Greetings from PPDocs, Inc! We are excited to share new information with our clients and friends. Moving forward, be on the lookout for our Monthly Newsletters. Also, remember to subscribe and tell a friend!
CFPB Provides Helpful Factsheet on Assumptions
On May 1, 2019 the CFPB issued a Factsheet on the requirement to provide a Loan Estimate and Closing Disclosure on loan assumptions. The six page document offers usefull information and a good flowchart to assist the industry in complying with this oft-confused topic.
The Factsheet only addresses whether or not TRID disclosures are required for a specific scope of transactions, which is:
- 1. Adding or substituting a new consumer obligor on an existing consumer credit transaction;
- 2. Closed-end, secured by real property or a co-op; and
- 3. Not a reverse mortgage.
The Factsheet consists of a flowchart and narrative, to provide both a quick reference guide, as well as more meaty information to explain the details. The CFPB is careful to establish the foundational concept of an “assumption” under 1026.20(b). Unless a transaction meets the regulatory definition, the TRID disclosure requirements are not applicable. So then, what IS an assumption? In general, to meet this particular definition of assumption, a transaction must meet three elements:
- 1. Include the creditor’s express acceptance of the new consumer as primary obligor;
- 2. Include the creditor’s express acceptance in a written agreement; and
- 3. Be a “residential mortgage transaction” as to the new consumer.
If one of these elements is not present in the transaction, then it is not an “assumption”, and TRID disclosures would not be needed. For example, if the first two elements are met, but the property will not be the new consumer obligor’s principal dwelling, then the entire issue become moot. It is not a residential mortgage transaction, and is therefore not an assumption requiring TRID disclosures. The Factsheet provides other useful examples to illustrate this point.
An important note also made by the Factsheet is that even though the transaction might not trigger the requirements to provide a Loan Estimate and Closing Disclosure, it might still trigger other disclosure requirements under TILA or RESPA.
If your institution conducts loan assumption transactions, it is imperative you read the Factsheet, which is being included with this newsletter. It is worth your time and attention!
Quality Documents, Fast Results
For most orders, once a request for closing documents is received, we can prepare and provide these documents in as little as 1-2 hours. In addition, before returning closing documents to our clients, our experienced operators review the title work and survey. If we discover any issues, we inform the client promptly to ensure that our clients receive adequate title insurance coverage and close loans that meet investor or agency guidelines all while making sure the loan closing stays on schedule.
We are pleased to announce the addition of Amy Coke to our Sales/Marketing team. Amy brings over 20 years of mortgage experience to our team, holding positions in both sales and operations management. She attended UCLA as an undergraduate and holds a Master of Science degree from Southern Methodist University. She has also served as a past president of the Dallas Mortgage Bankers Association and remains actively involved with the DMBA Board of Directors. We are thrilled to have her, and we know only great things are ahead of us!