We are pleased to announce the opening of our new Spokane Valley Operation and that Mick Templeton AVP / Branch Manager / Escrow Closer, Melody Sarff, Escrow Assitant, and Tricia Osterholm, Escrow Assistant have joined our Spokane Ticor Team and will staff our new office.
Mick and his team have been serving the real estate community in the Spokane Valley area for many years as an independent escrow operation.
Please join us in congratulating the new members of our team!
Where to find us
16201 E Indiana Avenue, Suite 3300
Spokane Valley, WA 99216
If a buyer opts not to purchase an owner’s policy, in most states they would not receive the benefit of a simultaneous issue discount applied to the loan policy premium. Currently, in a typical residential transaction, a lender quotes the discounted rate on a Loan Estimate.
However, any increase in this premium would result in a tolerance violation or increased annual percentage rate. Therefore, the CFPB wrote into the new rules any simultaneous issue discount must be applied to the owner’s policy premium and not the loan policy premium.
Therefore, when the new CFPB rules are implemented, the lender will need to disclose the full lender’s policy premium on the Loan Estimate and the preparer of the Closing Disclosure will charge the full loan premium. The new formula for calculating the owner’s premium with the simultaneous issue discount applied is as follows:
Simultaneous Issue Rate
Full Loan Premium
The new calculation method applies regardless of which party to the transaction is paying the owner’s policy premium. For example, the premiums on the purchase of a $300,000 residence with a $240,000 loan closed simultaneously with actual premiums are as follows:
Owner’s Policy Premium
Loan Policy Premium (Full Rate)
Loan Policy Premium (Simultaneous Issue Rate)
On a transaction closed prior to the effective date of the new rules the seller would pay $1,090 and the buyer would pay $469. On the same transaction closed after the effective date of the new rules the disclosure would reflect the seller paying the calculated premium of $631 and the buyer paying the full loan premium of $928.
The title provider will still receive all the total premium dollars due to them. However, the seller ends up paying $459 less than obligated and the buyer ends up paying $459 more than obligated.
The only way the formula works is if one of the parties to the transaction is paying both policy premiums, which in most markets is not customary. As a result, our systems have been designed to provide an off–setting debit to the seller for the balance of the owner’s premium and an offsetting credit for the same to the buyer.
The disclosure amounts, and off–setting debits and credits only appear when the Closing Disclosure is printed using the Company’s escrow production systems. Any other document, such as a closing statement or fee ticket, will print the premium dollars in the normal fashion.
The Ticor Title TRID Wheel is the only wheel that instantly determines earliest Consummation Date!
Based on the new CFPB rule that goes into effect beginning Oct. 3, 2015, this carefully crafted and well planned TRID Wheel is designed to eliminate the guesswork in determining earliest Consummation Date.
Use the wheel to:
• Instantly determine earliest Consummation Date
• Estimate required closing days by working backwards on the wheel
Reserve Yours Today!
Contact your Ticor Title representative to reserve your Ticor Title TRID Wheel today. Supplies are limited.
We are very pleased to announce that Ticor’s Gig Harbor Escrow office has relocated to an updated and more spacious location just a few doors down from the previous location.
The move is part of our plan involving the expansion of our Gig Harbor team and provides a freshly updated space with additional room to accommodate client signings, added escrow staff, and a dedicated Property Information Specialist.
We think you’ll love the upscale look & feel, accessibility, ample parking, easy access to highway 16, and our team of experienced professionals.
In addition to the delivery period we discussed in our previous video, lenders must ensure the borrower receives the Closing Disclosure no later than three business days before consummation. This is referred to as a waiting period.
Three Business-Day Waiting Period
The CFPB final rule requires the lender to give the borrower three business days to thoroughly review the Closing Disclosure to enable them to compare the charges to the loan estimate and ensure the cost and loan program they are obtaining are as expected. In our previous video, we explained the waiting period begins on the day the Closing Disclosure is sent. It does not start the next business day!
Waiting Period Example
If the Closing Disclosure is delivered by mail, email, courier or fax on a Monday, it is assumed that the delivery period expires on Wednesday at midnight. Then the waiting period begins, which means the loan may not be consummated less than three business days after the Closing Disclosure is received by the borrower.
