Pub. 2 2014 Issue 3

summer 2014 9 First, either the lender or the broker may deliver the Loan Estimate to the consum- er; however, ultimate responsibility falls on the lender. The final form that the CFPB developed is a three page form. The final form de-emphasizes APR because, in testing, the consumers found the APR to be con- fusing, but includes some new disclosures that were mandated by Dodd-Frank, such as total interest percentage and the “In 5 Years” calculation. Second, there are multiple versions of the loan closing form to account for different transaction types, for example a refinance and a purchase have different forms from each other. This will be a training con- cern — ensure lending staff understands the definition of each type of transaction and the “real purpose of the loan.” For in- stance, staff should be able to differentiate between a land-only loan, construction- only and construction-to-permanent loan. There also is a “seller-only” form re- quired for closed-end loans in residential transactions. Other loans, such as reverse mortgages and home equity lines of credit and other mortgages secured by a mobile home or by a dwelling that is not attached to the real property, will still use the HUD-1 form. The new Loan Estimate co-mingles lend- er and settlement costs with loan terms and replaces the HUD line numbers with an alphanumeric system. The Closing Disclosure itemizes the costs and includes section totals rather than lumping costs together and rolling them up into one line item. Because the form is a combination of loan information and settlement costs, communication and cooperation between the lender and closing agent is vital. If the settlement agent completes the loan clos- ing disclosure form, the lender needs to provide a copy of the loan estimate form to provide the information necessary for an accurate Closing Disclosure. Third, the initial Loan Estimate must be delivered or mailed to the borrower no later than three business days after the lender receives the mortgage application and no less than seven business days be- fore consummation of the loan. A revised Loan Estimate due to changed circum- stances must be delivered or placed in the mail within three business days of the lender’s knowledge of a changed cir- cumstance; however the borrower must receive it no later than four business days before consummation of the loan. The borrower must receive the Closing Disclosure no later than three business days prior to the consummation of the loan. A revised loan Closing Disclosure can, in most cases, be delivered and received at the closing. Key points of the Three-day Rule include: • If disclosures are not delivered in person, but are instead delivered by mail, electronic media or a courier; the borrower is considered to have received the disclosure three business days after being placed in the mail, sent by email or placed with a cou- rier. Accordingly if delivering other than in person, an additional three business days is required in order to ensure receipt by the borrower no later than three business days prior to consummation. • The lender is allowed to rely on evidence that the consumers actually received the disclosure earlier, if the disclosure is sent by email (assuming the consumer has consented to email and complied with E-sign require- ments), and receipt is acknowledged the same day as the lender sent them, then the lender can rely on the actual day of receipt and consummation may take place on the third business day after the actual receipt. • The loan closing disclosure can change from the time received by the borrower and consummation unless (a) the APR changes by 1/8 of 1%, or (b) the loan product changes, or (c) a prepayment penalty is added. In any of those three instances, a re-disclosure must be received by the borrower three business days before consummation, meaning that con- summation would be delayed. Fourth, the “tolerance levels” are kept intact; however, some of the items falling within the “buckets” will be changed for loans that require the disclosures.  RESPA / TILA — continued on page 10