New Lending Disclosures
Published On: November 18, 2015 Posted by: Brad
New Lending Disclosures / How does it impacts YOU? / What is TRID?
TRID is The New TILA RESPA Integrated Disclosures that went into effect August 1, 2015. The government entity responsible for this new disclosure requirement is “CFPB” Consumer Financial Protection Bureau.
• The Loan Estimate replaces the initial Truth-in-Lending disclosure & Good Faith Estimate for most closed-end mortgage loans
• The Closing Disclosure replaces the final Truth-in-Lending disclosure & HUD-1 Settlement Statement for most closed-end mortgage loans
What Types of Loans are not Affected by TRID?
• Home Equity Lines of Credit (HILOC’s)
• Reverse mortgages
• Mortgages secured by a mobile home or dwelling not attached to real property
What are the Primary Changes?
1. Application Definition – the loan application is considered received and the clock starts ticking for the disclosure delivery when the following six items are received. Name, income, Social Security number, property address, estimated value of property (contract written price), and mortgage loan amount sought.
2. Timing is Everything
New disclosure delivery timing requirements
Loan Estimate must be provided:
No later than three business days after receiving the application
No later than seven business days before consummation
Closing Disclosure must be received by borrower not later than three business days before consummation
Revisions and Corrections “waiting period” requirements
A revised Loan Estimate must be received by borrower(s) no later than three business days before consummation if the following occurs:
APR becomes inaccurate
Loan product changes
Prepayment Penalty is added
3. Changes to the 0% Tolerances Category
Fees paid to the creditor, a mortgage broker, or an affiliate of either (NEW)
Unaffiliated third-party services for which the borrower cannot shop (NEW)
4. Written List of Providers
The creditor must provide a separate list of services for which the borrower may shop and identify at least one available provider for each service no later than the third business day after receiving the application
Must include sufficient information to allow the borrower the contact the provider
Must state that the borrower may choose a different provider for that service
5. Issuing the Closing Disclosure
The creditor is responsible for providing the Closing Disclosure, including HUD-1 information that the settlement agent was previously responsible for
The settlement agent is responsible for providing the Closing Disclosure to the seller