This Compliance Alert is being sent to inform you that one or more of the documents currently contained in your Wolters Kluwer Financial Services ComplianceOne mortgage (SaaS) software is being revised. The following information summarizes the changes and provides instructions on how to obtain and use the revised document(s). While not all users are affected by the changes, we ask that you read the following information carefully to determine if your documents require updates.
Important Compliance Information
Closing Costs Financed (Paid from your Loan Amount)
Closing Disclosure
Read this notice, if you offer lending products that are subject to the Truth-in-Lending and Real Estate Settlement Procedures Act Integrated Disclosures (TRID) requirements and provided a refund to offset fee increases above permissible limits in transactions that did not involve a seller. If you do not provide a refund when the Closing Disclosure is issued in this scenario, this issue does not apply to you.
We identified and addressed an issue on the Closing Disclosure for transactions without a seller where a refund is provided to offset fee increases in excess of permissible limits (“affected transactions”). The amount of such refund (if any) is disclosed on the Lender Credits line in the Closing Cost Details section, and is referenced in the Calculating Cash to Close table, of the Closing Disclosure. Due to an error, the amount of the refund was inadvertently being double-counted when determining the value that appears on the Closing Costs Financed (Paid from your Loan Amount) line of the Calculating Cash to Close table. This error has been addressed,and the update will be available in the upcoming February 2016scheduled deployment to PRODUCTION.
The impact of the error was different depending on the version of the Closing Disclosure used in an affected transaction. The following explains the error that may have occurred on each version of the disclosure.
If the “alternative” (that is, designed for transactions without a seller) version of the Closing Disclosure was used in the affected transaction, the value on the Closing Costs Financed (Paid from your Loan Amount) line may have been reduced by the amount of the refund. Theamount disclosed on this line should instead be calculated under 12 C.F.R. §1026.38 (e)(6).
If the “standard” (that is, designed for all transactions) version of the Closing Disclosure was used in the affected transaction, the issue may have impacted the value on the Closing Costs Financed (Paid from your Loan Amount) line in the Final column of the Calculating Cash to Close table and, as a result, the Final Cash to Close value. As a result of the error, the Closing Costs Financed (Paid from your Loan Amount) line may havebeen reduced by the amount of the refund. Theamount disclosed on this line should instead represent the actual amount of closing costs to be paid out of loan proceeds under 12 C.F.R. §1026.38 (i)(3)(ii).
Disclosing an incorrect value on the Closing Disclosure may result in a Truth-in-Lending violation. A Truth-in-Lending violation may be curable, if you act fast. You must act no later than 60 days after discovering the problem and before your customer brings the problem to your attention. You should consult with your attorney regarding this issue and any interim solution.
Although we are not able to provide legal advice, if you want to contact us about this Compliance Alert, please call us at 1-800-274-2711, Extension 1223665.