Straight talk on new Settlement Cost Booklet, I mean Toolkit
To go along with the new integrated disclosures, there's a new Settlement Cost Booklet- now called a Toolkit- to go along with them. Our notes ...
The special information booklet (also currently known as "Shopping for your home loan. Settlement cost booklet" is something published by federal regulators (now the CFPB) to help borrowers understand the mortgage process. The existing version is available here and the updated version that will take effect on August 1 can be found here. It's required by Reg. 1026.19(g).
Seems straightforward enough, but here are some notes on it in case you're ever curious- maybe save you some time in tracking it all down yourself.
Recent Updates
The new Booklet (to roll out with TRID) will have a new name: "Your home loan toolkit: A step-by-step guide." It's also now called a "Toolkit." This new version is interesting because it's been developed for better use electronically-- there are interactive checklists and charts that you can use to fill out information.
Some have criticized certain aspects in the Toolkit as it will exist after 8/1; this from CFPB Monitor:
"The Toolkit appears to reflect a bias in favor of fixed rate loans, a 20% down payment, and HUD counseling. It discourages loans with balloon features and prepayment penalties and encourages consumers to shop with at least 3 different lenders. Curiously, while the list of possible lenders for consumers to consider includes banks and credit unions, there is no direct mention of 'Mortgage Bankers.' Instead, only Mortgage Brokers are listed. While the reference to 'online lenders' might be intended to include 'Mortgage Bankers,' many Mortgage Bankers are not online lenders."
Timing
This has the same timing requirement as the initial disclosure (3 business days after "application"). Most lenders will want to deliver it right along with the Loan Estimate, but that's not required.
Scope: When is it required?
The Toolkit is required on essentially all purchase-money residential mortgages.
It is NOT required for the following, however:
Refinance
Reverse mortgages
Home equity lines of credit (provide alternative booklet instead)
Home equity loans (closed end subordinate lien)
Where the borrower withdraws within the 3-day window
Some Extra Stuff
Making Revisions
Technically, you're allowed to make some small revisions - but you should probably stay away from that ... the risk/reward ratio doesn't seem to be in your favor.
One exception might be for translating this into another language. For most lenders, realistically, this means finding a version that has been translated by somebody else. And no - the CFPB doesn't have this in different languages, at least not yet. As of April of this year, they were still working on a Spanish version... and if they released it already, I haven't been able to track it down.
If you insist on making changes, permissible changes are listed in 1026.19(g)(2).
Multiple borrowers
You only need to provide one Toolkit, even where there are multiple borrowers.
Most Recent Version
The Toolkit will be revised from time to time ... it's your responsibility to make sure you're giving out the most recent version (I'm sure we'll give you a heads up on Wednesday morning). If you haven't checked in awhile, sometime before August 1 may be a good time ... and if you're still giving out ones written by HUD, it might be time to get a new one!
No Commingling of Disclosures
You're not allowed to provide this Toolkit as part of a larger document ... it needs to be separate.
In other news:
How much do you love your dog? Not as much as this guy, I guarantee you that! Here's a 73-year old Marine who fed a California bear a "knuckle sandwich" and "da## corkscrewed [the bear's] head" to save his pet.
Ever been in a Board meeting where they wanted to deny a loan modification to a borrower because they receive public assistance? I know you can't do that, you know you can't do that, and if you ever need to point to something- here's a reminder from the CFPB.
Sometimes it's good to have a short memory, but sometimes it's good to remember just how crazy this industry is. One "fun fact" to remember is that, founded in 1850, Lehman Bros had revenues of $57 billion in 2007, ranked 37 in Fortune 500 in 2008, and went bankrupt the same year.
Tips on how to "manage up." They say some are better at managing down, others with managing peers, and still others better with clients or the public. And almost all of us need to "manage up" ... to a boss, to several bosses, or to a Board of Directors. Failure to manage up can destroy your productivity and is more likely to cause your departure than your superior's. Struggling with Boss/Board relationships? Here are some potential root causes: (taken from FYI: For Your Improvement (c) 2009)
Boss/Board doesn't think you're as good as you think you are
Large gaps in skills leading to under-valuing/not respecting one another
Mismatch in ethics or values
Mismatch in style, pace, or motivation
Great, well what can I do about it? Here are some starting tips from the same book:
Focus on the long road ... try to settle any conflict so it leaves behind the least long-term noise for you and your organization
Don't like the person? Learn to de-personalize and be neutral. A fly on the wall should not be able to tell whether you're talking to a friend or foe. As with any negotiation, stick to the numbers and logic - letting pride or ego enter into the equation can only hurt.
Loose lips? Keep it to yourself- gossip is not going to help you or the organization. The Boss/Board deserves your loyalty and support, even those you view as unfair.
Seek feedback from others. (distinguish with gossip) Get a fresh perspective on what you can do better. Ask a colleague or outside confidant for thoughts.
For more reading you may consider Coping With Difficult Bosses by Robert Bramson or How to Manage Your Boss by Christopher Hegarty.
"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
- Warren Buffet
Thanks so much for reading our weekly newsletters. We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy. Your calls and e-mails are very helpful - please keep contributing.
**These are our opinions. We're not authorized, or willing, to express those of others.**