TRID (TILA-RESPA Integrated Disclosure) is a the best thing that could have happened for the loans we will be brokering.
Much less paperwork needs to be completed, and the buyers will be seeing a few upfront disclosures instead of what was an amazing amount of government required paperwork. Basically, we are turning back the clock a decade in what the government will require the borrower to sign initially on upfront disclosures—but the forms make it easier to understand. There are so few papers, Elite Financial will include 1-2 forms we feel the borrower should know upfront to be informed and comfortable in the loan process.
TRID is more regulations, more confusion. In the end, I think it will make more sense to the buyer, and once the system adjusts to the changes, things will be much better—especially to our customers. The biggest concern is accuracy regarding costs, as changes will create delays as new disclosures will be necessary with any major change in fees. Since we went through this on the last go around of changes, I feel this will settle down to work accurately and timely once the system adjusts—as we all witnessed. The changes sound more difficult than they are, and escrow bears the brunt of the responsibility.
Here is a somewhat detailed explanation of the process—since most of this involves escrow and lender disclosures, don’t expect to have to change your procedures. You may want to have a brief discussion with us instead of trying to read this technical outline. If you would prefer a webinar, I can send it to you at your request:
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directs the Consumer Financial Protection Bureau (CFPB) to integrate the mortgage loan disclosures under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA).
The CFPB fulfilled its directive with the TILA-RESPA Integrated Disclosure rule (TRID). TRID merges the Good Faith Estimate and initial Truth-In-Lending disclosure into a new form: the Loan Estimate (LE). TRID merges the HUD-1 and final Truth-In-Lending disclosure into a new form: the Closing Disclosure (CD). (Effective Date: The TRID forms must be provided by a creditor or mortgage broker that receives an application for most closed-end credit transactions secured by real property on or after October 3, 2015.)
For applications received prior to October 3, 2015, creditors must follow the Regulations X and Z disclosure requirements and use the GFE, HUD-1, and TIL forms.
New Disclosures and Timing Requirements Loan Estimate (LE) Closing Disclosure (CD)
- Integrates and replaces the GFE and initial TIL.
- The LE is intended to provide consumers with help understanding the key features, costs, and risks of the mortgage loan they are applying for.
- It must be delivered or placed in the mail no later than the third business day after the consumer submits a loan application.
- Combines the HUD-1 statement and final TIL.
- This disclosure provides information to the consumer to help them understand all costs involved in the mortgage loan transaction.
- It must be received by the consumer at least three (3) business days before consummation of the loan.
- Consummation date: the day the borrower is legally obligated to pay the loan. New Business Day Definitions The definition of “business day” differs for each disclosure.
Additional timing requirements apply for revised disclosures. LE A business day is a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. CD A business day means all calendar days except Sundays and the legal public holidays such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
Application Definition: Similar to the definition under Regulation X, an application is the submission of the following six items. The seventh “catch-all” item defined under Regulation X, “any other information deemed necessary by the loan originator,” no longer applies. Items may be submitted in written or electronic format, or as a written record of an oral application.
Once a creditor receives these six items the LE must be delivered or placed in the mail within three business days unless the applicant’s terms cannot or will not be approved:
• Borrower(s) Name • Borrower(s) Income • Borrower(s) Social Security Number • Property Address • Estimated Property Value • Mortgage Loan Amount Sought Post-consummation servicing-related disclosures required by TRID: • Escrow Closing Notice – provided to consumers prior to cancelling an escrow account. • Partial Payment Disclosure – includes information related to the partial payment policy applicable to the loan.
TRID applies to most closed-end consumer mortgages. It does not apply to the following: • Home equity lines of credit (HELOCs). • Reverse mortgages. • Mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land). • Loans made by persons who are not considered “creditors,” because they make five or fewer mortgages in a year
This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Loans are subject to credit and property approval. Availability of programs is subject to change without notice.