TX Discl Webinar Presentation...And, the TRID regulations require the lender to collect title...

Webinar:The Texas Disclosure - What Goes On It & How To Explain ItJuly 7, 2015

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7/2/2015

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TEXAS DISCLOSURE

Form T‐64

Presented by:

Janet S. Minke, CTIAVice President, Underwriting Support ServicesAlliant National Title Insurance Company

This information is being provided by TLTA for educational and reference purposes only, and is not intended to represent the only approach to any particular issue. This information should not be construed as legal, financial or business advice from or on behalf of TLTA, and users should consult their own legal counsel and subject‐matter experts to ensure that any policies adopted or actions taken meet the requirements unique to their company.

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Procedural Rule P‐73

• When a Closing Disclosure is used, the Texas Disclosure must also be used

• Form T‐64 must include certain disclosures

• Form T‐64 provides acknowledgement of receipt and authorization to disburse

• A combined form or separate forms may be used

• Additional lines may be added

• The last 3 paragraphs and signatures must be kept together on same page

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Why do we need a new form?

• In the fall of 2015, the federal TILA/RESPA Integrated Disclosures (TRID) rule requires a new Closing Disclosure (CD) to replace the current HUD‐1.

• Lenders are responsible for the content of the CD.

• The CD has size limits that may result in combined fees.

• TRID requires simultaneous issue title premiums to be inaccurately disclosed.

• Texas settlement agents have required disclosures that lenders are unlikely to include on the CD.

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What is the new Texas form?

• As the name – Texas Disclosure –implies, it is a “disclosure” form.

• It also provides an acknowledgment of receipt and authorization to disburse.

• It is not a settlement statement –and does not restate the fees/charges from the Closing Disclosure.

• It must be used with a Closing Disclosure, not by itself.

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When is the new form used?

• In any transaction in which the federal Closing Disclosure is used.

• Not in other transactions.

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What is in the Texas Disclosure?

• Required– Accurate title insurance premium

amounts

– Portion of premium paid to third parties

– Portion of real estate commission paid to third parties

– Itemization of settlement agent fees – if combined on CD

• Optional– Itemization of recording fees

– Itemization of other combined fees

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Form T‐64: Line‐by‐Line

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Heading – Purpose of Form

• Provide additional disclosures

– required in Texas

• Provide acknowledgments

– required in Texas

• To be used with the federal Closing Disclosure.

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Closing and Transaction Info

• Same information as Page 1 of CD

• May add lines for multiple parties

• Closing Disclosure Issued Date ties the CD and TD together

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Lender & Settlement Agent

• Names and addresses are the same as Page 5 of the combined CD

– And Page 1 of the Seller Only CD

• Contacts and license numbers are only on the CD, not on the TD

– Parties also receive the CD

• No need to duplicate the information

• Seller doesn’t really need contact info for the buyer’s lender.

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Title Insurance Premiums

• Two paragraphs explain the possible difference between premiums collected on the CD and actual Texas title insurance premiums

• Disclosure of Title Agent

– Issuing or arranging a “home office issue”

• Disclosure of Title Insurance Underwriter

– Whose policy will be issued

• Actual premiums – same as Schedule D

– Owner’s, Loan, Endorsements

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Title Insurance Premiums

• Disclosure of premium split between agent and underwriter and payment of portion of premium to third party – as required by §2702.053.– Same as Schedule D of Commitment

– Not required to show both dollars and percentage

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Fees Paid to Settlement Agent

• Used when a lender combines multiple settlement agent fees into a single charge on the CD.

• If fees are not combined –or settlement agent charges a single fee – the section may be left blank.

