The New Standard Practice: Our Latest Adventure

So here I am writing a post in my Blog called Escrow Experts, thinking that in this new Lending environment, I am anything but an expert. Learning as I go along and putting into action that which I learned in theory these last many months. The nice thing is that I am amongst good company. Throughout the nation, my peers, all respected professionals, are in the same proverbial “boat”.

As a quick reminder, as of October 3, 2015, we will no longer use the HUD1 Closing Settlement Statement, which has been phased out in exchange for the new Closing Disclosure.

There will be so much more liability on the lenders' shoulders, that the lenders will be issuing the Closing Disclosure based on an accumulation of fees provided to their office by the Settlement Provider (Escrow Holder). Consequently, the situation is now such that all fees as provided to the Lender must be actual, with little to no room for inflated Estimates as we have provided in the past. This creates quite a challenge, as in Escrow, we never really know what will be required of our office until the very end.

Consequently, effective October 3, 2015, Sepulveda Escrow Corporation has a new fee schedule, whereupon our office has done our best to keep our fees as close and reasonable as our previous schedule of fees, with the exception of including a small increase for archive fees and cost of living.

I also want to take this opportunity to explain something of great importance. During the last several years, our office has put a new protocol in place due to the terms and conditions in the lenders Instructions, and which some of you may not be aware of. Lenders require the Escrow company to be fully responsible and liable for the actions of the notary public performing the signing and notarization of the Loan documents (most require a One Million Dollar Errors and Omissions Policy of Insurance). Due to this burden of liability, our office requires Buyers to sign their loan documents in our office, and during our hours of operation. Doing so protects the Buyer on an even higher level by avoiding the documents being handled by outside notaries, Agents or Mortgage Brokers. (In the event of extenuating circumstances, such as out of State Buyers, our office has in place a Nationwide Signing and Notary Company who we employ to accommodate the signing). Each and every Manager of a direct Lender with whom I have spoken agrees with this as a necessary practice, and as such Sepulveda Escrow adapted this as company protocol.

While signing in escrow during office hours may not be as convenient as signing in one’s home at any hour of the day or night, every Buyer benefits in countless ways coming into escrow. It is a great comfort to meet and know the very person responsible for conducting the closing transaction which applies their hard earned money into homeownership.

Here at Sepulveda Escrow Corporation, we consider these changes in our Industry a challenge; preferring to accept this as an exciting opportunity to learn and incorporate new procedures into our every-day routine. And with that let me wish each and every one of us the best of luck, whether you navigate through these new times as an Agent, Broker, Mortgage Broker, Lender, Seller, Buyer or Escrow Officer. CHEERS!

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

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TRID Presentation Powerpoint Slides - July 16, 2015 SRAR Lunch and Learn

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.
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TRID PRESENTATION NOTES FOR JULY 16, 2015 SRAR LUNCH AND LEARN

MELISSA MOTKIN, SEPULVEDA ESCROW CORPORATION
TRID PRESENTATION NOTES FOR THE JULY 16, 2015 
SRAR LUNCH AND LEARN

Here is a brief overview of how and why we are at the crossroads of such a dramatic change in our Industry.

As we all know, in the Fall of 2008 our Country suffered a severe financial crisis. We witnessed the fall and closure of many Institutions. There was an overall loss of wealth, which affected companies and individuals, along with serious unemployment. It was understood that large parts of our financial system operated with little to no Oversight.

President Obama signed the Dodd-Frank Act of 2010 to make sure that a crisis like this never happens again and to prevent the excessive risk taking that led to the financial crisis. The law also created a watchdog to prevent the exploitation of Consumers, which they thought would build a safer and more stable financial system, one that provides a robust foundation for lasting economic growth and job creation. This reform is designed to make sure that everyone follows the same set of rules. It demands accountability and responsibility from everyone. Helping Consumers to avoid the payment of hidden fees and penalties, along with loans they cannot ultimately afford. Cracking down on abusive practices in the mortgage industry, making sure Contracts are easier to read so people know what they are signing. Home Buyers will receive more information about the costs, and the risks, so that they can make better financial decisions. This consumer watchdog will be looking out for just regular people as they interact with the financial system.

