Know Before You Owe (KBYO or TRID)

In the model forms, it most likely is an example of a revised Closing Disclosure provided at the closing table, where the revisions are not material (no change in APR, Product Description, or addition of prepayment penalty).

The signature line is optional and intended for the consumer(s) on the transaction to acknowledge receipt for the benefit of the creditor. There is no requirement for a signature by the seller. You should seek legal counsel or your in-house compliance expert’s opinion before making such an alteration on a Closing Disclosure, if desired to have it or if such a request comes from a potential loan investor or specific type of program.

For purposes of compliance with the Closing Disclosure, the columns regarding contacts must remain. However, where no such person is participating in the transaction, the column is left blank. In the event there is more than one of each person required for a column (e.g., two sellers' real estate brokers splitting a commission), the space in the contact information table may be altered to accommodate the information for such persons. If the space does not accommodate the addition of such information, an additional table may be provided on a separate page, with an appropriate reference to the additional table.

The Loan ID is assigned by the creditor and is used to identify the transaction. The File ID is assigned by the settlement agent and used for identification purposes.

Section §1026.38(t)(5)(iv)(A), permits the deletion of unused lines from the disclosures required by §1026.38(f)(1) through (3) and (g)(1) through (4), if necessary, to allow the addition of lines to other sections that require them for the required disclosures. This provision permits creditors and settlement agents to use the space gained from deleting unused lines for additional lines to accommodate all of the costs that are required to be itemized. For example, if the only origination charge required by §1026.38(f)(1) is points, the remaining seven lines illustrated on form H-25 of appendix H to this part may be deleted and added to the disclosure required by §1026.38(g)(4), if seven lines in addition to those provided on form H-25 are necessary to accommodate such disclosure.

The date the Closing Disclosure is delivered to the consumer. Commentary ¶38(a)(3)(i)-1 says for general guidance on identifying the date issued for the Closing Disclosure, see the commentary to §1026.37(a)(4). Commentary ¶37(a)(4)-1 says it’s the date the creditor mails or delivers the Loan Estimate to the consumer. The creditor’s method of delivery does not affect the date issued.

Charges that are designated as paid by others under § 1026.38(f) and (g) may include the letter “L” in parentheses, i.e. “(L)” to the left of the amount in the column to designate those charges paid by the creditor pursuant to the legal obligation between the creditor and consumer.

Closing Date = Consummation which is defined §1026.2(a)(13). Consummation means the time that a consumer becomes contractually obligated on a credit transaction (state law governs when a consumer becomes obligated).

It depends on the type of payment:

Services Did Not Shop For

• Fee charged at consummation and is not a prepayment of future premiums over a specific future time period or a payment into an escrow account. Government funding fees include VA Funding Fee, USDA guarantee fee, or any other fee paid to a government entity as part of a governmental loan program, that is paid at consummation.

• Could apply if creditor allowed consumer to shop for conventional MI; provided fee is charged at consummation; is not a prepayment of future premiums over a specific future time period; is not a payment into an escrow account.

• Fee is prepayment of future premiums over a specific future time period. “Mortgage insurance or any functional equivalent” means amounts identified in 12 CFR §1026.4(b)(5).

• Fee is a payment into an escrow account.

The number assigned to the transaction by the settlement agent for identification purposes.

Section §1026.37(m)(4) requires a disclosure if charges are added to an individual delinquent installment by a creditor that otherwise considers the transaction ongoing on its original terms. Late payment charges do not include: (i) the right of acceleration; (ii) fees imposed for actual collection costs, such as repossession charges or attorney’s fees; (iii) referral and extension charges; or (iv) the continued accrual of simple interest at the contract rate after the payment due date. However, an increase in the interest rate on account of a late payment by the consumer is a late payment charge to the extent of the increase.

Many State laws authorize the calculation of late charges as either a percentage of the delinquent payment amount or a specified dollar amount, and permit the imposition of the lesser or greater of the two calculations. The language provided in the disclosure may reflect the requirements and alternatives allowed under State law.

Many State laws authorize the calculation of late charges as either a percentage of the delinquent payment amount or a specified dollar amount, and permit the imposition of the lesser or greater of the two calculations. The language provided in the disclosure may reflect the requirements and alternatives allowed under State law.

