Qualitative Testing of Integrated Mortgage Loan Disclosure Forms

Settlement Disclosure
Settlement information
Date
12/13/2011
Agent
Martha Jones
Location
ABC Settlement

54321 Random Blvd, Ste 405

Somecity, AL 54321
Property
1234 Anywhere Street
Somecity, AL 54321

This form is a statement of final loan terms and actual closing costs.

transaction information
Borrower
James White and Jane Johnson

456 Avenue Anywhere

Anytown, AL 12345
Seller
John Wilson

123 Somewhere Dr.

Anytown, AL 12345
Sale Price
$120,000

Loan Terms

Can this amount increase after closing?

Loan Amount

$108,000

NO

Interest Rate

4.125%

NO

Monthly Principal & Interest

$523.42

NO

See Projected Payments Below
for Your Total Monthly Payment

loan information
Lender
Mimosa Bank

9876 Random Blvd, Ste 504

Somecity, AL 54321
FHA
Loan Type x Conventional
VA
_____________
Loan Term 30 years
Purpose
Purchase
product
Fixed Rate
File #
01234
Loan ID #
1330172608
MIC #
56789

Does the loan have these features?
Prepayment Penalty

NO

Balloon Payment

NO

Projected Payments
Payment Calculation
Principal & Interest

Years 1-7
$523.42

Mortgage Insurance

+ 54.90

Estimated Taxes & Insurance

+ 246.68

Amount Can Increase Over Time

Estimated Total
Monthly Payment
Information about Escrow
for Taxes & Insurance

$825.00
$246.68 a month

Years 8-30
$523.42
—
+ 246.68

$770.10

x E scrow. Your monthly payment includes the items listed in
Section 1400 on page 3. You must pay other items separately.
No escrow. You must pay your taxes and insurance separately
from your loan payments.

Closing Costs
Cash to Close

SETTLEMENT DISCLOSURE

$16,331.79 
Closing Costs include $4,280.00 in Settlement Fees.
See Closing Costs Summary on page 2.

PAGE 1 OF 5

Closing Costs Summary

Did Your Closing Costs Increase?

Total Settlement Fees

$4,280.00

Settlement Fees Financed in Loan Amount
Settlement Fees Paid in Cash at Closing
Settlement Fees Paid Before Closing
Total of Other Costs in Connection with the Loan
(Settlement Costs minus Seller Credits)

—
$3,717.00
$563.00
$3,614.79

Down Payment Summary

Some Closing Costs are subject to
limits on increases.

Loan
Estimate

Closing Costs That Cannot Change

$2,167.00

$2,167.00

Closing Costs That Can Only Increase 10%

$1,865.00

$2,015.00

Increase Between Loan Estimate
and Closing Costs

$0 over limit

Originator Fees Summary

Total Down Payment

$12,000.00

Total Fees Paid to Originator

Deposit $3,000.00

Paid by Borrower(s)

Remaining Down Payment Due

Paid by Lender

$9,000.00

100 Total Amount Due from Borrower
101 Contract sales price
102 Personal property
103 Total Closing Costs to borrower (line 1600)
104
105
Adjustment for items paid by seller in advance
106 City/town taxes
to
107 County taxes
to
108 Assessments
to
109
110
111
120 Total Amount Due from Borrower

—
$2,160.00

400 Total Amount Due to Seller
$120,000.00
$7,458.40

$127,458.40

200 Amount Paid by or on Behalf of Borrower
201 Deposit or earnest money
202 Principal amount of new loan(s)
203 Existing loan(s) assumed or taken subject to
204
205
206
207
208
209
Adjustments for items unpaid by seller
210 City/town taxes
to
211 County taxes
10/1/11 to 12/13/11
212 Assessments
to
213
214
215
216
217
218
220 Total Paid by/for Borrower

401 Contract sales price
402 Personal property
403
404
405
Adjustment for items paid by seller in advance
406 City/town taxes
to
407 County taxes
to
408 Assessments
to
409
410
411
420 Total Amount Due to Seller

$120,000.00

$120,000.00

500 Reductions in Amount Due to Seller
$3,000.00
$108,000.00

$126.61

$111,126.61

501 Excess deposit (see instructions)
502 Total Closing Costs to seller (line 1600)
503 Existing loan(s) assumed or taken subject to
504 Payoff of first mortgage loan
505 Payoff of second mortgage loan
506
507
508
509
Adjustments for items unpaid by seller
510 City/town taxes
to
511 County taxes
10/1/11 to 12/13/11
512 Assessments
to
513
514
515
516
517
518
520 Total Reduction in Amount Due Seller