This Consumer Watchdog organization is now known as the Consumer Financial Protection Bureau, the C.F.P.B., an entity created by the Dodd-Frank Act.

In short, its intent is to lower risk, promote transparency and protect the American public.

While the Dodd Frank Act also affects student loans and investment banking, specific to the mortgage industry, it mandates the combination of TILA and RESPA, the Truth in Lending Act with the Real Estate Settlement Procedures Act, combining the Loan Disclosures and Good Faith Estimates and the HUD1 Settlement Statement disclosure, into a single disclosure. The HUD1 will be replaced by the Closing Disclosure, in most transactions.

Most consumer mortgages are affected by this rule, with the exception of,

• Home Equity Lines of Credit 
• Reverse Mortgages 
• Mortgages secured by a Mobile Home 
• Commercial Loans 

where for the time being, the HUD1 shall continue to be utilized, though I do understand that the CFPB will be working on its replacement in time. 

With these new regulations also comes a whole new vocabulary of terms. T.R.I.D. is an acronym for TILA RESPA INTEGRATED DISCLOSURES. That’s TILA for the Truth in Lending Act and RESPA for the Real Estate Settlement Procedures Act. 

The Initial Truth in Lending Statement and Good Faith Estimate shall be replaced by a Loan Estimate. The Final Truth in Lending Statement and the HUD-1 are replaced with a Closing Disclosure, or C.D. as it will be commonly referred as. The regulation requires delivery to the Buyer, now known as the Consumer, three (3) business days prior to signing. (See attached List of New Terms and Acronyms). 

Lenders must have the following to accept and begin processing a new loan;
Six (6) items required to issue Loan Estimate:

1. Consumers Name 
2. Consumers Income 
3. Consumers SSN (to obtain credit report) 
4. Property Address 
5. Estimated Value of the Property 
6. Requested Mortgage Loan Amount 

Some other new Industry terms include:

• The signing shall be considered the closing and shall now be known as the date of Consummation; Our Lender will now be referred to as the Creditor and our Escrow Agent will now be called a Settlement Provider.

Also, once the Consumer signs the promissory note and loan documents, he becomes legally obligated to the Creditor. While the date of consummation effectively means date of Closing, there is still some need for clarification on this front as the Lender has not yet funded the loan and the deeds have not yet been recorded.

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• TO AVOID DELAYS IN THE CLOSING DUE TO REQUIREMENT OF REDISCLOSURE IT IS RECOMMENDED TO:

• Buyer to begin process well before entering into Contract 
• Avoid last minute changes which will impact the Closing Disclosure 
• Disclose to Lender Seller Credits 
• Disclose to lender any Buyer paid Broker Admin Fees 
• Comply with City ordinances prior to Appraisal, ie. Smoke detectors, carbon monoxide detectors, water heater strapping ALL to avoid need for Appraiser to return to the property. 
• HOA Contact information 
• Obtain HOA Documents before beginning loan process 
• Buyer paid Termite Inspection/Repairs 
• Avoid Additional costs at time of Walk Through 
• Buyer paid Home Warranty 
• Reimbursement for Broker Paid Costs 

HOW THIS AFFECTS REAL ESTATE PROFESSIONALS

1. Closings may take longer because of the three (3) business day review periods 
2. Your contact information and license number must appear on the Closing Disclosure form 
3. Your Clients may receive multiple Loan Estimates due to: 
1. Changed Circumstances
2. Multiple applications for different loan products with the same lender
3. Multiple applications with different lenders
4. Clients may receive multiple Closing Disclosures, some with three (3) business day waiting period and some without; 
5. Some before closing and some after closing 
6. Buyers lenders title policy will not show separately as a charge 
7. Last minute changes will impact the Closing Disclosure delivery time, ultimately affecting the date of closing 

In closing,

• The new disclosures are intended to simplify the previously used forms. Last-minute concessions, changes to Agreement 
• Requires Lenders to ensure borrowers have ability to repay their mortgage.
• Prohibits steering incentives, dual compensation and levels the playing field for qualification and screening standards 
• Protects Consumers from detrimental actions by mortgage servicers and provides Consumers with Better tools, information and protections for consumers facing foreclosure 

1. Personal delivery of Closing Disclosure will help to expedite the closing 
2. Electronic or email delivery are considered “mailbox” delivery. The CD must be sent Six (6) business days prior to Consummation (loan document signing). Mailbox rule gives three (3) business days for delivery, with a three (3) day review period, for a total of Six (6) business days. 

