Closing Disclosure Page 1

Working with 2015 RESPA-TILA Regulations 

2015 RESPA-TILA Workflow 

The Closing Disclosure input forms (pages 1-5) enable you to review, edit, or enter information that is populated to the Closing Disclosure output form that is provided to the borrower at least three business days prior to consummation. Use the Closing Disclosure Page 1 to review and edit disclosure, closing, loan, and transaction information, loan terms, projected payments (for estimated payments, the final balloon payment, if any, and the estimated monthly taxes, insurance, and assessments), and costs at closing. Much of the information on the Closing Disclosure Page 1 input form is populated from other Encompass forms. This form is used to populate page 1 of the Closing Disclosure output form.

Disclosure Information

The Disclosure Information section displays information about the most recent Closing Disclosure, the reason and changed circumstance for any redisclosure, and information about the most recently disclosed Closing Disclosure that has not been excluded from the Disclosure Tracking timeline.

Fee Level Disclosures

This checkbox and new Change of Circumstance Fee-Level Management features were introduced in Encompass 18.3 (View the release notes.)

The Fee Level Disclosures checkbox (field ID 4461) is provided above the list of changed circumstance reasons on the Loan Estimate (LE) Page 1 and Closing Disclosure (CD) Page 1 input forms. By default, this checkbox is NOT selected, which indicates that loans will be disclosed at a disclosure level. When this checkbox IS selected, fees must be redisclosed at the fee level (i.e., users must send revised disclosures when a fee is changed). You can document disclosure reasons with and without a changed circumstance when doing a fee level disclosure. Certain informational disclosure reasons on the CD Page 1 are available to select and enter details about, and they will be reflected in the Disclosure Tracking tool as applicable. This enables fee changes to continue to be documented at the fee level with the added benefit of permitting disclosure reasons to be identified at the disclosure level.

The following changed circumstance fields and reasons on the CD Page 1 are now always enabled so they can be selected to indicate a changed circumstance reason:

• Changed Circumstance (field ID CD1.X61)
• Changes Received Date (if Changed Circumstance field is selected) (field ID CD1.X62)
• Changed Circumstance text box and Lookup (magnifying glass) icon (if Changed Circumstance field is selected) (field ID CD1.X64)
• Comments box (if Changed Circumstance field is selected) (field ID CD1.X65)

Reasons:

• Change in APR (field ID CD1.X52)
• Change in Loan Product (field ID CD1.X53)
• Prepayment Penalty Added (field ID CD1.X54)
• 24-hour Advanced Preview (field ID CD1.X56)
• Tolerance Cure (field ID CD1.X57)
• Clerical Error Correction (field ID CD1.X58)
• Other (field ID LE1.X84 and CD1.X59)
• Any Changed Circumstance that does not have a specific reason assigned to it. (Using the Changed Circumstances Setup tool in Encompass Settings, the administrator can assign a specific reason to a Changed Circumstance option.)

You can also open the Good Faith Fee Variance Violated alert and enter information in the alert that will then be populated to these fields as applicable.

Note that administrators use the Changed Circumstances section of the Disclosure Tracking Settings screen to control if this checkbox is selected or not. If the administrator configures this checkbox to be selected, users will not be permitted to change it.

It is important to consider that the disclosure level that is set with the Fee Level Disclosures checkbox is established once the initial disclosure (typically the LE) is sent. Once this initial disclosure has been sent, you cannot change the Fee Level Disclosures checkbox. Once you have disclosed at a fee level, you must continue to redisclose at a fee level for the remainder of the loan’s lifecycle (and vice versa if you have initially disclosed at a disclosure level). The Fee Level Disclosures checkbox will no longer be editable (i.e., it will be grayed out) once the loan is disclosed. For loans started in earlier versions of Encompass before this checkbox was available, the checkbox will not be selected.

The Reason section enables a user to select the reason for redisclosing a Closing Disclosure.

Indicate the reason for a redisclosure

• Select one or more reasons to indicate why the redisclosure is being made.

• If you select the Other option, enter a description in the text box.

The Changed Circumstance section enables users to enter or edit details about a changed circumstance that results in a redisclosed Closing Disclosure.

Indicate a changed circumstance

Closing Information

The Closing Information section includes important dates related to closing, the settlement agent, and file number for the settlement agent, and the address, estimated and appraised values, and sale price for the subject property. With the exception of the Settlement Agent, all fields in this section can be edited.

Loan Information

The Loan Information section contains loan details populated from other forms. All fields in this section can be edited.

• If not already populated, enter the Mortgage Investor Corporation (MIC) number for the loan.

• If needed, click the Lock icon to select a different loan Purpose or to enter a new Product description.

Transaction Information

The Transaction Information is populated with the name and address of the borrower, co-borrower, seller, and lender. With the exception of the seller's name, all fields in this section can be edited.