300 Cash at Settlement from/to Borrower

600 Cash at Settlement to/from Seller

301 Total amount due from borrower (line 120)
$127,458.40
302 Total paid by/for borrower (line 220) ($111,126.61)

601 Total amount due to seller (line 420)
602 Total reduction in amount due seller (line 520)

303 Cash to Close x From

603 Cash x To

To Borrower

$2,160.00

Summary of Seller’s Transaction

Summary of Borrower’s Transaction

SETTLEMENT DISCLOSURE

Final

$16,331.79

From Seller

$6,299.00

$126.61

$6,425.61

$120,000.00
($6,425.61)

$113,574.39
PAGE 2 OF 5

Closing Costs
700 Total Real Estate Broker Fees $120,000 @ 5.0%
$6,000.00
Paid at Settlement
Paid Outside of Settlement
Division of commission (line 700) as follows:
From
From
701 $3,000.00
to Reliable Realty Co.
Borrower’s Funds
Seller’s Funds
Paid
Amount
By/To/When
702 $3,000.00
to Realty Pros LLC
703 Commission paid at settlement
$6,000.00
704
800 Origination Charges
801
1
Points
$1,080.00
802 Underwriting Fee
$425.00
803 Application Fee
$200.00 Bor/Lend/Before
804 Processing Fee
$300.00
805 Broker Fee
to Friendly Mortgage Broker Inc.
$2,160.00 Lend/Brok/At
900 Services in Connection with Your Loan
901 Credit Report Fee
to Creditco
$9.00 Bor/Prov/Before
902 Tax Status Research Fee
to Collateral Research Inc.
$40.00
903 Flood Determination Fee
to Collateral Research Inc.
$35.00
904 Tax Monitoring Fee
to Monitoring Services Inc.
$15.00
905 Flood Monitoring Fee
to Monitoring Services Inc.
$10.00
906 Appraisal Fee
to Local Appraisal Co.
$354.00 Bor/Affl/Before
907 Document Preparation Fee to Collateral Research Inc.
$55.00
908 Survey Fee
to Surveyors Inc.
$105.00
909 Pest Inspection Fee
to Home Pest Co.
$200.00
910 Structural Inspection Fee
to Home Engineering Corp.
$275.00
1000 Title Charges
1001 Settlement Agent Fee
to ABC Settlement Co.
$250.00
1002 Title Examination
to Regional Title Co.
$290.00
1003 Title Commitment Letter
to Regional Title Co.
$100.00
1004 Courier Fees
to Speedy Delivery Corp.
$32.00
1005 Lender’s Title Policy
to First Patriotic Title & Guar. Co.
$320.00
1006
Coverage: $108,000
1007 Owner’s Title Policy
to First Patriotic Title & Guar. Co.
$460.00
1008
Coverage: $120,000
1009
1010
1011
1100 Total Settlement Fees $4,280.00 by Borrower
Paid by Borrower at Closing: $3,717.00
Paid by Borrower Before Closing: $563.00
1200 Taxes and Other Government Fees
1201 Recording Fees:
Deed $12.00
Mortgage $45.00
$45.00
$12.00
1202 City/County Tax/Stamps: Deed $
Mortgage $
1203 State Tax/Stamps:
Deed $
Mortgage $
1204 Transfer Taxes
1205 Mortgage Tax:
Deed $12.00
Mortgage $162.00
$162.00
$12.00
1300 Prepaids
1301 Property Taxes (current period)
$237.61
1302 Homeowner’s Insurance Premium ( 12 months) to XYZ Ins. Co.
$904.00
1303 Mortgage Insurance Premium ( months)
to
1304 Windstorm Insurance Premium ( 12 months)
to Wind Safe Co.
$1,430.00
1305 Daily Interest Charges
$12.38 per day from 12/13 to 12/31
$222.75
1400 Initial Escrow Payment
1401 Homeowner’s Insurance
$75.33 per month for 3 mo.
$225.99
1402 Mortgage Insurance
per month for mo.
1403 City Property Taxes
per month for mo.
1404 County Property Taxes
$52.18 per month for 3 mo.
$156.54
1405 Annual Assessments
1406 Windstorm Insurance
$119.17 per month for 3 mo.
$357.51
1407
1408 Aggregate Adjustment
1500 Total Settlement Costs
$3,741.40 by Borrower
Paid by Borrower at Closing: $3,741.40
Paid by Borrower Before Closing: $0
1600 Total Closing Costs (Line 1100 + Line 1500)
$7,458.40
$6,299.00

