As of October 3rd, 2015 the CFPB integrated the (TILA) Truth in Lending Act (Regulation Z) and (RESPA) Real Estate Settlement Procedures Act (Regulation X) disclosures.
There are now two new forms that lenders are required to send out within 3 business days of receiving a loan application.
The Dodd-Frank Wall Street Reform Act directs the CFPB (Consumer Financial Protection Bureau) to integrate the TILA and RESPA disclosures. These two new integrated disclosures are now called the Loan estimate and the Closing Disclosure.
RESPA’s Good Faith Estimate (GFE) and TILA’s Truth in Lending Disclosure were integrated creating the Loan Estimate.
The Final TIL and the HUD-1 Settlement Statement were integrated creating the new closing disclosure.
What is TRID?
TRID stands for TILA-RESPA Integrated Disclosure rule. This new rule integrating RESPA and TILA replacing the HUD-1 disclosure and Good Faith Estimate (GFE) with a new more comprehensive closing disclosure and loan estimate. TRID is designed to help borrowers understand the terms of their loan more clearly before closing.
4 disclosures combined into 2
What is the purpose of TRID?
Mortgages are complicated and difficult. The TRID rule attempts to simplify it by doing two things:
- It streamlines and condenses certain loan disclosures, and
- Changes the timing of certain mortgage processes
TRID provides consumers with a clearer more easy to understand estimate of the costs involved in a mortgage. Providing consumers a more convenient way of comparing loan offers from mortgage lenders. TRID reduces the amount of paperwork involved and provides more clear and accurate loan estimate.
- Loan Estimate – A loan estimate replaces GFE, or Good Faith Estimate. A GFE has always been provided from lenders 3 days after receiving a loan application. A loan estimate will be standardized with all lenders and will ore clear state the terms and estimated fees. This will make shopping for a mortgage and comparing loan offers easier for consumers.
- Closing Disclosure – The HUD-1 statement has been replaced with the closing disclosure. The new closing disclosure is more complete with the costs and fees clearly stated. The closing disclosure will also be more accurate. TRID has provides on how much certain items actual cost at close can vary from the estimate cost in the closing disclosure.
The new TRID documents have the most important information in more prominent places
The estimated monthly payment, closing costs and estimated cash to close are prominently shown on the first page of the disclosure. This makes it easier for the consumer to quickly see the most important information on the disclosures.
Mortgage Loans that are not Affected By TRID
Persons who do not make at least 5 loans per year are not considered “creditors” therefore the TILA-RESPA rule does not apply to loans made by these persons.
- HELOC (Home Equity Lines of Credit)
- (Reverse Mortgages)
- Land loans – Mortgages secured by a dwelling not attached to property
When the Mortgage Application is Considered to be Received
A mortgage application is considered received when these six items are received. Lenders have 3 days to send the loan estimate and closing disclosure to the borrower. The clock does not start the following day after the loan application is received, it starts the same day it’s received.
- Full name
- Social security number
- Property address
- Estimated property value
- Loan amount wanted
TILA-RESPA Integrated Disclosure rule Resources
For more information on TRID and how to implement it please refer to the following references.
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