DS News

44 CFPB INTRODUCES NEW FORMS FOR INTEGRATED DISCLOSURE RULE Charged by the Dodd-Frank Wall Street Reform and Consumer Protection Act to integrate loan disclosures stemming from the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA), the Consumer Financial Protection Bureau (CFPB) has created a united mortgage disclosure rule. e new rule integrates four forms into two in order to create more streamlined and easier- to-understand mortgage disclosure paperwork. e CFPB notes that consumers found the previous system confusing, with overlapping and inconsistent language. e government agency's new rule and forms will attempt to clear up the confusion. In a guide accompanying the new forms, the CFPB said, "e forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. e forms also provide more information to help consum- ers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time." Two forms have been combined—the Good Faith Estimate (GFE) and the initial Truth-in- Lending Disclosure—to create a new form, the Loan Estimate. e Loan Estimate is designed to bring transparency to the lending process, providing key features, costs, and risks in an easier to understand format. e Loan Estimate must be provided to consumers no later than the third business day after submitting a loan application. Two other forms have been combined as well—e HUD-1 and the final Truth-in- Lending disclosure—to create another new form, the Closing Disclosure. e purpose of the newly created form is to help consumers understand all of the costs in the transaction. e Closing Disclosure must be provided to consumers at least three business days before consummation of the loan. e CFPB noted some caveats with the new rule: "e final rule applies to most closed- end consumer mortgages. It does not apply to home equity lines of credit (HELOCs), reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land). e final rule also does not apply to loans made by persons who are not considered 'creditors' because they make five or fewer mortgages in a year." e TILA-RESPA rule is effective August 1, 2015, after which the new forms will take effect. IDS, MORTGAGEFLEX DEVELOP BLIND MORTGAGE DOC PREP-LOS INTEGRATION Mortgage document preparation vendor In- ternational Document Services Inc. (IDS) and MortgageFlex Systems, a provider of mortgage loan software, announced the development of a joint interface between IDS's flagship mort- gage document preparation system idsDoc and MortgageFlex's LoanQuest loan origination system (LOS). e new interface allows users to generate mortgage documents in idsDoc, while remain- ing in the LoanQuest system. e functionality allows LoanQuest to remain in the database of record, while also providing users access to the capabilities of idsDoc. "With all the regulatory changes lend- ers have faced just in the past three months, simplicity is a lender's best friend these days," said Mark Mackey, EVP at IDS. "At IDS, we always strive to make life easier for our clients, and integrations like these allow lenders to access multiple best-in-class systems while streamlining the origination process." e interface also has the ability to create custom mappings according to the lender's preference, as well as support all seven package types to generate docs. is integration allows users to include processing docs and verification forms in their packages. "Both IDS and MortgageFlex share a similar culture of development, which makes partnerships like these work so smoothly," said Craig Bechtle, EVP at MortgageFlex. "Com- pliance is at the top of our customers' list of concerns, and the ability for our customers to access the sophisticated doc prep capabilities of idsDoc without leaving the LoanQuest system eliminates data transfer errors that could com- promise compliance. CREDIT LOOSENS AND REFINANCES SHRINK IN FEBRUARY Ellie Mae released its Origination Insight Report, which noted falling mortgage rates, shrinking refinances, and loosening credit restrictions in the month of February. e report, culled from 57 percent of Ellie Mae's mortgage application data, found that the average rate for a 30-year mortgage fell to 4.65 percent. February's drop was the first time in three months that mortgage rates have decreased from the previous month. ARM loans slowed as well for the first time in five months to 6.9 percent, which was still higher than the 2013 average of 4.2 percent. Refinances on closed loans made up 43 percent of total closed loans, a drop of 4 percent from January's figure of 47 percent. e 2013 average for refinances on closed loans was 53 percent. e time it took to close on refinances also fell in February by four days, from 44 days in January to 40 days in February. Closing on refinances, on average, took 45 days in 2013. Ellie Mae also noted a slight loosening of credit restrictions, providing more opportu- nity for homebuyers. irty-three percent of closed loans had a FICO score of 700 or less, up from the 24 percent average last year. For all loans in February, the average credit score for closed loans was 724, while the average denied credit score was 689. However, buyers with lower credit scores had better luck applying for FHA loans. e average credit score for successfully closed FHA loans was 669 in the month of Febru- ary. e average credit score for denied FHA loans was 645.

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