Mortgage pool attorney , Securities Attorney

David Ruyle Attorney at law

Mr. Ruyle is a California native and has been licensed to practice law in California since 1973.  For more than 36 years Mr. Ruyle has assisted entrepreneurs with state and federal private placement memorandums.  Mr. Ruyle has extensive experience and expertise as a lawyer and principal in mortgage lending and securities law.  He prides himself on utilizing his legal skills and real estate business experience to craft mortgage funds and mortgage pools including private placement memorandums, subscription agreements and powers of attorney as well as creating limited liability companies and corporations including operating agreements along with loan documentation to enhance the success of his clients.  He practices with his two sons, Chad and David Jr., to creatively combine business and estate planning including the formation of business entities, partnerships, asset protection and tax planning.  Ruyle & Ruyle, a boutique law firm located in San Diego California,  provides services concerning the pertinent laws and regulations including state licensing law and the Truth-in-Lending Act.   The firm is dedicated to serving their clients' needs in all areas of mortgage lending and non- public securities law.  They strive to provide a high level of service to their clients by making themselves accessible and paying attention to detail in document preparation.  Mr. Ruyle was among the first group of attorneys in California to qualify as a certified specialist in estate planning, probate and trust administration law by the State Bar of California Board of Legal Specialization  Mr. Ruyle is a member of the San Diego County Bar Association as well as the California Bar Association with membership in the Estate and Trust Division.  He is a published author and frequent lecturer.   In addition to the practice of law, Mr. Ruyle has extensive business and real estate investment and development experience that is invaluable in assisting his clients in these areas.  He is a founding member and past chairman of LJL Funding, LLC, a residential hard money lender, and is a principal in Sierra Capital Investment Partners, Inc. that acquires, manages and disposes of “tapes” (bulk purchases) of single-family residences owned by banks (REOs) and performing and non-performing trust deed notes.

RESPA and Truth in Lending Act Reform for 2009 and 2010

We have now received the long awaited RESPA and Truth in Lending Act Reform.
For the benefit of our clients we summarize the changes as follows:
Generally RESPA Reform became effective on January 16, 2009 with specific provisions as follows:

What becomes effective January 16, 2009?
- Revision to Servicing Transfer Disclosure
- Revised "Required Use" definition relative to service providers
- Allowance for Average Charges
- Escrow account provisions
- ESIGN recognition

What becomes effective January 1, 2010?
- Revised Good Faith Estimate (GFE)
- GFE tolerances on settlement costs
- Revised Settlement Statement (HUD-1)  (may utilize new Statement prior to effective date)
- Revised definitions for application, Good Faith Estimate, and Mortgage Broker
- Additional definitions for changed circumstances, origination services, loan originator, prepayment penalty, third party, title service and tolerance  
- Elimination of 1% origination fee cap on FHA loans

You can see by the lists above and their corresponding effective dates, there are quite a few necessary changes to policies and procedures needed in order to be operationally compliant in a very short period of time.

Now, let's discuss those provisions and requirements that are effective on January 16, 2009.
Servicing Transfer Disclosure
The Economic Growth and Paperwork Reduction Act of 1996 amended RESPA regarding the Servicing Transfer Notice [Section 2605(a)] to reflect simply a requirement to notify the applicant whether the servicing would be or is likely to be transferred. However, at that time Regulation X was not amended in keeping with the act. The final rule amends Regulation X for this purpose. The rule provides sample or recommended wording regarding this disclosure. The format of the disclosure is not promulgated only recommended. The disclosure no longer has the signature requirement prior to closing as well. The revised disclosure will be required as of January 16, 2009.

"Required Use" Definition & Effect
It has been my experience thus far that this is one of the most controversial revisions to RESPA (in addition to the disclosure of yield-spread premiums as a credit against loan pricing). The definition of required use was modified to reflect economic disincentives are as problematic as incentives. This definition does not eliminate the allowance to offer legitimate consumer discounts; however, the discount cannot be tied to the use of an affiliate settlement service provider. The new definition provided in the rule, "Required use means a situation in which a person's access to some distinct service, property, discount, rebate, or other economic incentive, or the person's ability to avoid economic disincentive or penalty, is contingent upon the person using or failing to use a referred provider of settlement services. In order to qualify for the affiliated business exemption under §3500.15, a settlement service provider may offer a combination of bona fide settlement services at a total price (net of the value of the associated discount, rebate, or other economic incentive) lower than the sum of the market prices of the individual settlement services and will not be found to have required the use of the settlement service providers as long as: (1) the use of any such combination is optional to the purchaser; and (2) the lower price for the combination is not made up by higher costs elsewhere in the settlement process".
One of the most controversial issues regarding this new definition involves Home Builders. Home Builders are not considered settlement service providers, thereby eliminating any discounts or incentives provided by home builders to home purchasers when using an affiliated mortgage lender for their home financing, a widely used incentive by home builders. There are many companies in this situation that are scrambling at the moment regarding this item.

Average Charges

The final rule allows for average cost pricing (revised from the proposed rule and is now referred to as "Average Charges"). Settlement service providers can determine classifications of transactions to determine the average cost for their services. This average cost can be used in disclosing the associated charges for these settlement service providers. The total amount charged to the borrower cannot exceed these charges for the specific class of transaction. The same average charge must be used for all loans within that classification. Average charges cannot be based on loan amount or property value. This may be problematic for the title industry due to the manner in which they typically based the cost of title insurance. If average charges are not used, the charge to the borrower on the HUD-1 cannot exceed the amount received by the settlement service provider. HUD did give some guidance on determining classifications of transactions in that the settlement service provider may define the classifications based on period of time, type of loan and geographic area. Average charges must be recalculated every six months.

Escrow Account Provisions
The final rule eliminates outdated provisions regarding the phase-in period of aggregate accounting for escrow accounts. It additionally discusses the mortgage loan documents with regard to escrow cushions. If the escrow cushion as stated in the loan documents provides for a lower cushion than mandated by state or federal law, the loan documents apply. If the escrow cushion as stated in the loan documents provides for a higher cushion than state or federal law, then the state or federal law applies accordingly.
ESIGN Recognition
The final rule adds ESIGN as applicable to RESPA for electronic delivery of disclosures.
 
 
David John Ruyle, Esq.