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Real Estate Commission

• Used when real estate broker requests payment to third parties from commission

– Sometimes called CDA

– Disclosure of payees required by Bulletin 160

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Other Disclosures

• Itemize recording fees for documents other than the Deed and Deed of Trust

• Itemize other fees that may be combined on the CD, such as loan policy endorsements

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Receipt and Authorization

• Information for consumers

• Receipt for CD and TD

• Authorization for settlement agent to disburse according to the CD

• Signed by seller and buyer/borrower

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Time for Questions

Rev 1 / 06 28 15 / J. Minke ©2013 Alliant National Title Insurance Company, Inc. All Rights Reserved Page 1 of 1

TEXAS DISCLOSURE – Form T-64

I. P-73. Closing Disclosure and Texas Disclosure (Form T-64).

(a) When a settlement agent is required to use a federal Closing Disclosure form in a settlement in Texas, the settlement agent must also prepare Form T-64.

(b) On Form T-64, the settlement agent must:

(1) accurately disclose the Texas title insurance premiums,

(2) separately itemize all other fees and charges paid to the settlement agent (which may have been combined on the Closing Disclosure), and

(3) disclose all payments of portions of the title insurance premium or real estate commission to third parties.

(c) Settlement agents must use Form T-64 with the federal Closing Disclosure, as an acknowledgement and authorization for disbursement.

(d) Settlement agents may use a combined Form T-64 for signature by both buyer and seller, or may use a separate Form T-64 for each party.

(e) Additional blank lines may be added to Form T-64 as needed to disclose additional items.

(f) The last three paragraphs, beginning with “The Closing Disclosure was assembled” and ending with the acknowledgment paragraph, must be kept together on the same page with the signatures.

II. Why does Texas need a new form?

The TILA/RESPA Integrated Disclosures (TRID) rule goes into effect in the fall of 2015 for most transactions involving consumer mortgage loans. This rule requires a new form – the Closing Disclosure – which takes the place of the HUD-1 Settlement Statement.

The rule makes the lender responsible for accurately completing and delivering the Closing Disclosure, although they may rely on the settlement agent to prepare and deliver, if they choose. Because lenders will be held liable for the accuracy of the form, they will determine what goes on the form – and they must carefully control the content to meet TRID regulations.

For example, the Closing Disclosure has a set size and a limited number of lines on which to itemize all costs involved in the transaction. As a result, it is possible a lender will combine fees paid to a single provider to conserve space on the form.

And, the TRID regulations require the lender to collect title insurance premiums in a simultaneous issue transaction in a manner that doesn’t accurately reflect the actual premium for each policy.

Finally, it is unlikely a lender will want to use this strictly regulated federal form to make disclosures that are required by state law, in addition to those required by the TRID rule.

III. What is the new Texas form?

The new T-64 Texas Disclosure is just what the name implies, a form for the purpose of disclosing additional information to borrowers and sellers in Texas. Some of the disclosures are required by Texas regulations and others may simply be desired to help

TEXAS DISCLOSURE


consumers more fully understand fees or charges that have been combined on the Closing Disclosure.

The Texas Disclosure includes an acknowledgment by all parties of receipt of both the Closing Disclosure and the Texas Disclosure, together with an authorization for the settlement agent to disburse funds according to the fees and charges on the Closing Disclosure

The Texas Disclosure is not an alternate closing or settlement statement. It does not include all fees and charges from the Closing Disclosure, nor does it indicate which party pays a fee or charge. There is no “bottom line” on the Texas Disclosure and it cannot be used by itself.

IV. When is the new Texas form used?

The Texas Disclosure must be used in any transaction in which the new Closing Disclosure is used as the settlement statement.

It is not required in transactions where the settlement is based on a HUD-1 settlement statement or a Buyer, Borrower or Seller statement.

V. What information is contained in the new Texas form?

A. First – it does not require itemization of any fees or charges that

are already itemized and accurately reflected on the Closing

Disclosure.

B. The Texas Disclosure contains both required and optional

disclosures.

1. Required

a) Accurate title insurance premiums

b) Any portion of the premium paid to third parties (premium split)

c) Payment of a portion of a real estate commission to third parties

d) Itemization of fees paid to a settlement agent (if not itemized on CD) – required by new rule P-73

2. Optional

a) Itemization of recording fees not itemized on CD

b) Itemization of other fees not itemized on CD – for example, individual title insurance endorsements

VI. The Texas Disclosure: Line by Line

We will now go through the form – one section at a time – discussing the content of each section.