The waiting period includes Thursday, Friday and Saturday, therefore the borrower would be able to sign on the next business day which is Monday, unless Monday is a federal holiday.
Exceptions to the Rule
If signing is scheduled during the waiting period, the lender must postpone signing unless closing within the waiting period is necessary to meet a bona fide personal financial emergency. Consumers may waive their right to receive the Closing Disclosure three days prior to consummation only if they have a bona fide personal financial emergency.
Bona fide personal financial emergencies are extremely rare and determining whether one exists is fact intensive. The only example provided by the CFPB is the imminent sale of the consumers’ homes through foreclosure, where the proceeds of the new mortgage can save the home from foreclosure, which isn’t very realistic.
Revisions to the Closing Disclosure
If there are changes to the loans APR, changes to the loan product, or a prepayment penalty is added to the loan after the Closing Disclosure has been delivered to the borrower, then the lender must ensure the Closing Disclosure is revised and a new delivery period and waiting period begins. For any other changes which occur before the consummation that do not include the three we just discussed, the lender must provide a corrected Closing Disclosure with any terms or cost that have changed and ensure the borrower receives it; there is no additional three business day waiting period required.
The lender must ensure only that the borrower receives the revised Closing Disclosure at or before consummation. There is no delivery or waiting period for the seller. The settlement agent must provide the seller its copy of the Closing Disclosure no later than the day of consummation.
The rule did not make any changes to the existing rescission requirements under regulation Z. This means if the borrower is refinancing their existing loan, then the delivery, waiting, and three day right to resend applies. Keep in mind the rescission timeline is calculated differently than the delivery and waiting periods. The first day of the rescission period starts the day after all borrowers have received their notice of right to resend.
The new TRID rule has very strict requirements as to the delivery of the Closing Disclosure. The Closing Disclosure must be delivered to the borrower at least three business days prior to the consummation of the loan. If the Closing Disclosure is hand delivered, a waiting period commences which we’ll discuss further in a later post.
If the Closing Disclosure is delivered by mail, email, courier, or fax a delivery period of three business days precedes the waiting period. The delivery period does begin on the day the Closing Disclosure is sent. It does not start the next business day.
If the Closing Disclosure is delivered by mail, email, courier, or fax on a Monday it is assumed the delivery period expires on Wednesday at midnight.
Who Delivers the Closing Disclosure?
The rule makes the lender responsible for ensuring that the consumer receives the Closing Disclosure. Lenders may work with the settlement agent to have them deliver the Closing Disclosure to consumers on their behalf. Lenders and settlement agents also may agree to divide responsibilities with regard to completing the Closing Disclosure with the settlement agent assuming responsibility to complete some or all of the Closing Disclosure.
The lender must maintain communication with the settlement agent to ensure the Closing Disclosure and its delivery satisfy the requirements described above and the creditor is legally responsible for any errors or defects.
In the end, the CFPB will hold the lender responsible for ensuring the preparation and delivery of the Closing Disclosure is done properly regardless of who actually prepares the form and delivers it.
Wells Fargo Leads Industry
Wells Fargo led the industry by informing them of their intention to deliver the Closing Disclosure to the borrower. In September of 2014 they issued a statement which read:
Evidence of delivering the borrower’s Closing Disclosure with receipt at least three business days prior to closing are critical requirements for us. The data to support this must be readily accessible for internal and external audit. We considered many factors, such as the large number of settlement agents who close Wells Fargo loans in local markets, their closing volumes, limited integration capabilities to provide compliance data to us, and the evolving use of electronic delivery within the Wells Fargo loan process.
At this point in time, we believe that this critical compliance evidence can only be provided if Wells Fargo delivers the Closing Disclosure directly to our borrowers to meet the three-day requirement, including when a change occurs that requires the three-day clock to be restarted. We still must work closely with you to ensure we have accurate information on this disclosure, and because of the early collaboration needed, we are hopeful that this will create a smoother closing for everyone.
This video discusses how the charge for the lenders and owners title policy must be disclosed on the loan estimate and the closing disclosure.
Where is the discount applied on the Loan Estimate and Closing Disclosure?
