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Truth in Lending: 5.11.2.4 CFPB Compliance Resources

The primary sources to review in order to understand and apply these new rules are the relevant provisions of Regulation Z, the related official interpretations, and the supplementary information accompanying the final rule. For secondary sources, the CFPB maintains a website with links to other compliance resources.814 The following resources are housed at that site:

Truth in Lending: 5.11.2.5 Trial Disclosure Program

The Dodd-Frank Act grants the CFPB authority to allow a covered person to conduct a trial program for the purpose of providing trial disclosures to consumers that are designed to improve upon any model form issued by the agency, so long as the program is limited in time and scope and is subject to specified standards and procedures.823 In 2013, the CFPB exercised its authority and announced its “Policy to Encourage Trial Disclosure Programs.”824 This policy is addressed more fully in

Truth in Lending: 5.11.2.7.4 “Projected Payments” section

A separate table under the heading “Projected Payments” must appear on the first page of the loan estimate form underneath the “Loan Terms.” This information includes an itemization of each separate periodic payment or range of payments with an estimate of the taxes, insurance, assessments, and the payments to be made with escrow account funds.856 A periodic payment is the regularly scheduled payment of principal and interest, mortgage insurance premiums, and escrow payments without regard to any final payment that differs from other paymen

Truth in Lending: 5.11.2.7.6.1 General

Using the master heading “Closing Cost Details,” page two of the loan estimate form must contain an itemization of all estimated loan costs associated with the transaction881 broken down into three subheadings, unless the payments and/or interest rate will vary: “Loan Costs”; “Other Costs”; and, “Calculating Cash to Close.”882 If the payments and/or interest rate will change, the “Closing Cost Details” must include an “Adjustable Payment (AP) Table” and/or an “Adjustable Interest Rate (AIR)

Truth in Lending: 5.11.2.7.6.2 “Loan Costs” subsection

Under the heading “Loan Costs,” the creditor must itemize each amount into the following categories: “Origination Charges”; “Services You Cannot Shop For”; and, “Services You Can Shop For.”884 Following this listing, the creditor must total these charges and place the total under “Total Loan Costs.”885 All charges, other than points (see next paragraph) must be listed in alphabetical order by their labels under the applicable subheading.886 T

Truth in Lending: 5.11.2.7.6.3 “Other Costs” subsection

The heading “Other Costs” includes all costs associated with the transaction that do not fit under “Origination Charges,” “Services You Cannot Shop For,” or “Services You Can Shop For.”911 These charges represent services “that are ancillary to the creditor’s decision to evaluate the collateral and the consumer for the loan.”912 This section of the loan estimate form breaks the closing costs into four categories: “Taxes and Other Government Fees”; “Prepaids”; “Initial Escrow Payment at Closi

Truth in Lending: 5.11.2.7.6.4 “Calculating Cash to Close” subsection

Next, the creditor must disclose the total amount of cash or other funds that must be brought to the closing under the “Calculating Cash to Close” heading on page two of the loan estimate form.929 There, the first line contains the “Total Closing Costs” (previously listed), followed by the “Closing Costs to be Financed” on line two.

Truth in Lending: 5.11.2.7.6.5 “Adjustable Payment (AP) Table” subsection

If the periodic principal and interest payments may change after consummation but the change is not due to an adjustment of the interest rate (or if the product is a seasonal payment product), the “Adjustable Payment (AP) Table” subsection must appear under the “Closing Cost Details” master heading.946 If the transaction does not contain such loan terms, the table must not be included.947 For example, the table is not included where the loan contains a fixed interest rate and does not contai

Truth in Lending: 5.11.2.7.7.1 General; identification of creditor and broker

This section of the loan estimate form starts on page three.966 All of the remaining information the creditor must provide appears under the master heading, “Additional Information About This Loan.” First, at the top of page three, the creditor (labeled “Lender”) must list its name and its Mortgage Licensing System and Registry identification number (labeled “NMLS ID/License ID”).