TEXAS DISCLOSURE


Texas Disclosure Form T-64_

This form provides additional disclosures and

acknowledgements required in Texas. It is used with the

federal Closing Disclosure form.

The heading at the top of the form sets the stage – it is to provide additional disclosures – and

acknowledgements – it is used with the federal Closing Disclosure.

Closing Information Transaction Information Closing Disclosure Issued Date:

August 31, 2015 Property: 123 Hilltop Place Ourtown, TX 76000

Closing Date: September 1, 2015 Borrower(s): Bob Buying and Belinda Buying GF #: 2015-89774 Address(es): 456 Middle Acre Drive

Ourtown, TX 76000 Sales Price: $100,000.00 Seller(s): Steve Sellers and Susan Sellers Loan Amount: $80,000.00 Address(es): 123 Hilltop Place

Ourtown, TX 76000

The first section provides the same information about the transaction found at the top of Page 1

of the Closing Disclosure.

Procedural Rule P-73 allows the addition of lines. So, if there are multiple buyers or sellers, they

may be added in this section. It is also okay if the additional parties are shown on an Addendum

in the same manner they will be shown on the Closing Disclosure.

Notice both a “Closing Disclosure Issued Date” and a “Closing Date” are shown. This, along

with the other information, ties the Texas Disclosure to a specific companion Closing Disclosure.

Lender and Settlement Agent Lender: American Lending Co. Address: 4200 Front Street Ourtown, TX 76000

Settlement Agent: Best Title Agent Address: 1000 Main Street Ourtown, TX 76000

The second section provides the same information about the Lender and Settlement Agent –

names and addresses – as that found on Page 5 of the combined Closing Disclosure (Page 1 of

the Seller Only Closing Disclosure).

The Texas Disclosure does not require the additional details about contact information or

license numbers that are shown on the Closing Disclosure. Why? Because anyone receiving the

Texas Disclosure will also receive the Closing Disclosure – no need to repeat the information.

(Note: Although the contact information for the buyer’s lender is not on the Seller Only Closing

Disclosure, it is not information needed by the seller.)

Title Insurance Premiums If you are buying both an owner’s policy and a loan policy, the title insurance premiums on this form might be

different than the premiums on the Closing Disclosure. The owner’s policy premium listed on the Closing

Disclosure will probably be lower than on this form, and the loan policy premium will probably be higher. If you

add the two policies’ premiums on the Closing Disclosure together, however, the total should be the same as the

TEXAS DISCLOSURE


total of the two premiums on this form.

The premiums are different on the two forms because the Closing Disclosure is governed by federal law, while this

form is governed by Texas law. The owner’s policy and loan policy premiums are set by the Texas commissioner of

insurance. When you buy both an owner’s policy and a loan policy in the same transaction, you are charged the full

premium for the owner’s policy but receive a discount on the loan policy premium. Federal and Texas law differ on

where the discount is shown. Texas law requires the discount to be reflected in the loan policy premium, while

federal law requires the discount to be reflected in the owner’s policy premium.

Title Agent: Best Title Agent Owner’s Policy Premium $ 875.00 Loan Policy Premium $ 100.00 Underwriter: Alliant National Title Endorsements $ 168.75 Other $ TOTAL $1,143.75

Of this total amount: $171.57 (or ____%) will be paid to the Underwriter; the Title Agent will retain $583.31 (or ____%); and the remainder of the premium will be paid to other parties as follows:

Amount ($ or %) To Whom For Services

$388.87 Super Title Agent Title Evidence

The third section is for the purpose of accurately disclosing the actual premiums for title

insurance, as well as information about who will issue the policy and whether another agent or

an attorney will be paid for performing services related to the title policy.

It begins with a plain language explanation about the differences in the way title premiums may

be shown on the Closing Disclosure and the actual premiums for the policies to be issued.

This is followed by information about the title agent who is either issuing the policy or arranging for a home office issued (directly issued) policy, and the underwriter whose policy will be issued.

