How to avoid feeling violated by the CFPB
Recapping TILA-RESPA tolerances — 50 weeks out
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And so goes another week of intense, deep-dive material on the tolerances for the TILA-RESPA Loan Estimate. But as we wrapped up section 7 of the rule, we also pointed out that we’re heading into Week 50 of the countdown to August 1, 2015.
In order to complete section 7, we ran through the following charges that remain subject to zero tolerance in changes between the Loan Estimate and the Closing Disclosure form:
1. Fees paid to the creditor.
2. Fees paid to a mortgage broker.
3. Fees paid to an affiliate of the creditor or a mortgage broker.
4. Fees paid to an unaffiliated third party if the creditor did not permit the consumer to shop for a third party service provider for a settlement service.
5. Transfer taxes.
In breaking that down, we also covered that a fee is “paid to” the creditor, mortgage broker, or an affiliate of either if it is retained by that person or entity. And that a charge is not paid to one of these entities when it receives money but passes it on to an unaffiliated third party.” A fee is not considered “paid to” a person if the person does not retain the fee.
From there we discussed that refunds are due to the consumer no later than 60 calendar days after consummation, with the two scenarios that have been defined:
- For charges subject to zero tolerance, any amount charged beyond the amount disclosed on the Loan Estimate must be refunded to the consumer.
- For charges subject to a 10% cumulative tolerance, to the extent the total sum of the charges added together exceeds the sum of all such charges disclosed on the Loan Estimate by more than 10%, the difference must be refunded to the consumer.
Then there are the new penalties. Previously averaging around $5,000 in total for RESPA violations, fines under the new rule will be even higher because these penalties are assessed per day rather than per infraction, and the violation doesn’t need to be “knowing” or “reckless” in order to merit a penalty.
- “Knowing” violations — $1,000,000 per day
- “Reckless” violations — $25,000 per day
- Other violations — $5,000 per day
Finally, we came to a realization that we’re now in Week 50 of the Lender Implementation Timeline. To help kick this week of planning and budgeting off, we provided 5 things to consider during this phase:
1. Get a matrix going of the vendors your business depends on.
2. Understand how the people in your organization will be affected.
3. Look at your current business processes.
4. Identify the pitfalls that your current technology doesn’t handle.
5. Be brutally honest with yourself.
This week we’ll have a guest-post from someone well known in the industry. Who? Check back to find out who that person is, and what they’ll be talking about. In the meantime, be sure to visit www.TILARESPA.com to view a growing knowledge base of information and forums where you can ask questions and interact with others in this industry.
All information and views expressed or implied are provided without warranty and are only the opinion of Pavaso, Inc. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation. The final rule can be found here.