eeeeClosing Disclosure Page 4

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 4 input form to review and edit the assumption, demand feature, late payment, negative amortization, partial payments, security interest, and escrow account information. The form is also used to disclose an Adjustable Payment table and an Adjustable Interest Rate table when the principal and interest payment or interest rate for the loan changes after consummation. This form is used to populate page 4 of the Closing Disclosure output form.

Loan Disclosures

Use the Loan Disclosures section to disclose information about the assumption, demand feature, late payment , negative amortization, partial payments, and security interest.

  • Some information is already populated from other Encompass forms.

  • Other data can be entered or changed.

  • Click the Get Late Fee button to automatically populate late fees based on state and agency requirements for the subject property location. The button triggers calculations that produce generic late fees or investor-driven overrides to late fees based on investor plan IDs and custom plan IDs associated with the user’s Plan ID.

  • To edit the security interest field, click the Lock icon.

  • All of the fields in this section can be populated using a Data Template.

Loan Disclosures - Escrow

The Loan Disclosures - Escrow section indicates whether or not the loan has an escrow account. If the loan has an escrow account, escrow data is populated from the Aggregate Escrow input form. If the loan does not have an escrow account, this section is used to disclose the reason for not having an escrow account and to disclose the property costs for the first year and the escrow waiver fee, if any.

  • In the will have an escrow account section, click the Aggregate Setup button to open the Initial Escrow Account Setup tool.

  • The will have an escrow account checkbox is automatically selected when the Escrowed Payment checkbox (field ID HUD24) is selected on the Aggregate Escrow Account input form. When you designate due dates and click OK in the Initial Escrow Account Setup tool, Encompass automatically indicates the associated fee as Escrowed in the associated Fee Details pop-up window for the fee on the 2015 Itemization and on the Aggregate Escrow Account input form.

    When only mortgage insurance is impounded, Encompass populates the prepaid mortgage insurance amount in the Initial Escrow Payment field, but does not automatically select the will have an escrow account checkbox.

  • In the will not have an escrow account because section, click the Lock icon to edit the estimated property cost for the first year.

  • The will not have an escrow account because checkbox is automatically selected when the Waived option is selected in the Impounds Required field (field 2293) on the Underwriter Summary tool, or there are no escrowed checkboxes selected for the loan.

    • If a user completes the Aggregate Escrow Setup form later and adds one or more escrow items:

      • The will not have an escrow account because checkbox is cleared, and the fields in the section below the checkbox are cleared and disabled.

      • The will have an escrow account checkbox is selected, and the fields in the section below the checkbox are updated based on the new entries in the Aggregate Escrow Setup form.

  • Use the Escrowed Property Costs Basis dropdown list to select Consummation Date or 1st Payment Date as the basis for calculating the escrowed payments for the first year. The default selection is Consummation Date.

    • When Consummation Date is selected, escrowed costs within one year are calculated from Closing Date (typically 10 or 11 payments).

    • When First Payment Date is selected, escrowed costs within one year are calculated from First Payment Date (typically 12 or 13 payments).

  • The population of data in the Escrowed Property Costs within 1 year and Non-Escrowed property costs within 1 year is based on the fields listed below being indicated as Escrowed in the associated Fee Details pop-up window on the 2015 Itemization input form:

    • 1002 Home Owners Insurance (field ID NEWHUD2.X133)

    • 1004 Property Taxes (field ID NEWHUD2.X134)

    • 1005 City Property Taxes (field ID NEWHUD2.X135)

    • 1006 Flood Insurance Reserve (field ID NEWHUD2.X136)

    • 1007 Misc (field ID NEWHUD2.X137)

    • 1008 Misc (field ID NEWHUD2.X138)

    • 1009 Misc (field ID NEWHUD2.X139)

    • 1010 USDA Annual Fee (field ID NEWHUD2.X140)

      The fees listed above will be automatically indicated as Escrowed or Non-Escrowed (i.e., the appropriate checkbox is selected in the Escrowed or Non-Escrowed column) based on whether the Escrowed checkbox is selected in the associated Fee Details pop-up window. The Non-Escrowed property costs within 1 year field is calculated based on the number of payments the borrower will make within the first year (i.e., the applicable fees above are multiplied by the appropriate number of months based on the difference between the First Payment Date (field ID 682) and one year from the Closing Date (field ID 748)). In most cases, this is 11 months. 

  • The USDA annual fee (for USDA loans), monthly mortgage insurance (for monthly loans), and biweekly mortgage insurance (for biweekly loans) are included in the following escrow calculations. This option was changed in the Encompass 18.3 major release.

    • Total Escrowed Property Costs over Year 1 (field ID HUD66)

    • Escrowed property costs within 1 year (field ID CD4.X40)

    • Monthly Escrow Payment (field ID CD4.X10)

Adjustable Payment (AP) Table and Adjustable Interest Rate (AIR) Table

The Adjustable Payment (AP) Table is disclosed when the periodic principal and interest payment for the loan can change after consummation, but not because of a change to the interest rate. The Adjustable Interest Rate (AIR) Table is disclosed when the loan’s interest rate can change after consummation.

AP Table

The AP Table is disclosed when the periodic principal and interest payment for the loan can change after consummation, but not because of a change to the interest rate; or if the loan is a seasonal payment loan. If the periodic principal and interest payment does not change, the AP Table is not disclosed. The information disclosed in the AP Table on the Loan Estimate is disclosed in the AP Table on Closing Disclosure - Page 4 after being updated to reflect the terms of the loan at consummation.

The Adjustable Payment table includes the following entries:

  • Interest Only Payments - Read-only fields populated based on data from the loan file.

  • Optional Payments - Read-only fields populated based on data from the loan file.

  • Step Payments? - Editable fields for indicating whether the loan has step payments (the default selection is No) and entering the number of payments that are made before the payment amount changes.

  • Seasonal Payments - Editable fields for indicating whether the loan has seasonal payments (the default selection is No) and entering a description.

  • Monthly Principal and Interest Payments

    If the Biweekly option (field ID 423) is selected for the Amortization type, the title of this section changes from Monthly Principal and Interest Payments to Biweekly Principal and Interest Payments.

  • If the Yes option is selected for Interest Only Payments, the three fields in this section are populated with read-only text describing the changes and maximum payment amount for the principal and interest payments, based on data in the loan.

  • If the Yes option is selected for Optional Payments, Step Payments?, or Seasonal Payments, the three field in this section are blank and can be edited.

AIR Table

The AIR Table is disclosed when the loan’s interest rate can change after consummation. The AIR table displays on the input form when the ARM option is selected for the Amortization Type (field ID 608). If the ARM option is not selected: the loan’s interest rate does not change after consummation, the AIR Table is not disclosed, and the table does not displayed on the input form.

The AIR table includes the following entries:

  • Index + Margin - The margin index and rate.

  • Initial Interest Rate - The initial interest rate for the loan.

  • Min/Max Interest Rate - The minimum and maximum interests rates during the life of the loan. Click the Lock icon to edit the minimum rate.

  • Change Frequency - This sections display the timing of the first interest rate adjustment and the number of months between each subsequent adjustment.

  • Limits on Interest Rate Changes - The maximum interest rate change for the initial increase and subsequent increases.