융자지식 251-TILA-RESPA Integrated Disclosure Rule (TRID)

by usezloan | Nov 22, 2021 | Financial study

융자지식 251-TILA-RESPA Integrated Disclosure Rule (TRID)

2.35 TILA-RESPA Integrated Disclosure Rule (TRID)
Prior to October 3, 2015, borrowers received two cost-related disclosure forms at the time of
application and potentially two more similar forms at the time of closing. The similar forms (called the
Good Faith Estimate and Truth in Lending disclosure) contained overlapping information and were
quite confusing for consumers to understand.
In response to those problems, the Dodd-Frank Act required the Consumer Financial Protection
Bureau to combine a few of the disclosures required by RESPA and TILA in order to make them easier
to understand and to cut back on some of the excessive paperwork.
By integrating some of the disclosure forms and making other related changes, the government is
hoping to make it easier for consumers to understand the terms of their loans.
In December 2013, the CFPB addressed the integration of the RESPA and TILA disclosures by finalizing
what has become known as the “TILA-RESPA Integrated Disclosure Rule.” The rule contains two
newly integrated disclosure forms and instructions on how to use them. Note that even though these
disclosures are referred to as “TRID” or “TILA/RESPA Integrated Disclosures,” the actual requirements
for providing them to applicants are now contained entirely in Regulation Z.
Specifics regarding the newly integrated forms will be discussed in greater detail over the next few
pages. However, the basics are as follows:
● The Good Faith Estimate and the initial Truth in Lending disclosure form have been combined
into one disclosure form known as the Loan Estimate. This form discloses the cost of the credit
itself, as well as settlement cost information based on the information known at the time of
application.
● The HUD Settlement Statement and the final Truth in Lending disclosure form have been
combined into one disclosure form known as the Closing Disclosure, which discloses actual
cost information at the time of closing/settlement/consummation of the loan.
The contents of the TILA-RESPA Integrated Disclosure Rule (including the requirements pertaining to
the two new disclosure forms) apply in credit transactions involving a wide range of mortgage loans.
As with any rule, however, there are some exceptions. The TRID rule doesn’t apply to the following
types of mortgage loans:
● Home equity lines of credit (HELOCs).
● Reverse mortgages.
● Mortgages for mobile homes not secured by real estate.
● Loans from anyone who funds no more than five loans in a calendar year (typically sellers
assisting in financing properties that they are selling).
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Loans that are exempt from the TRID requirements will continue to use the GFE, HUD and TIL
disclosure forms.

융자지식 250-Loan Originator Compensation Rule

by usezloan | Nov 22, 2021 | Financial study

융자지식 250-Loan Originator Compensation Rule

2.32 Loan Originator Compensation Rule
In the past, loan originators’ compensation was partially based on the type and terms of the chosen
loan product. The Loan Originator Compensation Rule:
• Prohibits creditors from compensating MLOs based on the loan’s interest rate or other terms
associated with the rate/terms of the loan.
• Additionally, the rule eliminated the form of compensation known as yield-spread premium
(YSP), in which mortgage brokers and originators were able to increase their compensation by
providing the borrower an interest rate higher than that for which they qualified.
• Compensation includes commissions, bonuses, salaries, merchandise, trips and any other
financial incentives.
• The law further prohibits against dual compensation; that is, it restricts an originator from
being paid by either the borrower OR the lender on a given transaction, but not both.
Loan originator organizations must keep a record of payments from a creditor and payments to
individual originators for three (3) years.
2.33 Ability-To-Repay (ATR) Mortgage Rules
As part of the requirements of the Dodd-Frank Bill, the Consumer Financial Protection Bureau (CFPB)
implemented the Ability to Repay (ATR)/Qualified Mortgage (QM) rule, which took effect on January
10, 2014.
The rule requires lenders to make a reasonable, good-faith determination before or when a loan is
consummated, that the consumer/borrower has a reasonable ability to repay the loan.
If a borrower can prove in court that a loan did not meet the ATR requirements, then the borrower
can sue for up to three times the amount of finance charges paid, including attorney fees. A borrower
has three years to file a claim.
The ability-to-repay provisions requires creditors to make a “reasonable and good faith
determination” based on verified and documented information that, at the time the loan is
consummated (closed), the consumer has a reasonable ability to repay the loan according to its terms,
as well as all applicable taxes, insurance (including mortgage insurance) and assessments.
Coverage of the Rule – The rule applies to all closed-end mortgages secured by residential properties,
with the following exceptions:
● HELOCs
● Timeshares
● Reverse mortgages

