TILA/RESPA Integrated Disclosures Quiz

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Questions and Answers

What must lenders provide to consumers at the time of loan application?

A copy of the Closing Disclosure form

A list of all potential charges

A copy of the booklet 'Your Home Loan Toolkit' (correct)

A copy of the Loan Estimate form

What is considered a 'business day' for lenders under the TILA/RESPA rules?

Only the days of loan closings

Only weekdays excluding holidays

Any calendar day except Sundays and public holidays (correct)

Any day except weekends

What does 'consummation' refer to in the context of a loan?

The day the borrower becomes indebted to the creditor (correct)

The day the closing transaction occurs

The day the loan documents are signed

The day the loan is applied for

How is good faith measured in relation to Loan Estimates and actual charges?

By comparing original and actual charges on the Loan Estimate and Closing Disclosure Signup and view all the answers

Which of the following documents must be delivered or mailed to the consumer within three business days after receiving a loan application?

The Loan Estimate form Signup and view all the answers

What must creditors ensure regarding the figures in the Loan Estimate?

They are made in good faith and with reasonable information Signup and view all the answers

For certain costs or terms, creditors can charge consumers more than disclosed on the Loan Estimate without any limitations on which of the following?

Tolerance limitations for specific charges Signup and view all the answers

What is the purpose of the TILA/RESPA Integrated Disclosures (TRID) rule introduced on October 3, 2015?

To replace old forms and establish new procedures Signup and view all the answers

What must the creditor indicate when an amount has changed in the closing costs?

Where to find the amended amounts on the Loan Estimate Signup and view all the answers

What is the 'Cash to Close' amount?

The amount the borrower needs to produce at closing Signup and view all the answers

Which of the following is included in the borrower's transactions at closing?

Adjustments for items paid by the borrower in advance Signup and view all the answers

What is indicated in the seller's column regarding amounts due at closing?

Closing costs the seller will pay are included Signup and view all the answers

What is the purpose of Page 4 in the Closing Disclosure?

To disclose additional Loan features and terms Signup and view all the answers

Which document must real estate brokers file under the Tax Reform Act of 1986?

Form 1099-S information return Signup and view all the answers

What does the 'Security Interest' section in Page 4 identify?

The collateral securing the loan Signup and view all the answers

What does the 10% cumulative tolerance allow creditors to do regarding certain charges?

Charge up to 10% more than the disclosed amount for certain charges. Signup and view all the answers

What information does Form 1099-S include?

Names and addresses of parties and sale proceeds Signup and view all the answers

Which of the following charges is NOT subject to zero tolerance?

Origination charges such as points Signup and view all the answers

In the calculation of 'Cash to Seller', what is considered?

Total due from the seller minus amounts due to the seller Signup and view all the answers

What is required if the closing costs exceed the amounts disclosed beyond the applicable tolerance threshold?

The creditor must refund the excess within 60 calendar days. Signup and view all the answers

What does the 'Late Payment' section of Page 4 inform the borrower?

Fees charged for late payment Signup and view all the answers

Which type of loan is explicitly excluded from the Integrated Disclosures rule?

Home equity lines of credit (HELOCs) Signup and view all the answers

If total closing costs exceed the legal limits, what must the creditor disclose?

The excess dollar amount to the borrower Signup and view all the answers

What does 'Negative Amortization' refer to in loan disclosures?

Borrower's equity diminishes over time Signup and view all the answers

What does the Loan Terms section on the H-25 Closing Disclosure primarily list?

Loan amount, interest rate, and payment details. Signup and view all the answers

In the H-25 Closing Disclosure, where is the total amount of cash the buyer needs to close located?

Page 3 Signup and view all the answers

Which of the following elements may NOT be included in the borrower’s column at closing?

Closing costs to be paid by the seller Signup and view all the answers

Which of the following items falls under 'Other Costs' on the H-25 Closing Disclosure?

