(FAQ) document - CMG Financial

TILA-RESPA Integrated Disclosure Rule
Frequently Asked Questions
Table of Contents
This Frequently Asked Question (FAQ) document incorporates key questions and topics regarding the TILA-RESPA
Integrated Disclosure (TRID) Rule and its implementation at CMG Financial (CMG). FAQs that are specific to a certain
lending channel at CMG are categorized separately. For example, an FAQ specific to a Mortgage Broker is located within
the Wholesale Lending category.
General Questions
Retail Lending Questions
Wholesale Lending Questions
Correspondent Lending Questions

Mortgage Broker
Disclaimer

Select Partner (Mini-Correspondent)
External Resources
General Questions
TRID RULE
Q1: Can the new TRID Disclosures be used before the effective date?
A1: The TRID Rule is effective for applications taken on or after August 1, 2015. Early compliance is not permitted
so the disclosures cannot be used on live loans prior to August 1st. Application dated prior to August 1st must close
using the current documents (GFE, TIL and HUD).
Q2: What loan types are not subject to the TRID Rule?
A2: TRID does not apply to the following loan types:
 Home Equity Lines of Credit (HELOCs)
 Reverse Mortgages
 Mortgages secured by a Mobile Home or dwelling not attached to real property
This means these loan types are closed using the current documents (GFE, TIL and HUD).
LOAN ESTIMATE (LE)
Q1: When is the LE required to be delivered to the borrower?
A1: The initial LE must be delivered within 3 general business days after receiving the borrower’s complete
application.
A revised LE must be delivered within 3 general business days after receiving information sufficient to establish a
valid changed circumstance and within 3 general business days of the interest rate lock.
Q2: What is considered a “complete application” for requiring the LE to be delivered?
A2: A complete application consists of the following 6 pieces:
1. Borrower’s Name
2. Borrower’s Income (stated, not verified)
3. Borrower’s Social Security Number to obtain a credit report (could also be a Tax EIN)
4. Property Address
5. Estimate of the Value of the Property
6. Loan Amount Sought
EDITION: MAY 8, 2015
DOCUMENT OWNER: CMG COMPLIANCE DEPARTMENT
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Q3: Can a Fee Worksheet/Itemization be provided to the borrower before receiving a complete application and issuing
the LE?
A3: Yes, however it cannot resemble the LE and it must contain the following disclaimer is at the top of the first
page in 12-point font or greater: “Your actual rate, payment, and costs could be higher. Get an official Loan
Estimate before choosing a loan.”
Note: The requirement for this disclaimer exists when providing a list of closing costs common in the consumer’s
area, providing a list of available rates for loan products, and in certain advertisements.
Q4: What is the waiting period after the borrower receives the LE?
A4: There are two waiting periods for the LE:
 The initial LE must be received by the borrower 7 specific business days before consummation.
 A revised LE must be received 4 specific business days before consummation.
Q5: What is the difference between “general” and “specific” business days?
Q5: For delivering the LE, general business days are defined as days in which the lender’s offices are open to the
public for carrying out substantially all of its business functions except Sundays and specific federal holidays.
For the waiting periods after the borrower receives the LE, specific business days are defined as all days except
Sundays and specific federal holidays.
Q6: If not delivered in person, when is the LE considered as received by the borrower?
A6: When the LE is not delivered in person, the borrower is considered to have received the LE 3 specific business
days after it is delivered electronically or placed in the mail (unless evidence is provided demonstrating earlier
receipt).
Important Note: If the LE is delivered electronically via a document vendor that is compliant with the E-Sign Act (e.g.
IDS and DocMagic) and the borrower does not access the LE, then it’s not considered as received. The document
vendor is required to update the delivery date to the date it is placed in the mail due to not being accessed
electronically.
Q7: Can the waiting period required after receipt of the LE be waived?
A7: The only way to waive the waiting period is if the borrower has a bona fide financial emergency – this is the
same as today regarding the waiting period for a TIL. It is very rare for a bona fide financial emergency to be
approved as most investors do not accept this and it’s difficult to defend in court. The only bona fide financial
emergency defined in Reg Z commentary is imminent foreclosure, however if a borrower is facing imminent
foreclosure, it’s unlikely they could be approved for a new loan. Requests for waiving the waiting period must be
approved by the CMG Compliance Department.
Q8: Is there any point in time when an initial LE expires and a new initial LE can be disclosed with different fees?
A8: Yes, a revised LE can be disclosed if the borrower indicates intent to proceed more than 10 business days after
the LE was originally received.
Q9: What documentation can you require from the borrower before issuing the LE?
