Know Before You Owe and Email Hackers

Summary of TRID changes and more information about the ongoing cyber fraud and email account hacking.

Dear Members,

I didn't get nearly the amount of grief I expected from non-Gator fans after last week's email promoting only the impending Gator Football season. What's the deal?

As mentioned last week, CFPB recently issued its Notice of Proposed Rule Changes to the “Know Before Your Owe” rules and its Official Commentary. There is a lot of really “in the weeds” stuff in the proposed changes. THE RULE REGARDING DISCLOSURE OF TITLE INSURANCE PREMIUMS WILL NOT BE AMENDED. But there are a few things that should be of interest to you. I will point these out over the course of several emails. The changes will not kick in until sometime next year so we have plenty of time to figure it all out. This week I am providing a high level summary of the changes in the way construction-perm loans are handled on the Loan Estimate and the Closing Disclosure.

• No longer will the lender choose how to allocate costs between the two loans. Under the proposed amendment, costs are allocated to the construction phase if they would not be imposed but for the construction financing and all other costs are allocated to the permanent loan.

• If the lender generally makes both construction and permanent financing available to consumers, then the lender must provide Loan Estimate disclosures for both loans unless the borrower has notified the lender in writing that they will seek permanent financing elsewhere. Lenders can choose between disclosing the loans as either a combined transaction on one Loan Estimate, or as separate transactions on two. If separately disclosed, both Loan Estimates must be provided within three business days of the initial loan application.

• Inspection and handling fees for the construction phase will have to be disclosed in separate addendums to the Loan Estimate and Closing Disclosure if they will be collected subsequent to the construction loan closing.

• Additional guidance about completing the LE and CD is provided in the new rules, covering topics such as Loan Term, Product, Loan Terms – Interest Rate, Loan Terms – Principal and Interest Payment and Projected Payments.

CYBER FRAUD/EMAIL AND ACCOUNT HACKING - whatever you want to call this insidious threat to your business, it is REAL. I was at my desk late one afternoon when a Member called and told me this story. Somehow her trust account had been “hacked” and the thief changed her password which provides access to the account to send wires, transfer money, etc. Fortunately, the Fund Member discovered this immediately and alerted the bank who took the appropriate measures to avoid any monetary loss. In addition, this thief managed to move her cell phone to another carrier. Wha???? She had set up alerts on her cell phone when the bank account was accessed so by moving the cell phone number to another carrier, she would no longer get those alerts! She has reported all of this to the authorities and they are hopeful that they will be able to trace all of this activity back to the bad person. My point is that NO ONE IS IMMUNE. You could be the next victim. You must be very vigilant and monitor all of your accounts, cell phones and email accounts to make sure nothing unusual is happening. When I hung up the phone, I immediately changed the password on my personal bank account because I had not done that in months!

Hope you found this helpful! Thank you for all you do for The Fund!

Best Regards,

Melissa Jay Murphy
Senior Vice President and
General Counsel