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Industry Updates: May 2015

Gavin T. Ales
May 27, 2015

CFPB’s New “Know Before You Owe” Mortgage Tool Kit
On March 31, 2015, the Consumer Financial Protection Bureau (CFPB) released a new toolkit that guides consumers through the process of shopping for a mortgage and buying a house. The new Toolkit replaces the existing settlement cost booklet that is provided to mortgage applicants.

The Toolkit provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what affordable means to them, and find their best mortgage. The Toolkit features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information. Creditors will be required to provide the new Toolkit in place of the existing settlement cost booklet to all mortgage applicants, beginning Aug. 1, 2015.

New Jersey Increases Maximum Principal Loan Amount Subject to High Cost Act for 2015
On Feb. 17, 2015, the New Jersey Department of Banking and Insurance published Bulletin No. 15-02, which provides the annual adjustment to the maximum principal amount of a loan that will be subject to the New Jersey Home Ownership Security Act of 2002 (the Act). For 2015, the maximum principal amount has been increased to $461,087.86. Loans with principal amounts exceeding this figure will not be subject to the Act's provisions. The revised amount is effective for all completed applications received by a lender on or after Jan. 1, 2015.

Following are some frequently asked questions (FAQs) related to the TILA-RESPA Integrated Disclosure Rule (TRID) that many of you, hopefully, find informative as you prepare to implement the Rule.

Q: Confirm that the definition of "interest" in Total Interest Percentage (TIP) includes only per diem interest and interest paid monthly (and not other prepaid finance charges, such as discount.)
A: TIP only includes the periodic interest and per diem interest.  It wouldn't include other charges that would be considered settlement charges, such as points or a buydown.

Q: Is there a character limitation for a fee name/description on the new forms?
A: A maximum of 23 characters is allowed to cover all scenarios. Explanation: (1) On the LE/CD, the width of the columns depends on whether there is a seller or not. The column can be expanded when no seller is present, allowing more characters. (2) The fill font used on both forms is the required Myriad-Pro, which is a proportional font where each character is a different width unlike the fixed width courier fill font where each character width is the same. Therefore, one fee description with more characters may fit where a different fee with fewer characters will not.

Q: Is the Total of Payments calculation different from the current calculation?
A: Yes, the new Total of Payment calculation is different. It includes principal, interest, MI, and Loan Costs (the total Loan Costs paid by the consumer under Regulation Z Section 1026.38(f) - note that this does not incorporate any general Lender Credit). Today, our Total of Payments is total payments of P&I and MI paid after closing, but doesn't include upfront MI or other loan costs paid before closing.



Gavin T. Ales is chief compliance officer with Torrance, Calif.-based DocMagic Inc. He may be reached by phone at (800) 649-1362, ext. 6446 or e-mail

This article originally appeared in the May 2015 print edition of National Mortgage Professional Magazine. 

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