● Temporary loans (less than 12 months)
● Construction loans
Factors to Consider When Evaluating ATR – Lenders should consider the following eight (8) factors
when determining whether or not a borrower has the ability to repay a mortgage:
1. Current or reasonably expected income or assets.
2. Current employment status.
3. Borrower’s Credit History.
4. Monthly mortgage payment for this loan. You calculate this using the introductory or
fully-indexed rate, whichever is higher, and monthly, fully amortizing payments that are
substantially equal.
5. Monthly payment on any simultaneous loans secured by the same property.
6. Monthly payments for property taxes and insurance that you require the consumer to
buy, and certain other costs related to the property such as homeowner’s association
fees or ground rent.
7. Other debts, including alimony, and child support obligations.
8. Monthly debt-to-income ratios or residual income that you calculated using the total of
all the mortgage and non-mortgage obligations listed above, as a ratio of gross monthly
income.
2.34 Qualified Mortgage
Lenders are deemed to have complied with ATR requirements if they satisfy the definition of a
Qualified Mortgage (QM). The requirements for a QM are, in general:
● No-doc loans not eligible: So-called no-doc loans where the creditor does not verify income
or assets cannot be qualified mortgages.
● No excess upfront points and fees: Limits points and fees, including those used to
compensate loan originators, such as loan officers and brokers. A loan generally cannot be
considered a qualified mortgage if the points and fees paid by the consumer exceed three
percent (3%) of the total loan amount.
● Cap on how much income can go toward debt: Qualified mortgages generally will be
provided to people who have debt-to-income ratios less than or equal to 43%. This
requirement helps ensure consumers are only getting what they can likely afford.
● Maximum loan term of 30 years.
● Prepayment penalties prohibited: Prepayment penalties are generally prohibited, except for
certain fixed-rate, qualified loans.
● No risky or toxic features: No negative amortization, no balloon payments, no Interest-only
loans.
● For ARMs – Must be underwritten as a fully amortizing loan at the maximum interest rate
that the loan can adjust to in the first five (5) years.
Temporarily, if a loan can be sold to Fannie Mae, Freddie Mac, or insured/guaranteed by FHA, VA or
USDA, the 43% DTI requirement will be waived.
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NOTE: Do NOT confuse Qualified Mortgages with Qualified Residential Mortgages (QRMs). The QM
deals with a consumer’s ability to repay. The QRM deals with risk retention and focuses on the
secondary market. In essence, if a mortgage loan fulfills all of the requirements to be a QM, the
institution is presumed to have complied with the ability-to-repay requirements. This is an important
distinction because loans that meet the QM standards protect the lender from potential legal action,
as described above.

융자지식 249-Section 35 Higher-Priced Mortgage Loans (HPMLs)

by usezloan | Nov 19, 2021 | Financial study

융자지식 249-Section 35 Higher-Priced Mortgage Loans (HPMLs)

2.31 Section 35 Higher-Priced Mortgage Loans (HPMLs)
TILA was amended in 2009 to create a new category of loans called “higher-priced mortgage loans,”
sometimes known as “HPMLs” or “Section 35 loans.” These loans, formerly called subprime, are now
called Higher Priced Mortgage Loans (HPML).
HPML Thresholds – A loan is a HPML if:
(a) The APR exceeds the APOR by 1.5% or higher for a firstlien
(b) The APR exceeds the APOR by 3.5% or higher for a subordinatelien
(c) The loan amount at which HOEPA’s points-and-fees test comes into effect has increased to
$21,980, and the HOEPA points-and-fees trigger is $1,099.”
Example – A borrower closed on a first mortgage loan of $120,000 where the APOR was quoted at 4%.
The APR at closing was 5.5%. The following would trigger a HPML designation:
APR Test – ARP 5.5. (Equal to or exceeds the APOR threshold – 4% + 1.5% (1st lien) = 5.5% by 1.5%
reaching the 1.5% HPML trigger threshold for a first lien)
On a HPML, the borrower must escrow (first liens only) for a minimum of five (5) years, and the
lender is prohibited from charging a prepayment penalty if the loan’s interest rate can adjust in the
first four years of the loan term.
Additionally, lenders must verify the borrower’s ability to repay all higher-priced mortgage loans by
looking at the borrower’s income, assets, credit and debt and by calculating a debt-to-income ratio.

2.32 Loan Originator Compensation Rule
In the past, loan originators’ compensation was partially based on the type and terms of the chosen
loan product. The Loan Originator Compensation Rule:
• Prohibits creditors from compensating MLOs based on the loan’s interest rate or other terms
associated with the rate/terms of the loan.
• Additionally, the rule eliminated the form of compensation known as yield-spread premium
(YSP), in which mortgage brokers and originators were able to increase their compensation by
providing the borrower an interest rate higher than that for which they qualified.
• Compensation includes commissions, bonuses, salaries, merchandise, trips and any other
financial incentives.
• The law further prohibits against dual compensation; that is, it restricts an originator from
being paid by either the borrower OR the lender on a given transaction, but not both.
Loan originator organizations must keep a record of payments from a creditor and payments to
individual originators for three (3) years.