Traditionally, when an owner’s title policy and a loan title policy are issued at the same time, insuring the same property, a discount is applied to the cost of the loan policy. In order to prevent an increase in the loan policy premium paid by the borrower in the event where borrower elected not to purchase an optional owners policy, the CFPB requires any simultaneous issued discount be applied to the owner’s policy premium and not the loan policy premium.
How is the discount disclosed?
The rule states any title insurance policy disclosed on the loan estimate and the closing disclosure must be disclosed by adding the simultaneous issue loan premium discount for the lenders title insurance coverage to the owner’s title insurance premium and then deduct the amount of a full premium rate for the lenders title insurance policy that would be charged in the transaction when the consumer declines the purchase of an owner’s policy.
Mathematically, it all works out if the borrower is paying for both the owners and lenders title policy. Because in the end, the borrower still plays the same.
What if the Seller pays for the Owners’ Title Policy?
In areas where the seller customarily pays for the owners’ title policy, the disclosure requirements on the loan estimate and closing disclosure end up costing the buyer more than they would customarily pay. Here’s why; if the seller agreed to pay for the owners title policy and the buyer agreed to pay for the lenders title policy, but the simultaneous issue discount being offered by the title company can only be applied to the owners title policy, then the seller realizes the benefit of the discount. Keeping in mind, the discount is only offered on the lenders title policy premium.
Here’s an example:
Sale price is $180,000, the buyer is obtaining a $162,000 loan towards the purchase of the property. The purchase and sale agreement states the seller has agreed to purchase an owners title policy for the benefit of the buyer. The full premiums for each policy are: owner’s policy premium $838, lenders policy premium, at full premium rate, $727. Remember, if the policies are issued simultaneously, the lenders policy would be less; it would be $360 which represents the charge for the lenders policy premium at the simultaneous issue rate. Keeping in mind the seller is the one who agreed per the sales agreement to pay the full premium amount for the owner’s title policy.
Here’s how it would compute:
Owners’ Title Premium
Simultaneous Discount Off Loan Title Policy
Full Loan Premium
Loan title policy charge on the loan estimate and the closing disclosure is $727 paid by the borrower. Owner’s title policy charge on the closing disclosure is $471, which represents the charge for the owner’s title policy less the simultaneous discount for the loan policy. $838 for the owner’s title premium plus $360 for the simultaneous discount off the loan title policy minus $727 for the full loan premium, the total is $471 paid by the seller. This means the seller needs to give the buyer a credit for $367, which represents the difference between the charge for the owners title policy less the simultaneous discount.
Full Loan Policy Premium
Simultaneous Discount Off Loan Title Policy
$727 full loan policy premium minus $360 equals $367.
In order to reconcile the charges to comply with the new rule and follow the written mutual instructions of the principles to the transaction as agreed to in the purchase and sale agreement, a debit from the borrower to the seller will have to be shown on the third page of the closing disclosure in the summaries of transactions section.
We have it covered
Don’t worry, all of the company systems are being updated, customers can still obtain accurate fee quotes which would be in compliance with the regulations using our website. Settlement agents’ production systems will be programmed to ensure the charges are disclosed properly and the purchase agreement is followed.
CFPB Proposes Two-Month Extension of Know Before You Owe Mortgage Rule
October 3, 2015
On June 24, 2015, the Consumer Financial Protection Bureau (CFPB) issued a proposed amendment to the Know Before You Owe mortgage disclosure rule, which proposes to move the rule’s effective date to October 3, 2015.
“The CFPB is proposing a new effective date of Saturday, October 3. The Bureau believes that moving the effective date may benefit both industry and consumers with a smoother transition to the new rules,”
the Bureau said in the statement.
“The Bureau further believes that scheduling the effective date on a Saturday may facilitate implementation by giving industry time over the weekend to launch new systems configurations and to test systems. A Saturday launch is also consistent with existing industry plans tied to the original effective date of Saturday, August 1.”
Although the proposed effective date has changed, our commitment to help you be ready remains unchanged. We will continue to be there for you every step of the way.