Keep in mind that the Lenders are being held Legally Responsible for the actions or inactions of their Service Providers where Consumers are harmed as a result of failing to comply with Consumer Financial Law.

Understanding the Lenders position is important and as Industry Professionals we must manage our expectations and the expectations of our Clients to be realistic so as to avoid disappointment. CFPB imposed Daily penalties $5,000.00 (failure to follow laws), $25,000.00 (gross negligence) , $1,000,000.00 (intentional violations)


Possible scenarios of delayed closing. 
       Multiple loan Estimates due to: 

1. changed circumstances 
2. different loan products (programs) 
3. applying with different Lenders

Nationwide Learning Curve

New Word for the times! FLEXIBILITY, more so than ever 

Include additional wording in Contract allowing for additional time and cooperation of the parties, in the event extension is necessary due to re-disclosure 

Not to under estimate time period 

Avoid putting Lenders and Mortgage Brokers in a position to fail 

Utilize handouts of CFPB Toolkit and Closing Check List

• Home Loan Toolkit: http://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf  

•  Housing Counselor Hotline: http://www.consumerfinance.gov/find-a-housing-counselor 

•  Additional Tools and Resources: http://www.consumerfinance.gov/owning-a-home

•  FAQs: http://www.consumerfinance.gov/askcfpb

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.
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GET “YOUR HOME LOAN TOOLKIT” HERE

4/9/15 - The CFPB (Consumer Financial Protection Bureau) has distributed a Home Loan Toolkit which is beneficial to each and every Consumer purchasing a new home with new loan financing. Obtain your Toolkit at http://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf

The Toolkit advertises that after you complete the tools the kit provides you will;

~ “know the most important steps you need to take to get the best mortgage for your situation”.
~ “better understand your closing costs and what it takes to buy a home”.
~ “see a few ways to be a successful homeowner“.

The following are a list of Sections in the Toolkit which are of interest to all;

~ “Choosing the Best Mortgage for You”
~ “Your Closing”
~ “Owning your Home”

The CFPB offers a hotline where you can speak to a housing counselor at http://www.consumerfinance.gov/find-a-housing-counselor
In addition, you can find additional tools and resources at http://www.consumerfinance.gov/owning-a-home and find answers to common questions at http://www.consumerfinance.gov/askcfpb

Please also feel free to call our Escrow Expert at (818) 838-1831 as we at Sepulveda Escrow are always happy to assist you as well.

Wishing you all the best in homeownership.

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

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EDUCATE YOURSELF NOW AND BE PREPARED FOR NEW CLOSING PROCEDURES

4/7/15 - The world as we know it is changing!, That is the Real Estate, Mortgage and Lending Industries will be changing effective August 1, 2015 and it is imperative that we prepare ourselves as much as possible. This will affect your real estate closing time frame and it is best that we plan ahead when preparing your Purchase Contract (and Escrow Instructions).

Under the new rules of TRID (TILA/RESPA Integrated Disclosure) which the Consumer Financial Protection Bureau (CFPB) has put in place, the Consumer must receive a Closing Disclosure three (3) business days before the consummation date. The referred to consummation date is defined as the date the Consumer signs the new loan documents.

It is important to be aware that in the event the Buyer, now being called and referred to as “The Consumer”, does not receive the Closing Disclosure within this specific time framework, the closing will be delayed.

TIP: While we will all be subject to a “learning curve”, it is of the utmost urgency that we do all that we can to prepare as much as possible to avoid complications at closing. While we will have to deal with issues at the time they occur, it may be prudent to incorporate into your Purchase Agreement and Escrow Instructions a provision for an extension to the closing date, due to delays in Buyers receipt of the Closing Disclosure (and prepare the Sellers to be more flexible in regard to the date of closing).

The good news is that we have the entire country coping simultaneously with the same concerns and issues, which I believe should lend us support while we learn as we go along.

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

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