Attorneys At Law

Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

Attorneys At Law - Attorneys practicing in and around the Chicagoland area. Experienced in the practice areas of Real Estate Law, Mortgage Foreclosure Defense Litigation, Social Security Disability, Business Law, & Estate Law.

Changes to Wells Fargo Loans and The Borrower Closing Disclosure

Changes are coming to the Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act and the Truth In Lending Act. These changes will be effective August 2015, and Wells Fargo is working to meet internal compliance and regulator expectations by controlling the generation and delivery of the borrower Closing Disclosure (CD).

These new changes may prompt questions about the rules and how they affect Wells Fargo and individual loans. Some frequently asked questions are answered below.

Will all lenders collaborate on a standard and consistent process for meeting all of the TILA-RESPA Integrated Disclosure Rules?

No.

Each lender is accountable for compliance and must determine its own method for achieving compliance.

Wells Fargo made an operational decision in September regarding our method for achieving compliance and we continue to build processes to support our approach.

Can we begin using the new CD form earlier than August 1, 2015?

No.

In fact, there will be several weeks/months that we will be required to use the previous disclosures with some loans and the new LE and CD on other loans*.

·        Applications prior to August 1, 2015 will use the previous GFE, initial TIL, final TIL and HUD-1.

·        Applications taken on or after August 1, 2015 will use the new Loan Estimate (LE) and CD.

There are no exceptions to this requirement – early use of the LE and CD are not allowed.

*Note: The new disclosures do not apply for home equity lines of credit, mortgages securing mobile homes that are not attached to real estate or for creditors who make five or fewer loans per year.

Can settlement agents prepare the CD and send it to the lender for approval, just as today for the HUD-1?

No – not for Wells Fargo loans.

Lenders are accountable for compliance, which includes the CD timing and accuracy. The new CD is governed by the Truth-in-Lending Act (TILA), not the Real Estate Settlement Procedures Act (RESPA).

TILA and RESPA have different accuracy expectations and enforcement provisions, as well as differences in definitions. The risks and penalties for Wells Fargo are more severe with TILA than RESPA.

How will Wells Fargo determine the exact fees that are applicable on loans?

Collaboration and input from our settlement agents on fees applicable for each transaction continues to be critical.

Wells Fargo will continue to work closely with settlement agents to determine the fees and other content required on the CD. This interaction must occur earlier in the process than is typical today.

How will Wells Fargo determine buyer/seller pro-rated amounts on purchase transactions?

Just as today with the HUD-1, we will work closely with our settlement agents to determine the amounts to be disclosed on the borrower CD.

The settlement agent will be responsible for the seller CD.

The TILA-RESPA Integrated Disclosure Rule uses the term “consummation” – what does that mean?

The TILA-RESPA Integrated Disclosure Rule requires that the borrower receive the CD at least three business days prior to consummation.

TILA defines consummation to be: “The time that a consumer becomes contractually obligated on a credit transaction.”

Wells Fargo considers consummation to be the date the borrowers will sign the note for all transactions (becomes contractually obligated), including transactions in escrow states.

What happens if the pre-closing walk through identifies a change to the buyer/seller agreement that will impact the CD?

The settlement agent must notify the lender’s closing contact if there are any changes that impact the CD. Wells Fargo will determine if an updated CD can be provided for delivery at the closing or if the change triggers the three-day receipt requirement to be restarted.

Will Wells Fargo assume the responsibility for disbursing loan proceeds?

No.

The settlement agent is critical and continues to be responsible for executing the closing including document signing, notarization, disbursement of funds, document recordation and delivery of final documents post-closing.

What education and training materials can we expect?

Specific Wells Fargo training plans are under construction in collaboration with other industry partners such as ALTA, title underwriters and other service providers. Plans include many educational communications and an information guide.

More details will be provided as available.

Contact us with any additional questions or to learn more.