A9: The LE must be provided to the borrower before you are permitted to request any documentation (e.g.
paystubs, bank statements, etc.). For example, before providing the LE, you may ask for the names, account
numbers and balances of a borrower’s checking/savings account, however you may not require a copy of the bank
statement or similar document for verifying the information. To provide another example, you may ask for the sales
price and property address, however you cannot require the purchase/sales contract to be provided before
delivering the LE.
EDITION: MAY 8, 2015
DOCUMENT OWNER: CMG COMPLIANCE DEPARTMENT
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Note: Preapprovals for TBD properties are still permitted. In the case of a TBD Preapproval, the borrower is
requesting for the lender to preapprove their loan, so in this situation, it is permissible to request income and asset
documentation. (Reminder: The LE is not provided until all 6 pieces of a complete application are received.)
Q10: What can be charged to the borrower before receiving the LE, and when can you collect payment information?
A10: The borrower may only be charged a reasonable and bona fide charge for a credit report. This is the only
permissible time to request the borrower’s payment information prior to the borrower receiving the LE and indicating
intent to proceed, which means if the credit report fee is not charged to the borrower until closing, then no payment
information can be obtained from the borrower.
Q11: What if the borrower already paid a credit report fee to another lender?
A11: The borrower cannot be charged another credit report fee until receiving the LE and indicating intent to
proceed. For example, a third-party originator submits an application to Creditor B after receiving a decline notice
from Creditor A. The credit report fee was charged previously during the application process with Creditor A. At this
point, a new credit report fee could not be charged before Creditor B supplies the LE. The borrower has already
paid one reasonable and bona fide credit report fee. Another cannot be charged until after receipt of the LE and
indicating intent to proceed.
Q12: When can you charge the appraisal fee to the borrower?
A12: The borrower must receive the LE and indicate intent to proceed before the appraisal fee can be charged.
Note: Signing the LE does not indicate intent to proceed.
Q13: Can the same credit card the borrower provided for the credit report fee be used for the appraisal fee?
A13: It is permitted to retain the credit card number on file after charging for the credit report, however the appraisal
fee cannot be charged until after the borrower has received the LE and indicated intent to proceed AND the
borrower has must provide new authorization for the use of the credit card for the appraisal fee.
Q14: What does the new term “Total Interest Percentage (TIP)” mean?
A14: TIP is the total amount of interest the borrower will pay over the whole life of the loan as a percentage of the
loan amount.
Q15: Where are lender credits shown?
A15: The credit for interest rate chosen will be shown as “Lender Credits” under “J. Total Closing Costs” – all
general lender credits are shown here. If the lender was paying for a specific fee at closing (e.g. appraisal fee), on
the LE, the credit would still show under “J. Total Closing Costs” (on the CD, the specific fee is shown in the “Paid
by Others” column and we can indicate it’s paid by the lender with a “(L)”).
FEE TOLERANCE
Q1: What fees are moving from the 10% tolerance category to zero tolerance?
A1: Zero tolerance now also includes fees paid to an unaffiliated third party if the borrower was not permitted to
shop for the service provider (e.g. Appraisal, Credit Report, and Flood Cert) and fees paid to an affiliate of the
lender or mortgage broker.
Q2: Will we still be able to have a valid changed circumstance to increase the appraisal fee?
A2: The appraisal fee itself can still increase with a valid changed circumstance. For example, the appraisal was
ordered for a single family residence per information provided by the borrower, however when the appraiser visited
the property, it’s actually a condominium and thus a different schedule of appraisal fees applies. This is a valid
changed circumstance.
EDITION: MAY 8, 2015
DOCUMENT OWNER: CMG COMPLIANCE DEPARTMENT
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Frequently Asked Questions
However, there will also be situations that will not be a valid changed circumstance. Fee increases for the location
of the property is not a valid changed circumstance since the property location was known when the LE was
disclosed. AMCs/appraisers that need to charge more for specific ZIP codes must identify this on their fee tables to
ensure the highest customary appraisal fee is disclosed upfront.
Q3: What if a field review or final inspection is needed after the underwriter reviews the appraisal report?
A3: It is still a valid changed circumstance if information specific to the borrower or transaction that the lender relied
on when providing the LE was inaccurate or changed after the LE was provided. In the case where the need for a
field review or final inspection was only discovered after the underwriter reviews the initial appraisal that would be a
valid changed circumstance.
Q4: When are credit supplements considered a valid changed circumstance in order to incase the credit report fee?
A4: There are two ways to look at credit supplements in regards to if it’s a valid changed circumstance:
1. If we received new information since delivery of the LE that would affect the borrower’s credit score so a
credit supplement was ordered to verify the new information, this would be a valid changed circumstance.
Examples include: validating new debt discovered during the undisclosed debt monitoring process and
evidencing debt was paid in full and closed by the borrower in order to lower the DTI for credit approval.
2. If the credit supplement was ordered only to clarify information on the credit report, this may not be a valid
changed circumstance since other documentation could be obtained to confirm this information.