As discussed in previous videos, the lender has to disclose to the borrower services and service providers they can shop for on a provider list. The Lender is responsible for ensuring the figures stated in the Loan Estimate are made in good faith and consistent with the best information reasonably available at the time the loan estimate is issued to the borrower to ensure there are no tolerance violations. The rule tightens the tolerances and does not allow changes to even more types of charges from the Loan Estimate to the date of consummation.
Charges That Cannot Increase at Closing Now Include:
Creditor or broker charges
Fees charged by an affiliate of the creditor or broker
Charges for services for which the borrower is not permitted to shop
For charges subject to zero tolerance, any amount charged beyond the amount disclosed on the loan estimate must be refunded to the borrower.
Charges With 10% Tolerance
Charges that in the aggregate cannot increase by more than 10% are:
Owners title premium
Charges for services the consumer shopped for using the creditor’s provided list
This means the lender may charge the borrower more than the amount disclosed on the loan estimate for any of these charges so long as the total sum of the charges added together does not exceed the sum of all the charges disclosed on the Loan Estimate by more than 10%.
If the lender permits the borrower to shop for a required settlement service but the borrower either does not select a settlement service provider or chooses a settlement service provider identified by the lender on the written list of providers, then the amount charged is included in the sum of all such third party charges paid by the consumer and also is subject to the 10% cumulative tolerance. For charges subject to a 10% cumulative tolerance to the extent the total sum of the charges added together exceeds the sum of all such charges disclosed on the loan estimate by more than 10%, the difference must be refunded to the borrower.
Charges Estimated in Good Faith (Charges That May Increase)
Charges that can increase at closing, meaning they have to be estimated in good faith include:
Impound account setup
Charges for which the borrower chose a service provider not on the creditor’s list
Any other non-loan related charges
If the borrower chooses a provider not on the lenders written list of providers then the lender is not limited in the amount that may be charged for the service. For certain costs or terms, lenders are permitted to charge the borrower more than the amount disclosed on the Loan Estimate without any tolerance limitation. This may include:
Property insurance premiums
Amounts placed into an escrow, impound, reserve, or similar account
Services required by the lender if the lender permits the borrower to shop and the borrower selects a third-party service provider not on the lender’s written list of service providers
Charges paid to third-party service providers for services not required by the lenders. (May be paid to affiliates of the lender)
Lenders may only charge borrowers more than the amount disclosed when the original estimated charge or lack of an estimated charge for a particular service was based on the best information reasonably available to the lender at the time the disclosure was provided.
The new forms group charges together making it impossible for the settlement agent to determine if there is a tolerance violation. There is no side-by-side comparison of the charges from the loan estimate to the charges shown on the closing disclosure to discern if any of them have increased.
If the amounts paid by the borrower at closing exceed the amount disclosed on the loan estimate beyond the applicable tolerance threshold, the lender must refund the excess to the borrower no later than 60 calendar days after the consummation. Although, they may cure the violation prior to consummation and it would be shown on the closing disclosure as paid outside closing to the provider covering the increased charge. The tolerance cures are shown as a lender credit on an amended closing disclosure in Section J.
As the real estate community makes the transition to the new rules and new forms set forth by the CFPB beginning October 3, there will be a short period where pre-existing escrow transactions will close using the HUD-1 Settlement Statement and new transactions will use the new Closing Disclosure Form.
The Loan Application Date is the Determining Factor
The key factor in determining which form will be used is the date of the loan application.
In other words, transactions with loan applications made before October 3rd will use the HUD-1 Settlement Statement and transactions with a loan application date after October 3rd will use the new Closing Disclosure.
Which form will be used?
Be sure to notify us of the date of the loan application when you place your Title & Escrow order.
Loan Application Before October 3
Transactions with a loan application made before October 3 will use the HUD-1 Settlement Statement.
Loan Application After October 3
Transactions with a loan application made after October 3rd will use the new Closing Disclosure Form.
Communication is Key
Let us know the date of the loan application at the time an order is placed with us. This is the best option for a seamless, smooth transaction. If you don’t have a loan application date at the time of opening, please let us know as soon as you do so that we may ensure that the proper forms are used and your transaction is smooth and successful.
Ticor is your CFPB Readiness Partner
Regardless of the date of the Loan Application, we are prepared to serve you and dedicated to your successful transaction.