Truth in Lending: 5.11.2.7.7.2 “Comparisons” subsection

Next, the loan estimate form must contain a “Comparisons” table along with statement next to this title that says: “Use these measures to compare this loan with other loans.”968 In the column on the left side under “Comparisons,” the row must state—“In 5 years” followed by the total principal, interest, mortgage insurance, and loan costs scheduled to be paid through the end of the sixtieth month after the due date of the first periodic payment, expressed as a dollar amount.969 This number co

Truth in Lending: 5.11.2.7.7.4 Signature statement

The loan estimate form ends on page three with the heading “Confirm Receipt.” Here, if the creditor includes signature lines for the borrowers, the creditor must state: “By signing, you are only confirming that you have received this form.

Truth in Lending: 5.11.2.7.8 Form of loan estimate

Section 1026.37 of Regulation Z ends with rules addressing headings and labels, use of the model forms in appendix H, rounding of dollar amounts and percentages, unit-periods, modifications to the model forms due to translations into languages other than English, logos or slogans, attachment of the creditor’s business card, and the inclusion of administrative information.991 More importantly, section 1026.37(o) imposes the clear and conspicuous, grouping, and segregation rules that apply to other closed-end consumer credit

Truth in Lending: 5.11.2.8.2 General information section

The general information appears at the top of the first page of the closing disclosure form. Next to the heading “Closing Disclosure,” the creditor must include the following statement: “This form is a statement of the final loan terms and closing costs. Compare this document with your Loan Estimate.” Immediately underneath this statement, the creditor must include the following items under the “Closing Information” heading:1004

Truth in Lending: 5.11.2.8.4 “Projected Payments” section

A separate table under the heading “Projected Payments” must appear on the first page of the closing disclosure form underneath the “Loan Terms.”1013 The same information that is shown on the loan estimate form must appear in this section,1014 except that the amount of estimated escrow payments to be listed must be determined according to RESPA’s Regulation X § 1024.17 for transactions subject to RESPA.1015 If the loan transaction is not gove

Truth in Lending: 5.11.2.8.5 “Costs at Closing” section

The creditor must disclose the actual costs or average price of the costs on the closing disclosure, unless an estimate is permitted.1018 A separate table under the heading “Costs at Closing” must appear on the first page of the closing disclosure form after the “Projected Payments” table. The “Costs at Closing” table begins with the actual “Closing Costs” section itemized as the sum of:

Truth in Lending: 5.11.2.8.6.1 Relationship to loan estimate

Using the master heading “Closing Cost Details,”1026 page two of the closing disclosure form must contain an itemization of all loan costs associated with the transaction broken down into two subheadings: “Loan Costs”1027 and “Other Costs,”1028 followed by totals.1029 This section differs from that in the loan estimate form because it must include columns showing whether the charge was borrowe

Truth in Lending: 5.11.2.8.6.2 “Loan Costs” subsection

Under the heading “Loan Costs,” the creditor must itemize each amount into the following categories: “Origination Charges”; “Services Borrower Did Not Shop For”; and, “Services Borrower Did Shop For.”1035 Next to each of these subheadings, the creditor must disclose the sum of the charges in that section that were paid by the borrower at or before closing.1036 Following the itemization of charges in each category, the creditor must show which fees were paid by the borrower, the seller, and o

Truth in Lending: 5.11.2.8.6.4 Totals

The “Total Closing Costs” are to be disclosed on line J, representing the sum of all closing costs (both the “Loan Costs” and the “Other Costs” subsections) paid by the borrower at or before closing.1071 The “Closing Cost Subtotals” line appears under “Total Closing Costs.” This line includes the subtotals of all closing costs that were borrower-paid, seller-paid, or paid by others.1072 The amount of any “generalized” lender credits, disclosed as a negative number, labeled “Lender Credits” i