The remaining data is the same as the corresponding data on Schedule D of the Texas Title Commitment – disclosures about other parties being paid a portion of the premium for rendering services.

In the bottom portion of the section, it is not necessary to enter both a $ amount and a % with regard to portions of the premium paid to other title agents or to attorneys.

TEXAS DISCLOSURE


Fees Paid to Settlement Agent Fees Paid to Settlement Agent on the Closing Disclosure include:

Escrow Fee $300.00 Copies $5.00

Courier Fees (3) $50.00

Wire Transfer Fees (2) $20.00

The fourth section is used when a lender combines multiple settlement fees into a single charge

on the Closing Disclosure. For example, the lender may choose to collect a “Settlement Agent

Fee” of $375 instead of separately collecting: Escrow Fee - $300, courier fees - $50, wire

transfer fees - $20 and copies - $5. In this case, the section is completed as shown above.

If the lender does not combine settlement fees, or if the settlement agent charges a “flat fee”

covering all settlement services, the section may be left blank.

Real Estate Commission Disbursement Portions of the Real Estate Commissions disclosed on the Closing Disclosure will be disbursed to:

Hiram Smith Referral Fee

Hilltop Franchise Fee

James Jenkins Advertising

Three Hills Media Consulting

The fifth section is used when a real estate broker requests a settlement agent to disburse portions of the real estate commission to third parties. This request is sometimes referred to as a “Commission Disbursement Authorization” or CDA. The fields allow the settlement agent to provide just a list of the parties being paid (required by Bulletin 160), or to also include the service for which the payment is being made – as shown above.

Other Disclosures Although not required, this section may be used to disclose individual recording charges included on Line 01 of

Section E of the Closing Disclosure; or to disclose a breakdown of other charges that were combined on the Closing

Disclosure:

Document Name Recording Fee Document Name Recording Fee Deed $20.00 Deed of Trust $72.00 Releases (2) $40.00

The final section is for optional Other Disclosures that may be desired.

The Closing Disclosure only provides itemization of the recording fees for a Deed and Security Instrument (DT). There is no provision for itemization of additional recording fees. Some lenders may provide additional lines for itemization of recording fees, but others may feel the TRID rule only allows the one line (E.01).

If the settlement agent desires to give detail for all recording fees, including documents not itemized line E01 (or additional lines) of the Closing Disclosure, the disclosure may be provided as shown above.

TEXAS DISCLOSURE


Other Disclosures Although not required, this section may be used to disclose individual recording charges included on Line 01 of

Section E of the Closing Disclosure; or to disclose a breakdown of other charges that were combined on the Closing

Disclosure:

Closing Disclosure Charge Name Included in Closing Disclosure Charge Loan Policy Endorsements T-17, T-19, T-36, T-30, Tax Exception – add “not yet due” Owner’s Policy Endorsements Amendment of Area and Boundaries Exception

It is possible a lender will combine other fees for which itemization may be desired. If other fees are combined on the Closing Disclosure, a breakdown of the items included in such combined fees may be provided in the bottom portion of the Other Disclosures section.

One of the anticipated uses of this section is for an itemization of title policy endorsements, as shown above.

The Closing Disclosure was assembled from the best information available from other sources. Settlement Agent cannot guarantee the accuracy of that information.

Tax and insurance prorations and reserves were based on figures for the preceding year or supplied by others, or are estimates for current year. If there is any change for the current year, all necessary adjustments must be made directly between Seller and Borrower, if applicable.

I (We) acknowledge receiving this Texas Disclosure and the Closing Disclosure. I (We) authorize Settlement Agent to make the expenditures and disbursements on the Closing Disclosure and I (we) approve those payments. If I am (we are) the Borrower(s), I (we) acknowledge receiving the Loan Funds, if applicable, in the amount on the Closing Disclosure.

