Revised TILA-RESPA Compliance Forms FAQs and Sample Forms

Frequently Asked Questions

In September 2015, the Arizona Association of REALTORS® will release revised versions of the following four forms: (1) Pre-Qualification Form; (2) Loan Status Update; (3) Residential Resale Real Estate Purchase Contract; and (4) Vacant Land/Lot Purchase Contract. To better understand the changes made to these forms, the reason for the changes, and how the revised forms should be utilized, below are frequently asked questions (FAQs) followed by answers and pertinent analysis. Please read these FAQs carefully before viewing the sample forms below.

Q1. Why were these forms revised?
A1. The Consumer Financial Protection Bureau (CFPB) is implementing revised rules and forms that combine disclosures consumers receive in connection with applying for and closing on a mortgage loan. To ensure that AAR’s forms comply with these rules and follow the new timelines, revisions were required.

Q2. In revising the Residential Resale Real Estate Purchase Contract and the Vacant Land/Lot Purchase Contract, were any changes made that are unrelated to the new TILA-RESPA Integrated Disclosure (TRID) rules imposed by the CFPB?
A2. No. At this time, the only changes made to these two contracts are those necessitated by the new TRID rules.

Q3. When do I need to start using these new forms?
A3. The new forms should be used in conjunction with transactions in which the lender receives a loan application on or after October 3, 2015.

Q4. Line 54 of the Residential Resale Real Estate Purchase Contract now requires that an AAR Pre-Qualification Form be attached to the Contract. What should the buyer do if they have not yet obtained a Pre-Qualification form, but nonetheless wish to submit a purchase offer?
A4. Under these circumstances, the buyer should indicate on line three of the Pre-Qualification Form that “Buyer HAS NOT consulted with a lender.” The buyer should then print their name on line four and sign and date on line five. If the box on line three is marked, the buyer does not complete lines six through 42 of the Pre-Qualification Form.

Q5. When must the buyer first deliver to seller a completed Loan Status Update?
A5. As evidenced by Section 2e of the Residential Resale Real Estate Purchase Contract, an initial Loan Status Update must be delivered to the seller “within ten days after Contract acceptance.” This is a change from the prior Residential Resale Real Estate Purchase Contract, which required initial delivery of the Loan Status Update within five days after Contract acceptance.

Q6. What should a buyer do if their lender refuses to complete a Loan Status Update?
A6. As is currently the case, the buyer should complete, at a minimum, lines 1-40 of the Loan Status Update. The failure of the buyer’s lender to complete the Loan Status Update is not a potential breach and, therefore, not subject to a cure period notice because the lender is not a party to the Contract.

Q7. Line 39 of the Loan Status Update states “Buyer commits to work with the above referenced Lender on the terms described herein.” Is the term “commits to work with” synonymous with the term “intends to proceed” as used in 12 CFR §1026.19?
A7. No. Intends to proceed is a defined term of art by which a borrower communicates to the lender that they choose to proceed with the loan transaction after having received the Loan Estimate. A buyer can therefore commit to work with a lender via the Loan Status Update and not yet have given formal notice of intent to proceed. If that is the case, the buyer would sign on line 40 of the Loan Status Update, but the box on line 45 would be marked “NO” as that line asks if the “Buyer indicated to Lender an intent to proceed with the transaction after having received the Loan Estimate.”

Q8. Section 2f of the Residential Resale Real Estate Purchase Contract now requires the buyer, “within three days after Contract acceptance,” to provide the lender with “Buyer’s name, income, social security number, Premises address, estimate of value of the Premises, and mortgage loan amount sought.” Why was this requirement inserted?
A8. The CFPB has defined a loan application as the borrower’s submission to the lender of the above-referenced six pieces of information. Submission of the loan application triggers the lender’s delivery of the Loan Estimate to the borrower, thereby beginning the timeline that will be followed through close of escrow. To ensure a timely closing, it is important that the timeline commence as early as possible, and for that reason, the borrower is now required to submit these six pieces of information to the lender within three days after Contract acceptance.

Q9. As part of their Loan Application, the borrower is required to provide the lender with an “estimate of value of the Premises,” in addition to five other pieces of information. What does “estimate of value of the Premises” mean?
A9. The estimate of value of the Premises will typically be the contract price.

Q10. What action must the buyer take three days prior to close of escrow?
A10. Three days prior to close of escrow the Buyer must either: (i) sign all loan documents; or (ii) deliver to Seller or Escrow Company notice of loan approval without PTD conditions AND date(s) of receipt of Closing Disclosure(s) from Lender; or (iii) deliver to Seller or Escrow Company notice of inability to obtain loan approval without PTD conditions. See Section 2b of the Residential Resale Real Estate Purchase Contract.

Q11. Why is it important for the seller to know the date(s) on which the buyer received the Closing Disclosure(s) from their lender?
A11. This information is important to the seller because it will help the seller understand when the transaction may close escrow. More specifically, the loan cannot be consummated (i.e. – execution of the promissory note and deed of trust) less than three business days after the Closing Disclosure is received by the buyer.

Q12. What changes were made to page nine of the Residential Resale Real Estate Purchase Contract and page ten of the Vacant Land/Lot Purchase Contract? Why were these changes made?
A12. The last page of these two contracts now require the agent’s state license number and the brokerage’s state license number. Page five of the new Closing Disclosure contains a section titled “Contact Information.” Within that section, the lender must enter the “State License ID” for the real estate agent and the “State License ID” for their Brokerage. This is a new requirement as this information did not appear on the HUD-1. By identifying these license numbers in the Contract, it will ensure that the lender is in possession of the information needed to properly complete the Closing Disclosure.

Q13. Lines 397 and 409 of the Residential Resale Real Estate Purchase Contract ask for the “Firm Address.” If the agent works out of a branch location and not the corporate headquarters, which address should be entered?
A13. The address listed should be “the identified person’s place of business where the primary contact for the transaction is located (usually the local office) rather than a general corporate headquarters address.”