Mortgage Disclosures
All about the TILA-RESPA Integrated Disclosure Rule (TRID)
What is the TRID Rule?
The rule integrates 4 existing required disclosures [the initial TIL (Truth-in-Lending), GFE (Good Faith Estimate), final TIL, and HUD-1] under TILA (Truth-in-Lending Act) and RESPA (Real Estate Settlement Providers Act), into 2 disclosures: the Loan Estimate (LE) and the Closing Disclosure (CD).
What is the purpose of TRID?
The Consumer Financial Protection Bureau (CFPB) is implementing this rule to give the consumer more time to fully understand the charges for a particular loan and to decide whether they believe they can afford the loan. The new forms use clear language and have been designed to make it easier for consumers to locate key information: interest rate, monthly payments and costs to close.
Does TRID Apply to All Loans?
The rule applies to most closed-end consumer mortgages. This will include Construction-only loans and loans secured by vacant land or by more than 25 acres. It does not apply to HELOCS, Reverse Mortgages, mortgage secured by a mobile home or by a dwelling that is not attached to real property (i.e. land). There is a partial exemption for certain transactions associated with housing assistance loan programs.
The Loan Estimate (LE)
The Loan Estimate must be provided to the consumer no later than 3 business days after receipt of a loan application and no later than 7 Federal business days before consummation (closing/disbursement of funds). Federal Business Days are defined as all calendar days except Sundays and legal public holidays.
The Closing Disclosure (CD)
The lender is now responsible for issuing the Closing Disclosure to the borrower. In order to issue an accurate Closing Disclosure, the lender will require receipt of final closing figures from the title company and/or the seller’s attorney reflecting all title and seller charges 10 days prior to consummation. This requirement is being made to meet the delivery timing requirements being enforced. The Closing Disclosure must be received by the borrower no less than 3 Federal business days before consummation.