________________________________________ ________________________________________

Borrower: Bob Buying Borrower: Belinda Buying

________________________________________ ________________________________________

Seller: Sam Sellers Seller: Susan Sellers

Settlement Agent: Best Title Agent

By: _________________________________ Escrow Officer

The final section above the signature lines provides statements regarding the fact that the fees/charges on the Closing Disclosure were assembled from the best information available and the settlement agent cannot guarantee the accuracy of the fees.

It discusses tax information for proration and reserves, indicating the parties should work together if the information upon which these calculations were based is determined to be inaccurate.

Finally, it provides an acknowledgement of receipt of both the Texas Disclosure and Closing Disclosure – and an authorization for the settlement agent to disburse according to the Closing Disclosure.

The form ends with signature lines for borrower, seller and settlement agent. The signature lines for Borrower and Seller may appear as shown, or may be formatted another way for ease of forms development and production.

IMPORTANT NOTE: The signatures and text above must appear on the same page per P-73.

Texas Disclosure Form T-64

This form provides additional disclosures and acknowledgements required in Texas. It is used with the federal Closing Disclosure form.

GF # Page 1 of 2

Closing Information Transaction Information Closing Disclosure Issued Date:

Property Address:

Closing Date: Borrower(s): GF #: Address(es): Sales Price: Seller(s): Loan Amount: Address(es):

Lender and Settlement Agent

Lender: Address:

Settlement Agent: Address:

Title Insurance Premiums If you are buying both an owner’s policy and a loan policy, the title insurance premiums on this form might be different than the premiums on the Closing Disclosure. The owner’s policy premium listed on the Closing Disclosure will probably be lower than on this form, and the loan policy premium will probably be higher. If you add the two policies’ premiums on the Closing Disclosure together, however, the total should be the same as the total of the two premiums on this form.

The premiums are different on the two forms because the Closing Disclosure is governed by federal law, while this form is governed by Texas law. The owner’s policy and loan policy premiums are set by the Texas commissioner of insurance. When you buy both an owner’s policy and a loan policy in the same transaction, you are charged the full premium for the owner’s policy but receive a discount on the loan policy premium. Federal and Texas law differ on where the discount is shown. Texas law requires the discount to be reflected in the loan policy premium, while federal law requires the discount to be reflected in the owner’s policy premium.

Title Agent: Owner’s Policy Premium $ Loan Policy Premium $ Underwriter: Endorsements $ Other $ TOTAL $

Of this total amount: $_________ (or ____%) will be paid to the Underwriter; the Title Agent will retain $_________ (or ____%); and the remainder of the premium will be paid to other parties as follows:

Amount ($ or %) To Whom For Services

Fees Paid to Settlement Agent Fees Paid to Settlement Agent on the Closing Disclosure include:

Texas Disclosure Form T-64

This form provides additional disclosures and acknowledgements required in Texas. It is used with the federal Closing Disclosure form.

GF # Page 2 of 2

Real Estate Commission Disbursement Portions of the Real Estate Commissions disclosed on the Closing Disclosure will be disbursed to:

Other Disclosures Although not required, this section may be used to disclose individual recording charges included on Line 01 of Section E of the Closing Disclosure, or to disclose a breakdown of other charges that were combined on the Closing Disclosure:

Document Name Recording Fee Document Name Recording Fee

Closing Disclosure Charge Name Included in Closing Disclosure Charge

The Closing Disclosure was assembled from the best information available from other sources. The Settlement Agent cannot guarantee the accuracy of that information.

Tax and insurance prorations and reserves were based on figures for the preceding year or supplied by others, or are estimates for current year. If there is any change for the current year, all necessary adjustments must be made directly between Seller and Borrower, if applicable.

I (We) acknowledge receiving this Texas Disclosure and the Closing Disclosure. I (We) authorize the Settlement Agent to make the expenditures and disbursements on the Closing Disclosure and I (we) approve those payments. If I am (we are) the Borrower(s), I (we) acknowledge receiving the Loan Funds, if applicable, in the amount on the Closing Disclosure.

________________________________________ ________________________________________ Borrower: Borrower:

________________________________________ ________________________________________ Seller: Seller:

Settlement Agent:

By: _________________________________ Escrow Officer

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