A prepayment penalty amount may be disclosed under the heading “Loan Terms”. Section 1026.37(b)(7)(i) requires disclosure of the maximum amount of the prepayment penalty that may be imposed under the terms of the legal obligation. The creditor must determine the maximum of each amount used in calculating the prepayment penalty. For example, if a transaction is fully amortizing and the prepayment penalty is 2% of the loan balance at the time of prepayment, the prepayment penalty amount should be determined by using the highest loan balance possible during the period in which the penalty may be imposed. If more than one type of prepayment penalty applies, the creditor must aggregate the maximum amount of each type of prepayment penalty in the maximum penalty disclosed.

It replaces page 1 of the HUD-1, however, settlement agents may need to develop other documents to disburse funds.

The name of the entity that employs the settlement agent. The name of the individual conducting the closing is not required.

Conversely, in the event the transaction involves more than one of each such person (e.g., two sellers’ real estate brokers splitting a commission), the space in the contact information table provided on form H-25 of appendix H to this part may be altered to accommodate the information for such persons, provided that the information required by §1026.38(o),(p),(q),(r) and (s) is disclosed on the same page as illustrated by form H-25. If the space provided on form H-25 does not accommodate the addition of such information, an additional table to accommodate the information may be provided on a separate page, with an appropriate reference to the additional table. A creditor or settlement agent may also omit a column on the table that is inapplicable or, if necessary, replace an inapplicable column with the contact information for the additional person.

Comment 1 of ¶38(p)(3)–1 provides the following example: “If the creditor forecloses on the property and the proceeds of the foreclosure sale are less than the unpaid balance on the loan, whether the consumer has continued or additional responsibility for the loan balance after foreclosure, and the conditions under which liability occurs, will vary by State” (this may also be referenced as a “deficiency judgment”). “If the applicable State law affords any type of protection, other than a statute of limitations that only limits the timeframe in which a creditor may seek redress, §1026.38(p)(3) requires a statement that State law may protect the consumer from liability for the unpaid balance.”

Since this varies based on state law, you will need to determine which box to check in consultation with your legal counsel or compliance expert.

A number that may be used by the creditor, consumer, and other parties to identify the transaction.

Date issued. The date the disclosures required by this section are delivered to the consumer, labeled “Date Issued.” Typically, that’s going to be the date either the form is being given in person to the consumer or the day the disclosure is being placed in the mail.

The date the amounts disclosed pursuant to §1026.38(j)(3)(iii) and (k)(3)(iii) are expected to be paid in a purchase transaction under §1026.37(a)(9)(i) to the consumer and seller, respectively, as applicable, or the date the amounts disclosed pursuant to §1026.38(j)(2)(iii) or (t)(5)(vii)(B) are expected to be paid to the consumer or a third party in a transaction that is not a purchase transaction under §1026.37(a)(9)(i).

Yes. It would be reflected in the Projected Payments Table Estimated Escrow row, if applicable. It also would be reflected in the Estimated Taxes, Insurance & Assessments section. Section §1026.37(c)(4)(ii) defines what insurance is to be included, which are charges listed under section §1026.43(b)(8). This includes "premiums or other charges for insurance against loss of or damage to property, or against liability arising out of the ownership or use of property, written in connection with a credit transaction".

The name of the settlement agent company conducting the closing.

If the Loan Estimate is delivered to the consumer by a mortgage broker, and at the time of delivery the creditor is unknown, the Loan ID may be left blank. However, if the Loan Estimate is initially delivered by the creditor, or if the Loan Estimate is revised either by rate locking or a valid changed circumstance, then since the creditor is the issuing party it should contain a Loan ID.

The Closing Disclosure must contain the Loan ID when delivered because it’s required to be disclosed by the creditor, or the settlement agent, on behalf of the creditor. Therefore, if the mortgage broker delivers the Loan Estimate and there are no subsequent valid revisions to the Loan Estimate they issue (including the fact that the rate is locked at the time of initial delivery), then technically yes, you could have a Loan Estimate with no Loan ID and only add the Loan ID at the time of delivery of the Closing Disclosure.

The entity who is actually conducting the loan closing.

This information would be found on page 3 of the Closing Disclosure. The reconciliation of taxes would be in sections “L” & “N”.

The Loan ID# must be the same Loan ID# on both the Loan Estimate and Closing Disclosure. There is an allowance granted for adding versioning such as by use of a hyphen and numbering sequence for multiple revised disclosures.

Assuming the Creditor's Loan ID# is not reasonably available to the mortgage broker it may be left blank. CFPB staff has said this is consistent with official commentary, which states the creditor's name can be left blank if unknown.