Home warranty fees Signup and view all the answers

What type of mortgage is subject to the Integrated Disclosures rule?

Closed-end consumer mortgages Signup and view all the answers

Which of the following is an example of a zero tolerance charge?

Appraisal fees required by the lender Signup and view all the answers

What is the significance of the 'general information' section in the H-25 Closing Disclosure?

It provides essential transaction details like closing date and agent. Signup and view all the answers

What is the total cost of transactions paid by the borrower derived from?

The summation of costs categorized as transaction-related. Signup and view all the answers

In what section of the H-25 Closing Disclosure are the costs paid by others displayed?

Other costs Signup and view all the answers

Which of the following best describes the 'Costs at Closing' section of Page 1?

Combines costs from multiple pages and outlines total cash needed. Signup and view all the answers

What type of costs does the Loan Costs section encompass?

Fees required by the lender and costs for services not shopped. Signup and view all the answers

Study Notes

TILA/RESPA Integrated Disclosures (TRID) Rule

Implemented on October 3, 2015, replacing older forms and procedures.

Loan Estimate (Form H-24)

Must be delivered to the consumer no later than the third business day after receiving a loan application.
Application is considered complete when the consumer provides the lender or mortgage broker with six pieces of information: name, income, Social Security number, property address, estimated value of property, and loan amount sought.
Lenders are responsible for ensuring the information is good faith and accurate based on the best information reasonably available at the time.

Closing Disclosure (Form H-25)

Must be provided to the consumer at least three business days before loan consummation.
Consummation is the day the borrower becomes indebted to the creditor, which may or may not coincide with the closing date.

Good Faith

Measured by comparing the estimated charges in the Loan Estimate to the actual charges paid in the Closing Disclosure.
Generally, charges exceeding the originally disclosed amounts are not considered good faith, even with technical errors, miscalculations, or underestimations.
Exceptions may apply for certain costs.

Types of Charges

Charges for services required by the creditor, where the consumer shops and selects a third-party service provider not on the creditor's list, are allowed without tolerance limitations.
Charges for third-party services and recording fees paid by the consumer are subject to a 10% cumulative tolerance.
All other charges have zero tolerance and cannot exceed the amount disclosed on the Loan Estimate except for changed circumstances permitting a revised Loan Estimate.

Applicable Transactions

Applies to most closed-end consumer mortgages.
Does not apply to home equity lines of credit (HELOCs), reverse mortgages, mortgages secured by mobile homes or dwellings not attached to real property, or loans made by borrowers who are not considered creditors due to making five or fewer mortgages in a year.
Now includes construction-only loans, loans secured by vacant land or 25 or more acres, and credit extended to certain trusts for tax or estate planning.

The H-25 Closing Disclosure Form

Consists of five pages.
Page 1 includes general information, loan terms, projected payments, and costs at closing.
Page 2 details closing costs, including loan costs and other transaction-related costs.
Page 3 calculates cash to close and summarizes transactions for both borrower and seller.
Page 4 provides additional loan disclosures, such as assumptions, demand features, late payment fees, negative amortization, partial payments, security interest, and escrow account details.
Page 5 includes loan calculations, other disclosures, and contact information for all parties involved.

Reporting Requirements

The Tax Reform Act of 1986 requires reporting of closed real estate transactions to the Internal Revenue Service.
"Real estate brokers" are required to report, including the seller's broker, buyer's broker, settlement agent, escrow agent, attorney, title company, mortgage lender, and designated parties by the Internal Revenue Service.
A Form 1099-S information return must be filed, including the names and addresses of parties and information about the sale proceeds.
A written statement with the same details must be provided to each party involved.
Additional reporting and withholding responsibilities may apply if the transaction involves a non-resident alien.

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Description

Test your understanding of the TILA/RESPA Integrated Disclosures (TRID) Rule. This quiz covers key aspects of the Loan Estimate and Closing Disclosure forms, including timing and good faith requirements. Perfect for those studying real estate and lending practices.