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Up to Speed on Upcoming Mortgage Application / Closing Disclosure Rules (Part 3)

Friday, June 27, 2014 - Article by: Lender411 Member

This is the third, and last part, of the posts I wrote to helps us get up to speed with the disclosure requirements that will replace the current application and closing of mortgage transactions comes August 2015. In part one, I discussed the disclosure that replaces the Initial Truth in Lending and the RESPA Good Faith Estimate (GFE). In part two, I discussed the disclosure that replaces the Final Truth in Lending Disclosure and the RESPA HUD-1. In this final installment, I will wrap up the guidance over miscellaneous disclosures that will become effective at the same time. This information was thoroughly covered by the CFPB and the Federal Reserve in a webinar co-hosted earlier this month.(1)


We may not charge an application fee until we have provided a Loan Estimate to a consumer, and he/she has expressed an intent to follow through the transaction. We may only charge a reasonable fee for the credit report.

Non-official, loan estimates, given to a potential borrower must clearly differentiate such information as NOT OFFICIAL by including in the first page, with letters no smaller than 12-points font size Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.(2) Furthermore, no NON-OFFICIAL written estimates may look like, or similar to, forms H-24 (Loan Estimate) or H-25 (Closing Disclosure).

If we provide non-official loan estimate information, we may NOT REQUIRE the borrower to provide us documents that verify the accuracy of the information they give us.


We must provide the RESPA Settlement Costs Booklet(3) to borrowers no later than 3 days after they finish the loan application. Within this context, the borrower is considered to have fully applied once he has provided these pieces of information (documentation):

  • name
  • income
  • social security number (to get credit report)
  • property address
  • estimate of the value of the property he/she intends to buy
  • mortgage loan amount they seek

The provision of this booklet is not required for:

  • refinancings
  • subordinate liens
  • reverse mortgages


We are required to provide a notice no later than 3 business days before we cancel a borrowers escrow account. Our notice must include the following information:

  • when and why are we closing the account
  • clarify an escrow account may be called impound or trust account
  • that without this account, the borrower will have to make direct payments for all property costs (taxes, insurance, etc)
  • an itemized table that lists fees imposed on the borrowers in connection with the closing of the account, and a statement that the fee is for closing the escrow account
  • include a phone number to which the borrower can call to get more information under the IN THE FUTURE consequences for failure to pay property costs, and if the borrower can keep an escrow account opened, and if there is deadline to request the account remain opened
  • you can access a model of the form here:


Whenever we are required to provide notice of a mortgage ownership transfer, the notice must include information about the partial payment policy.(4) This disclosure must include:

  • the heading Partial Payment above this information
    • if the payments are less than the full amount
      • If accepted: a statement that we may accept partial payment and apply these to the mortgage
      • If accepted but not applied to the loan: a statement that we, the lender may hold partial payment in a separate account until the remainder of the payment is made, and then apply the full periodic payment to the loan
      • If not accepted: a statement that we, the lender, does not accept partial payments
    • state if we have a different policy in case the loan is sold

At the time I wrote this, the webinar was not posted yet, but I am sure it will become available soon; you may look for it here:

The CFPB has put up a very nice website that provides easy access to Regulation Z; you can view acces it here:

Go to Part 1

Go to Part 2

1) June 17th, 2014




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