Loan Terms

The information in the Loan Terms section is populated from other Encompass forms and varies based on the selections made on the other forms. To edit the fields, select the Customize checkbox at the top of the section.

Can this amount increase after closing?

• The Loan Amount, Interest Rate, and Monthly Principal & Interest display on the left.

• The Can this amount increase after closing? column contains a dropdown lists for each of the entries listed above.

• If No displays in the dropdown list for any of these entries, no additional information displays.

• If Yes displays in the dropdown list, additional details about the increase displays to the right of the dropdown list. Use the Lock icons or dropdown lists, if available, to manually change details. Click the buttons, if available, to view additional information.

Does this loan have these features?

• This section contains rows for Prepayment Penalty and Balloon Payment.

• The Does this loan have these features? column contains a dropdown lists for each of the entries listed above.

• If No displays in the dropdown list for any of these features, no additional information displays.

• If Yes displays in the dropdown list, additional information about the feature displays to the right of the dropdown list. Use the Lock icons or dropdown lists, if available, to manually change details. Click the buttons, if available, to view additional information.

Projected Payments

The Projected Payments section shows the estimated payments (monthly or biweekly, depending on the loan type), the final balloon payment, if any, and the estimated monthly taxes, insurance, and assessments. Click the View Payment Schedule button in the section header to view the payment schedule.

Note: The Project Payments table is read-only by default and displays information based on the type of loan. Use the Customize checkbox and Edit button at the top of the section to customize the Projected Payments section for construction loans and other loan types that require specialized setup for the Projected Payments table.

The top of the section lists the estimated payments (monthly or biweekly, depending on the loan type). A column on the left lists the type of information displayed in each row:

• Time period

• Principal and interest

• Mortgage insurance

• Estimated escrow

• Total estimated monthly or biweekly payment

Up to four columns on the right display payment amounts, including payments for various time periods when the principal and interest payment change, mortgage insurance payments end, or a balloon payment is due.

For example:

• A 30-year fixed rate loan displays only one column if monthly payments do not change during the life of the loan and there is no mortgage insurance or balloon payment.

• A 5/3 ARM Interest Only loan may have four columns due to periodic interest rate adjustments and the termination of mortgage insurance payments.

All adjustable rate (ARM) loans will generate a four column Projected Payments table based on the following loan triggers:

Balloon loans

The final balloon payment is populated to the fourth column in the table, i.e., the Final Payment column. This is existing logic continued from earlier versions of Encompass.

Interest Rate Changes

• If the Max Lifetime Rate is reached at the first adjustment, all subsequent adjustments are reflected in the four column Projected Payments table even if the payment has not changed.

• If the Min (Floor Rate) is reached at the first adjustment, all subsequent adjustments are reflected in the four column Projected Payments table even if the payment has not changed.

Periodic Principal and Interest Payment Changes

Mortgage Insurance

Total Estimated Payment

The Total Estimated Payment label displays as Total Est. Monthly Payment or Total Est. Biweekly Payment, depending on whether the Biweekly option is selected or cleared for the Amortization type (field ID 423).

Final Balloon Payment

For balloon loans, the date and the amount of the final balloon payment display in the row labeled Final Balloon Payment on.

Estimated Taxes, Insurance, & Assessments

The total for the Estimated Taxes, Insurance, & Assessments is populated based on information entered in the 2015 Itemization.

The This estimate includes checkboxes are selected based on the checkboxes that are selected on line 1001 on the 2015 Itemization.

The In escrow? fields are populated with YES or NO based on the criteria below:

• Property Taxes - Whether the property taxes have been added to the Aggregate Escrow Account Setup tool

• Homeowner's Insurance - Whether the following insurance items have been added to the Aggregate Escrow Account Setup tool: homeowner's insurance, flood insurance, or one of the user defined fees that has the Insurance checkbox selected in the Fee Details pop-up window on the 2015 Itemization form.

• Other- Fees in lines 1007, 1008, and 1009 on the 2015 Itemization form that do not have the Insurance or Taxes checkbox selected on the Fee Details window on the 2015 Itemization:

• YES - If all are escrowed in the Aggregate Escrow Account form.

• NO - If none are escrowed in the Aggregate Escrow Account form.

• YES, SOME - If some are escrowed in the Aggregate Escrow Account form.

Costs at Closing

This section lists the closing costs, including Loan Costs, Other Costs, Lender Credits, Total Closing Costs, and Total Cash to Close. Details for the total closing costs and total cash to close are available on the Closing Disclosure Page 2 and Closing Disclosure Page 3 input forms.

For refinance loans, this sections displays a different set of closing costs, including the Loan Amount, Total Closing Costs, Estimated Total Payoffs and Payments, Estimated Cash to Close from/to Borrower, and Estimated Closing Costs Financed.