements of Regulation X and Regulation Z?
A: Yes, Regulations X and Z permit, but do not require electronic recordkeeping. Records can be maintained by any method that reproduces disclosures and other records accurately, including computer programs.
Q: If a broker is issuing a Loan Estimate but does not know the creditor, may the broker put its name on the form in place of the creditor’s name?
A: No. The comment provides that the broker must make a good faith estimate to disclose the name of the creditor, but when the name of the creditor is not known at the time the Loan Estimate is required to be delivered or placed in the mail, the mortgage broker may leave the creditor’s name blank. This does not allow the mortgage broker to substitute its name for the creditor’s name. Section 1026.37(a)(3) requires the name and address of the creditor, and a broker would not place its name and address when the name of the creditor is unknown. Commentary section 1026.37(a)(3)-2 addresses situations where the mortgage broker is making the disclosure and the creditor has not yet been determined.
Q: Information constituting a changed circumstance or borrower-requested changes might become available to the broker and lender at different times. When is the time for providing a revised Loan Estimate triggered?
A: If a revised Loan Estimate is to be provided, the loan originator must do so within 3 business days of receiving information sufficient to establish the changed circumstance. The 3 business days is triggered from the time of receipt by whichever loan originator, either the mortgage broker or the lender, receives the information first. Timely communication between the mortgage broker and the lender is essential to assure compliance.
**The following FAQ's are provided for informational purposes only and should not be considered legal advice. The contents and materials provided are subject to change at any time, without notice. This information was gathered from several sources, including the CFBP website.