SETTLEMENT DISCLOSURE

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Loan Disclosures
Assumption
If you sell or transfer your home to another person:
We will allow, under certain conditions, this person to assume
this loan on the original terms.
x We will not allow assumption of this loan.
Demand Feature
Your loan has a demand feature, which permits the lender to
demand early repayment of the loan. If this loan has a demand
feature, you should review your note for details.
x Your loan does not have a demand feature.
Escrow Account Information
For now, your loan
x will have an escrow account (also called an “impound” or “trust”
account) to pay your home-related costs, such as property taxes
and homeowner’s insurance. We estimate that these costs will total
$2,960.16 for the first year of your loan. Without an escrow account,
you would directly pay these potentially large costs in semi-annual
or annual payments. At closing, you will make an initial deposit
of $740.04 into your escrow account. After that, your regular
mortgage payments will include an additional $246.68 that
will go into your escrow account. We will take money from your
account to pay these home-related costs as needed. If we fail to
make payments, we may be liable for penalties and interest.
 ill not have an escrow account. You do not have an escrow
w
account because ___ you declined an account ___ we do not
offer escrow accounts. The fee for not having an escrow account
is $______. In addition to your mortgage loan payment, you
must directly pay your home-related costs, such as property
taxes and homeowner’s insurance. We estimate that these costs
will total $______ for the first year of your loan. You must pay
these costs in potentially large semiannual or annual payments.
If you would like an escrow account, you may contact us at
______________ by _________.

• require you to pay for insurance on your home that we buy on your
behalf, which likely would be more expensive and provide fewer
benefits than what you could obtain on your own.
Late Payment
If your payment is more than 15 days late, we will charge a late fee
of 5% of the monthly principal and interest payment.
Negative Amortization (Increase in Loan Amount)
Under your loan terms, you
are scheduled to make monthly payments that do not pay all of
the interest due that month. As a result, your loan amount will
increase (negatively amortize), and your loan amount will likely
become larger than your original loan amount. Increases in your
loan amount lower the equity you have in your home.
have the option of making monthly payments that do not pay all
of the interest due that month. If you do, your loan amount will
increase (negatively amortize), and, as a result, your loan amount
may become larger than your original loan amount. Increases in
your loan amount lower the equity you have in your home.
x do not have a negative amortization feature.
Partial Payment Policy
We will accept payments that are less than the full amount due
(partial payments). We will apply partial payments:

x We will not accept partial payments.
Security Interest
You are granting us a security interest in 1234 Anywhere St., Somecity,
AL 54321. You may lose your home if you do not make your payments
or satisfy other obligations for this loan.

In the future,
If you have an escrow account, or if one is added later, the amount
of your escrow payment may change. In addition, you may be
permitted to cancel your escrow account, but if you do so, you will be
responsible for directly paying these home-related costs unless you
create a new escrow account.
If your property taxes are not paid, your state or local government
may (1) impose fines and penalties or (2) place a tax lien on your
home. In addition, if you fail to pay any of your home-related costs,
we may
• add the amounts to your loan balance,
• add an escrow account to your loan, or

SETTLEMENT DISCLOSURE

PAGE 4 OF 5

Loan Calculations
Total of Payments. The amount you have paid after
you have made all 360 payments as scheduled.
Finance Charge. The dollar amount the credit will
cost you.
Amount Financed. The amount of credit provided
to you or on your behalf.

Other Disclosures
$281,792.70
$87,535.65
$105,452.25

4.65%

Total Interest Percentage (TIP). This rate is the total
amount of interest that you will pay over the loan
term as a percentage of your loan amount.

74.47%

Originator Information
Name

Friendly Mortgage Broker, Inc.

Phone

555-123-4444

Email [email protected]
NMLS ID 767698

Joe Smith
Mimosa Bank

Annual Percentage Rate (APR). This is not your
interest rate. This rate expresses your costs over the
loan term.

Lender Cost of Funds (LCF). The cost of the funds
used to make this loan. This is not a direct cost to you.

Appraisal Copy
If you paid for a written appraisal or valuation of the property, we
are required to give you a copy at no additional cost at least 3 days
before closing. If you have not yet received it, please contact:

1.35%

555-123-4444
Contract Details
See your note and security instrument for information about
• what happens if you fail to make your payments,
• other ways you can default on the loan,
• situations in which we can require early repayment of the loan, and
• the rules for making payments before they are due.
Liability after Foreclosure
If your lender forecloses on your home and the foreclosure does not
cover the amount of unpaid balance on this loan:
state law may protect you from personal liability for the unpaid
balance. If you refinance or take on any additional debt on your
home, you may lose this protection and be personally liable for
debt remaining after the foreclosure. You may want to consult an
attorney for more information.
x state law does not protect you from personal liability for the
unpaid balance.
Refinance
You may not be able to refinance your loan to lower your interest
rate and payments in the future with us or with another lender.
Tax Deductions
If you borrow more than your home is worth, the interest on the loan
amount above the home’s fair market value is not deductible from
your federal income taxes. You should consult a tax advisor for more
information.

Questions
If you have questions about the loan terms and costs on this form, contact your lender. To get more information or make a complaint, contact
the Consumer Financial Protection Bureau at www.consumerfinance.gov.

Confirm Receipt
By signing, you are only confirming that you have received this form. You don’t have to complete this transaction if you have signed or received
this form.
Applicant Signature/Date
Co-Applicant Signature/Date

SETTLEMENT DISCLOSURE

PAGE 5 OF 5