CMG is still researching this topic and will provide more clarification in later editions.
Q5: What happens if, by the time the short sale offer is approved, the lender, AMC and/or credit report company
increased their fees?
A5: If the borrower did not indicate intent to proceed within 10 business days, you can change the LE however you
want. However if the borrower did indicate intent to proceed and then the short sale approval takes a very long time
while in the interim default fees changed for the lender, AMC, etc., then this would be a valid changed circumstance
due to the length of time. Each individual circumstance, though, should be reviewed by the CMG Compliance
Department to ensure it’s documented accurately.
Q6: When is the LE redisclosed for the fee changes in the 10% tolerance category?
A6: If there is a valid changed circumstance affecting the 10% tolerance category, the LE is only redisclosed if the
total fees in that category increase over the 10% threshold. For example, the title agent discovers a lien on title that
needs to be cleared and adds a $100 fee to clear it. If the borrower and lender were unaware of this lien in order to
accurately disclose the title fees upfront, then this new information can be considered a valid changed
circumstance, however you will only redisclose the LE if this fee caused the total category to increase over the 10%
threshold. If the total fees in the 10% category were $800, so the total has now increased to $900, that is a 12.5%
increase and the LE can be redisclosed showing the new title clearance fee. On the other hand, if the title clearance
fee was only $50 that is a 6.25% increase and the LE would not be redisclosed. The LE cannot reflect increased
fees until it’s surpassed the 10% threshold.
CLOSING DISCLOSURE (CD)
Q1: What is the timing requirement for the CD?
A1: The borrower must receive the CD no later than 3 business days before consummation. This applies to both
purchase and refinance transactions. For example, if the loan is scheduled to close/sign on Thursday, the borrower
must receive the CD at least by the Monday before the closing/signing.
Note: Lenders are prohibited from providing a revised LE on or after the date on which the lender provides the CD.
Q2: What is the definition of consummation?
EDITION: MAY 8, 2015
DOCUMENT OWNER: CMG COMPLIANCE DEPARTMENT
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A2: Consummation means the time that a consumer becomes contractually obligated on a credit transaction, which
is the date the Note is signed.
Q3: How are business days defined for the CD?
A3: For the CD, specific business days are defined as all days except Sundays and specific federal holidays.
Q4: If not delivered in person, when is the CD considered as received by the borrower?
A4: When the CD is not delivered in person, the borrower is considered to have received the CD 3 specific business
days after it is delivered electronically or placed in the mail (unless evidence is provided demonstrating earlier
receipt).
Important Note: If the CD is delivered electronically via a document vendor that is compliant with the E-Sign Act
(e.g. IDS and DocMagic) and the borrower does not access the CD, then it’s not considered as received. The
document vendor is required to update the delivery date to the date it is placed in the mail due to not being
accessed electronically.
Q5: Who prepares the CD – the lender or the settlement agent?
A5: The lender can contract with the settlement agent to provide the CD on the lender’s behalf, however the lender
is still legally responsible for the accuracy as well as any errors or defects. (For CMG’s decision, please see the
Retail Lending and Wholesale Lending/Mortgage Broker categories.)
Q6: On purchase loans, who prepares the Seller’s CD?
A6: Either the lender or the settlement agent can prepare the Seller’s CD, however most lenders will have the
settlement agent prepare it and provide a copy to the lender.
Q7: Can the waiting period required after receipt of the CD be waived?
A7: The only way to waive the waiting period is if the borrower has a bona fide financial. It is very rare for a bona
fide financial emergency to be approved as most investors do not accept this and it’s difficult to defend in court. The
only bona fide financial emergency defined in Reg Z commentary is impending foreclosure, however if a borrower is
facing an impending foreclosure it’s unlikely they could be approved for a new loan anyways. Requests for waiving
the waiting period must be approved by the CMG Compliance Department.
Note: It’s also important to remember the appraisal delivery waiting period required under ECOA – all written
valuations must be provided to the borrower at least three business days prior to consummation.
Q8: Can the rescission period satisfy the 3-day waiting period?
A8: No, consummation occurs when the Note is signed, so the 3-day waiting period must be satisfied prior to the
signing/closing.
Q9: When is the CD required to be redisclosed?
A9: There are three categories of changes that require a revised CD to be delivered to the borrower:
1. Changes before consummation that require a new 3 business day waiting period:
 Disclosed APR becomes inaccurate
 Change in loan product (i.e. Fixed to ARM)
 Addition of a prepayment penalty
2. Changes before consummation which do not require a new 3 day waiting period:
 Costs change which do not cause the APR to become inaccurate (e.g. HOA due, escrow, attorney fee)
 Note: Although the waiting period was not reset, the borrower has the right to inspect the revised CD
during the business day prior to consummation.
