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Part 13: Closing Disclosure – Variances versus the Loan Estimate

The following information is intended for general information purposes with the goal of assisting Ellie Mae’s customers in complying with the new KBYO regulations. This information is provided as a courtesy to Ellie Mae’s customers and Ellie Mae makes no representation or warranty regarding the accuracy of the information set forth herein, and you may not rely on this information to ensure your company’s compliance with the KBYO regulations. This FAQ should not be construed as legal advice or opinion on any specific facts or circumstances, including the application of the KBYO regulations. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with all applicable laws and regulations.
Can a creditor use a Closing Disclosure to document a change in circumstance?
Under certain circumstances. The creditor shall not provide a revised Loan Estimate on or after the date on which the creditor provides the Closing Disclosure. The consumer must receive a ...
How does rounding the Loan Estimate fees affect the variances when the actual amount is disclosed on the Closing Disclosure? In particular, fees like Line 1 and Transfer Taxes, which have a zero variance allowance?
To conduct the good faith analysis required under §1026.19(e)(3)(i) and (ii), the creditor should use unrounded numbers to compare the actual charge paid by or imposed on the consumer for...
Can the fees decrease regardless of the Variance Category they are in?
Fees can decrease for all categories except for Lender Credits. When an interest rate is locked between the consumer and the creditor, a revised Loan Estimate mus...
Are the variance categories different than the RESPA tolerance categories?
Yes, there are some variance differences effective on 10/3/15 for applicable loans under the new rule. Here are the new variances: Variance Categories ...
If the borrower chooses the title company on the provider list provided by the creditor, does the Lender's Title Insurance then become subject to zero tolerance since it appears to be included in the items the borrower cannot shop for area on the Closing Disclosure?
Section 1026.19(e)(3)(ii) provides that if the creditor requires a service in connection with transaction and permits the consumer to shop for that service, but the consumer either does no...
Is it likely that a lender will need to prove whether the borrower selected a service provider to define the “shop for/did not shop for” on those costs that could go either way, such as the title costs?
Yes. A creditor shall retain evidence of compliance with the requirements of §1026.19(e) and (f) for three years after the later of the date of consummation, the date disclosures are requ...
Have you heard that Lender Tolerance Cures are not going to be allowable in the future?
No, we have no information on the potential of such an event at this time. Citation(s): §1026.19(f)(2)(iii), (iv) & (v)
What are the citations for the Lender Cure?
Regulatory citations regarding the curing of violations under the rule are found under §1026.19(f)(2)(iii), (iv) & (v). Changes due to events occurring after con...
Is there any acceptable variance in APR?
Inaccurate APR is defined under Regulation Z (§1026.18 & §1026.22) and depends on whether the loan is a “regular” (.125%) or "irregular" (.25%) transaction. ...
Do we need to wait three days if APR changes at all or by 1/8th?
If the APR becomes "inaccurate" under section §1026.22 of Regulation Z (“regular” (.125%) or "irregular" (.25%) transaction), then the three business day waiting period applies. ...
Will the current APR tolerances apply to the new Loan Estimate and Closing Disclosure forms?
Yes. APR tolerances are not changing under this rule. Citation(s): §1026.22(a)
Does disclosed APR becoming inaccurate apply if the APR goes lower than the tolerance?
Regulation Z states: “As a general rule, the annual percentage rate shall be considered accurate if it is not more than 1/8 of 1 percentage point above or below ...
If the APR goes down, do we still have to wait three day, since under Regulation Z there is no penalty for that?
See response to previous question regarding when the APR becomes inaccurate. You should additionally seek legal counsel or your compliance expert’s policy guidance regarding this scenari...
Can we include a cure for a tolerance on the Closing Disclosure?
Refund of fees paid in excess of actual amount may be shown on the closing disclosure as lender credit. In addition, a statement regarding the differences with a reference to the variation...
If the Loan Estimate has combined fee values and the Closing Disclosure has individual fees listed, how are the fees compared?
To conduct the good faith analysis required under §1026.19(e)(3)(i) and (ii) the creditor should use unrounded numbers to compare the actual charge paid by or imposed on the consumer for ...
Disclaimer: The above information is intended for general information purposes with the goal of assisting Ellie Mae’s customers in complying with the new KBYO regulations. This information is provided as a courtesy to Ellie Mae’s customers and Ellie Mae makes no representation or warranty regarding the accuracy of the information set forth herein, and you may not rely on this information to ensure your company’s compliance with the KBYO regulations. This FAQ should not be construed as legal advice or opinion on any specific facts or circumstances, including the application of the KBYO regulations. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with all applicable laws and regulations.

CFPB announcement regarding the delay of TRID

The Consumer Financial Protection Bureau is delaying until October 3, 2015, the effective date of the TILA-RESPA Final Rule and the related TILA-RESPA Amendments. In light of certain procedural requirements under the Congressional Review Act (CRA), the TILA- RESPA Final Rule and the TILA-RESPA Amendments cannot take effect on August 1, 2015, as originally provided by those rules. To comply with the CRA and to help ensure the smooth implementation of the TILA-RESPA Final Rule, the Bureau is extending the effective date of both the TILA-RESPA Final Rule and the TILA-RESPA Amendments beyond the additional minimum period required by the CRA to October 3, 2015, as proposed. The Bureau is also making certain technical amendments to the Official Interpretations of Regulation Z to reflect the new effective date and technical corrections to two provisions of Regulation Z adopted by the TILA-RESPA Final Rule.

The full statement from CFPB Director Richard Cordray can be viewed here

Popular KBYO questions

When do the new disclosures become effective and for which transactions? Part 1: Rule Applicability What happens in October when your final forms are new but initials are old? Part 4: Loan Estimate – Timing & Consumer Receipt For electronic delivery of disclosures, after a borrower agrees to accept electronic delivery in compliance with the ESIGN Act must all disclosures be sent through an ESIGN compliant system, or can a lender email a scanned copy of a document through normal email? Can the borrower return the document by email as an attachment? Part 3: Loan Estimate – Miscellaneous Questions If an application is received prior to October 3, 2015 and a Good Faith Estimate was provided to a consumer should a HUD-1 Settlement Statement and Final TIL Disclosure Statement or a Closing Disclosure be provided to the consumer when the consummation date is on or after October 3, 2015? Part 1: Rule Applicability Do you define “exempt” to mean we are not “allowed” to use the new forms or not “required” to use them? Can we send the new forms on a HELOC for example in lieu of the old? Can we use the new disclosures on all transactions? Part 1: Rule Applicability Can you confirm coops are excluded from the new disclosures since they are not secured by real property? Part 1: Rule Applicability Are transactions with 25 acres and more exempt? Part 1: Rule Applicability When can we start the new disclosures? Part 1: Rule Applicability What if no lender credits are decided until the loan closing, does a new Loan Estimate need to be provided to reflect this? Part 9: Revised Loan Estimate – Revisions/Re-Disclosure (including Timing & Delivery) If loan amount changes, then can the lender credits change? Part 9: Revised Loan Estimate – Revisions/Re-Disclosure (including Timing & Delivery)