There is no indication, at this time, of future rulemaking or guidance intended to provide a federal consummation date, other than the definition under Regulation Z. The definition of “consummation date” is governed by applicable state law.

It depends on whether the seller credit is a specific credit or a general credit. Commentary ¶38(i)(7)(ii) states, “the ‘‘Final’’ amount of ‘‘Seller Credits’’ reflects any change, following the delivery of the Loan Estimate, in the amount of funds given by the seller to the consumer for generalized (i.e., lump sum) credits for closing costs or for allowances for items purchased separately (e.g., if the seller is a builder). Seller credits are distinguished from payments by the seller for items attributable to periods of time prior to consummation, which are among the ‘‘Adjustments and Other Credits’’ separately disclosed pursuant to §1026.38(i)(8).”

Additionally, Commentary ¶38(j)(2)(v) indicates, “When the consumer receives a generalized credit from the seller for closing costs or where the seller (typically a builder) is making an allowance to the consumer for items to purchase separately, the amount of the credit must be disclosed. However, if the seller credit is attributable to a specific loan cost or other cost listed in the Closing Cost Details tables, pursuant to §1026.38(f) or (g), that amount should be reflected in the seller-paid column in the Closing Cost Details tables under §1026.38(f) or (g). Any other obligations of the seller to be paid directly to the consumer, such as for issues identified at a walk-through of the property prior to closing, are disclosed under §1026.38(j)(2)(v).”

For the Closing Disclosure with a seller, the Contact Information table must contain the following sub-headers with their own columns:

• Lender
• Mortgage Broker
• Real Estate Broker (B)
• Real Estate Broker (S)
• Settlement Agent

• Lender
• Mortgage Broker
• Settlement Agent

Yes, the Closing Disclosure must disclose charges “paid by or imposed on the consumer”.

For purposes of §1026.19(e), a fee is not considered ‘‘paid to’’ a person if the person does not retain the fee. For example, if a consumer pays the creditor transfer taxes and recording fees at the real estate closing and the creditor subsequently uses those funds to pay the county that imposed these charges, then the transfer taxes and recording fees are not “paid to” the creditor.

Similarly, if a consumer pays the creditor an appraisal fee in advance of the real estate closing and the creditor subsequently uses those funds to pay another party for an appraisal, then the appraisal fee is not “‘paid to” the creditor for the purposes of §1026.19(e).

A fee is also not considered “paid to” a person, for purposes of §1026.19(e), if the person retains the fee as reimbursement for an amount it has already paid to another party. If a creditor pays for an appraisal in advance of the real estate closing and the consumer pays the creditor an appraisal fee at the real estate closing, then the fee is not “paid to” the creditor for the purposes of §1026.19(e), even though the creditor retains the fee, because the payment is a reimbursement for an amount already paid.

The closing and disbursement dates would need to be coordinated between the creditor and the settlement agent; however, the creditor continues to remain responsible for the Closing Disclosure compliance with Regulation Z.

Commentary ¶19(f)(1)(i)-2iii states, “Because the creditor remains responsible under §1026.19(f)(1)(v) for ensuring that the Closing Disclosure is provided in accordance with §1026.19(f), the creditor is expected to maintain communication with the settlement agent to ensure that the settlement agent is acting in place of the creditor. See comment 19(f)(1)(v)–3 for guidance on a creditor’s responsibilities where a settlement agent provides disclosures.”

The amount of charges that are “paid by others” includes the creditor, but is not exclusive to the creditor. It could include other entities such as an employer or real estate agent, etc.

1026.38(f), (g), and (h) require under the Closing Disclosure heading “Closing Cost Details” a disclosure of whether a charge was borrower-paid at or before closing, seller-paid at or before closing, or paid by others. The creditor may obtain information regarding these, for example: verbally from the consumer, from a review of the purchase and sale contract, or from information obtained from a real estate agent in the transaction.

The date of consummation.

Consummation means the time a consumer becomes contractually obligated on a credit transaction.

State law governs when the consumer becomes obligated. When a contractual obligation is created on the consumer’s part is a matter to be determined under applicable law; Regulation Z does not make this determination. A contractual commitment agreement, for example, that under applicable law binds the consumer to the credit terms would be consummation.

Consummation, however, does not occur merely because the consumer has made some financial investment in the transaction (for example, by paying a nonrefundable fee) unless, of course, applicable law holds otherwise).