Title Division

1. Title Division Randall Evans Director Indiana Department of Insurance – Title Division rrealin@idoi.in.gov 317-234-5881

2. Title Division • Apply and enforce Title 27 of the Indiana Code • Conduct audit/examinations of title agencies and underwriters’ title commitments, policies, claims and escrow accounts • Respond to inquiries from other state agencies, consumers, companies and department staff • Work with Deputy General Counsel and other attorneys on cases progressing through administrative proceedings • Represent DOI as member of the Inter-Agency Mortgage Lending and Fraud Prevention Task force comprised of 5 state agencies • Manage daily operations and inquiries of the Residential Real Estate Acquisition of Licensing Information and Numbers Database (RREAL IN)

3. Consumer Financial Protection Bureau (CFPB) Closing Disclosure Form

4. Consumer Financial Protection Bureau Integration • Dodd-Frank Wall Street Reform and Consumer Protection Act created the Consumer Financial Protection Bureau (CFPB) • Goal of this agency is to “… help consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.” • Mandated to integrate the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1971 (RESPA) • One of the first outward steps the CFPB has taken was to create integrated existing forms. • Improve consumers’ understanding • Allow better comparison shopping • Avoid costly surprises at closing

5. CFPB Integration • October 3, 2015: Implementation date for the new integrated forms • New Loan Estimate (LE) Form • Replaces the Good Faith Estimate (GFE) • Combines the initial TIL and GFE • Closing Disclosure (CD) Form • Replaces the HUD-1 • Combines the final TIL and Hud-1 • Must retain the CD for five years • Must contain actual terms and costs of the transaction

6. Closing Disclosure (CD) Form

7. Closing Disclosure Form • What are the significant changes: • Three pages 8.5 x 14 to 8.5 x 11 five Pages • Line Numbers and block numbers are gone • Organized by section then alphabetical • Do not have to show the agent/underwriter split • Terminology must match the loan estimate exactly • Indiana: Use Alta Master Settlement Statement in conjunction with the CD where applicable

9. Closing Disclosure Form • Prepared by the lender or combination of lender and settlement agent • Lender role: • Provide CD to Consumer 3 business days prior to consummation • Responsible and liable for timing, delivery and accuracy of the CD • Settlement agent role: • Work with lender to prepare and provide the CD • All closing requirements are met • All closing documents completed in full and signed • All fees collected • Records documents with local county

10. Closing Disclosure Form cont’d • Timing of 3-day clock starts after received: • In person: received the day provided • Mail: received 3 business days after placed in the mail • Email: received 3 days after sent (federal E-Sign) • Re-disclose and Restarting the 3-day clock: • APR changes (Annual Percentage Rate) • Product changes • Addition of pre-payment penalty

11. Closing Disclosure Form cont’d • Waiver of the 3-day period: • Only exception bona fide personal financial emergency • Very fact intensive situation • Consumer must write a statement explaining emergency • Consumer statement cannot be a pre-printed form or from provided by the creditor

12. Closing Disclosure Form cont’d • Must be used on closed-end consumer credit transactions secured by real estate • Does not apply to: • Home Equity Lines of Credit (HELOC) • Reverse Mortgage • No Interest second Mortgages for down payment assistance i.e. Habitat for Humanity • Cash • Seller Financing or originators who conduct less than 5 transactions per year • Manufactured homes not attached to real estate

14. Good Funds Law

15. Good Funds Law • HEA 1136 (IC 27-7-3.7 et seq.) • Changes Effective July 1, 2016 • Amends Definition of “Good Funds” to include a check deposited and held in escrow account 14 days before the date of closing. • Checks (personal, cashiers): up to $10,000 in aggregate • Wired funds: Funds exceeding $10,000

16. Good Funds Examples • Check for $20,000 held for in escrow14 days and Cashiers check at closing for $5000.; • Check held in escrow for 14 days for $5,000 and a wire for $19,800, personal check at closing $200; • Wire for $25,000 and a personal check for $8500 held in escrow for 10 days and a personal check of $1000 day of closing; • Check for $9,800 held in escrow for 14 days, wire for $11,750, personal check of $2,000 at closing; • $25,000 Wire and $500 check at closing

17. RREAL IN Database

18. What is RREAL IN? Residential Real Estate Acquisition of Licensee Information and Numbers Database • Online form requesting names and licensure information for parities involved in residential real estate transactions for real property located in Indiana. • Developed for use by the Inter-Agency Mortgage Lending and Fraud Prevention Task Force agencies, by Indiana Department Of Insurance (IDOI) in partnership with the Indiana Office of Technology and Indiana Interactive (HIC), software vendor.

