First Guaranty Mortgage Corporation - Compliance Department



What are the general requirements for the Loan Estimate disclosure? 

For closed-end credit transactions secured by real property (other than reverse mortgages), the creditor is required to provide the consumer with good-faith estimates of credit costs and transaction terms on a new form called the Loan Estimate. This form integrates and replaces the existing RESPA GFE and the initial TIL for these transactions. The creditor is generally required to provide the Loan Estimate within three-business days of the receipt of the consumer’s loan application (see section 6.1 below on the timing requirements of the Loan Estimate). (§ 1026.19(e)(1))

  • Loan Estimate must contain a good faith estimate of credit costs and transaction terms. If any information necessary for an accurate disclosure is unknown, the creditor must make the disclosure based on the best information reasonably available at the time the disclosure is provided to the consumer, and use due diligence in obtaining the information. (§ 1026.19(e)(1)(i); Comment 19(e)(1)(i)-1)
  • Loan Estimate must be in writing and contain the information prescribed in § 1026.37. The creditor must disclose only the specific information set forth in § 1026.37(a) through (n), as shown in the Bureau’s form in appendix H-24. (§ 1026.37(o))
  • Delivery must satisfy the timing and method of delivery requirements. The creditor is responsible for delivering the Loan Estimate or placing it in the mail no later than the third business day after receiving the application. (§ 1026.19(e)(1)(iii))
  • Creditors may only use revised or corrected Loan Estimates when specific requirements are met. Creditors generally may not issue revisions to Loan Estimates because they later discover technical errors, miscalculations, or underestimations of charges. Creditors are permitted to issue revised Loan Estimates only in certain situations such as when changed circumstances result in increased charges. (§ 1026.19(e)3)(iv))
  • In certain situations, mortgage brokers may provide a Loan Estimate. As discussed in more detail in section 6.3 below, if a mortgage broker receives a consumer’s application, either the creditor or the mortgage broker may provide the Loan Estimate. (§ 1026.19(e)(1)(ii)).

    Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 5.1

What are the general timing and delivery requirements for the Loan Estimate disclosure?

Generally, the creditor is responsible for ensuring that it delivers or places in the mail the Loan Estimate form no later than the third business day after receiving the consumer’s application (although see section 6.3 below regarding delivery of the Loan Estimate by a mortgage broker).

The Loan Estimate must also be delivered or placed in the mail no later than the seventh business day before consummation of the transaction. ( See § 1026.19(e)(1)(iii)(B))
The creditor also is responsible for ensuring that the Loan Estimate and its delivery meet the content, delivery, and timing requirements discussed in sections 5, 6, 7, 8, and 9 of this guide. (See §§ 1026.19(e) and 1026.37).

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 6.1


Does a creditor have to use the Bureau’s Loan Estimate form? (§ 1026.37(o))

Generally, yes. For any loans subject to the TILA-RESPA rule that are federally related mortgage loans subject to RESPA (which will include most mortgages), form H-24 is a standard form, meaning creditors must use form H-24. (§ 1026.37(o)(3)(i) (See also § 1024.2(b) for definition of federally related mortgage loan)

For other loans subject to the TILA-RESPA rule that are not federally related mortgage loans, form H-24 is a model form, meaning creditors are not strictly required to use form H-24, but the disclosures must contain the exact same information and be made with headings, content, and format substantially similar to form H-24. (§ 1026.37(o)(3)(ii))

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 5.2


When does the creditor have to provide the Loan Estimate to the consumer?

The Loan Estimate must be delivered or placed in the mail to the consumer no later than the third business day after the creditor receives the consumer’s application for a mortgage loan. (§ 1026.19(e)(1)(iii)(A)). (See definitions of application and business day below at sections 6.5 and 6.9). If the Loan Estimate is not provided to the consumer in person, the consumer is considered to have received the Loan Estimate three business days after it is delivered or placed in the mail. (§ 1026.19(e)(1)(iv)). 

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 6.4


What is considered a “business day” under the requirements for provision of the Loan Estimate? 

For purposes of providing the Loan Estimate, a business day is a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. (Comment 19(e)(1)(iii)-1, § 1026.2(a)(6)).

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 6.9


What if the creditor does not have exact information to calculate various costs at the time the Loan Estimate is delivered? 

Creditors are required to act in good faith and exercise due diligence in obtaining information necessary to complete the Loan Estimate. (Comment 17(c)(2)(i)-1). Normally creditors may rely on the representations of other parties in obtaining information. (§ 1026.17(c)(2)(i))


However, there may be some information that is unknown (i.e., not reasonably available to the creditor at the time the Loan Estimate is made). In these instances, the creditor may use estimates even though it knows that more precise information will be available by the point of consummation. However, new disclosures may be required under § 1026.17(c) or § 1026.19. (Comment 17(c)(2)(i)-1)

When estimated figures are used, they must be designated as such on the Loan Estimate.

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 6.10



 
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