3. Certain changes which occur after consummation require issuance of a revised CD:
 Discovery of a recording fee paid by the consumer is different from the amount disclosed on the CD
EDITION: MAY 8, 2015
DOCUMENT OWNER: CMG COMPLIANCE DEPARTMENT
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TILA-RESPA Integrated Disclosure Rule
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Q10: Currently, we require a non-borrowing spouse (NBS) to sign the Final TIL at closing but they do not sign the HUD.
Will the NBS be required to sign the CD?
A10: In a rescindable transaction, the CD must be provided separately to each consumer that has the right to
rescind, so in this case, the NBS would need to sign. In transactions that are not rescindable, the CD may be
provided to any consumer with primary liability on the loan. It is permissible for the lender to add signature lines, so
CMG may decide to require the NBS sign if vested on title or in a community property state, and this will be defined
in future editions.
Wholesale Lending Questions
Mortgage Broker
LOAN ESTIMATE (LE)
Q1: Will CMG allow the broker to provide the LE?
A1: CMG has not announced a formal policy on this topic. Please watch for this update in the newsletters and future
editions of the FAQ.
Q2: Is Lender Paid Compensation disclosed on the LE?
A2: The first box “A. Origination Charges” only consists of items paid directly by the borrower to compensate the
loan originator and lender, which would include the borrower-paid compensation but not lender-paid compensation.
(Lender Paid Compensation is disclosed on the CD.)
Note: Lender Paid Compensation is still included in the QM Points and Fees calculation.
Q3: The LE is required to have a Loan ID and the same Loan ID disclosed on the LE must appear on the CD. When we
disclose the LE, what do we use as the Loan ID?
A3: The “Loan ID#” field is for the lender’s loan number, so for a wholesale transaction, it would have to be
assigned by CMG if we are the lender. Per the regulation, if the broker provides the LE and at that time the lender is
unknown, then the name and address of the lender is left blank. Brokers are expected per the rule to make a “good
faith effort” to disclose the lender’s name and address. This same guidance applies to the loan number. If CMG has
been identified on the LE, then CMG’s loan number for this loan would be disclosed on the LE.
Please note that CMG has not announced a formal policy regarding the delivery of the LE by the broker.
CLOSING DISCLOSURE (CD)
Q1: Who will prepare the CD – CMG or the settlement agent?
A1: CMG will prepare the CD. CMG will collaborate closely with the settlement agent to ensure both parties approve
the final product. (On purchase loans, the settlement agent will prepare the Seller’s CD and provide CMG with a
copy.)
Select Partner (Mini-Correspondent)
CLOSING DISCLOSURE (CD)
Q1: As a Select Partner, I am the creditor on the transaction. Am I allowed to prepare my own CD or will CMG require
the escrow company to prepare the CD?
EDITION: MAY 8, 2015
DOCUMENT OWNER: CMG COMPLIANCE DEPARTMENT
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A1: CMG will continue to allow you to use your current resource used for preparing the HUD to prepare the CD:
Escrow Company, CMG or self-prepared. Please keep in mind that you must also check with your warehouse
partner(s) to determine their specific requirements.
CMG may revise this answer. Please watch for any revisions in future editions and notification will be provided in
the newsletters.
Retail Lending Questions
CLOSING DISCLOSURE (CD)
Q1: Who will prepare the CD – CMG or the settlement agent?
A1: CMG will prepare the CD. CMG will collaborate closely with the settlement agent to ensure both parties approve
the final product. (On purchase loans, the settlement agent will prepare the Seller’s CD and provide CMG with a
copy.)
Correspondent Lending Questions
Disclaimer
Attention Mortgage Brokers, Select Partners (Mini-Correspondent Sellers) and Correspondent Sellers:
This is not meant to be legal advice. Please seek legal counsel as you implement TRID.
Please note that CMG may add overlays as needed upon further discussion and guidance from legal counsel. We will
supply our requirements in the TRID newsletters, which will become more detailed as we near August 1st.
External Resources
External Resources:



CFPB’s TRID Rule Implementation Site
Iowa Bankers Association: Comparison of pre-TRID Rules to new TRID Rules
PPDocs, Inc. TRID Interactive Timeline Calendar
Please contact CMG with questions you would like to have addressed in future newsletters and/or FAQs by
emailing us at TRID@cmgfi.com.
© 2015 CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS #1820 in most, but not all states. CMG Mortgage,
Inc. is an equal opportunity lender. Offer of credit is subject to credit approval. For information about our company, please visit us at www.cmgfi.com. To verify
our complete list of state licenses, please visit www.cmgfi.com/licensing.php and www.nmlsconsumeraccess.org.
EDITION: MAY 8, 2015
DOCUMENT OWNER: CMG COMPLIANCE DEPARTMENT
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