19. Why is RREAL IN Reporting Required? • It is statutorily mandated by Indiana Code (IC) 27-7-3-15.5 • To develop an electronic system for the collection and storage of information concerning First Lien Purchase Money Mortgage and Refinance transactions • Effective January 1, 2010 all closers of qualifying residential real estate transactions dated 1/1/2010 or after, are required to report said transactions within 10 business days of the closing date. Initial reporting requirements included First Purchase Money Mortgage or a Refinance transaction. • Statute amended by HB 1273 Passed June 2011 • Effective for qualifying transactions dated 1/1/2012 or after • Additional transaction types reportable

20. Reportable Transactions • First Lien Purchase Money Mortgage (Includes Consumer Construction) • Refinance • Cash Transaction • Land Contract • Reverse Mortgage • Home Equity • Subordinate Mortgage • Business Loan Secured by Residential Property • Commercial Loan Secured by Residential Property

21. Who is required to input data*? Closing Agents (as defined by IC 6-1.1-12.-43 (a)(2))– Must complete the online form, within 10 business days of the signing date. • A Closing Agent is defined as “a person that closes a transaction”; which includes: • Title agents, Agencies • Mortgage Lenders (Banks and Credit Unions, etc.), Loan Originators, • Other Closers (Attorneys, Mobile Notaries, etc…) *Data processors and other support staff may key information

22. Completing an online form: 1. Log in with username and password.

23. 2. Select the type of transaction to be reported and select submit.

24. Q & A

25. Examination of Title Insurance Agencies Jonathan Handsborough Senior Title Examiner Indiana Department of Insurance – Title Division jhandsborough@idoi.in.gov 317-234-5156

26. Exam Scheduling and Notification • Scheduled annually based on previous exam (average 18 months intervals) • Previous findings drive more frequent exam schedule (average 6 month intervals) • Consumer Complaints can generate need for unscheduled exam • Resident and Non-Resident Agencies • Written notification sent to Title Agency via email • 2-4 Weeks prior to exam

27. Virtual and Onsite Exams • Desk Audit and Onsite Exam of Non –Resident Agencies • Submit requested documents within 10 business days (mail or email): non-compliance could result in suspension of license • Additional documents requested as needed • Onsite Exam of Resident Agencies • Submit requested documents no later than 3 business days prior to exam; non-compliance could result in suspension of license • Provide work station (table or desk) with an electrical outlet • Access to paper files • Access to computer terminals (electronic files)

29. Examination of Files and Documents • Random title closing files • Escrow Account Statements and Reconciliation Reports • Financial Statements • Articles of Incorporation or Organization • Applicable Licenses • Other Docs: Ensure Compliance Standards

30. Compliance Standards (8) 1. Agency acts within the scope of its license: employees are licensed as required 2. Controlled or affiliated Business in accordance with statutes, rules and regulations 3. No inducements (direct or indirect), in consideration of referral, title, escrow or other services provided. 4. Escrow accounts used only to receive or disburse funds as related to loan closing

31. Compliance Standards (8) Cont’d 5. TIEFF collection in accordance with Indiana state law 6. Policies and premiums reported and remitted on a timely basis 7. Compliance with 27-7-3-15.5, RREAL IN reporting requirements 8. Re-issue and refinance credits, where applicable, applied consistently in compliance with the agency underwriting contract and rate schedule

32. Most Common Violations • Timely Reporting of transactions in the RREAL IN • Lag time • Recording of Deeds and Mortgages • Final policy issuance • Recommended 90 days from closing (when all conditions are met) • Good Funds Violations • Checks exceeding law • Licensing: • Expired • No license

33. Q&A