TILA RESPA Integrated Disclosures (TRID): What Does It Mean For Me?

IN THIS ARTICLE:

• Regulatory Background for Disclosure Rules
• The New Disclosures
• Loan Estimate Disclosure and Timing Rules
• Closing Disclosure and Timing Rules

Effective October 3, 2015, the U.S. government made significant revisions to the rate and fee disclosures consumers receive in the beginning and end of every mortgage transaction. These disclosures come with specific timing requirements that impact all home financing transactions.

Here's an overview of the disclosures and associated timing rules so you can plan your home financing properly.

Regulatory Background for Disclosure Rules

Consumers financing homes in the U.S. are protected from fee abuses by two main regulations:

• The Truth In Lending Act (known as TILA or Regulation Z) protects consumers from closing cost abuses by standardizing the way mortgage terms and fees are calculated and disclosed.
• The Real Estate Settlement Procedures Act (known as RESPA or Regulation X) protects consumers from artificially inflated real estate transaction costs by prohibiting different housing services providers (like lenders, realtors, title companies, escrow companies, attorneys, and insurance companies) from paying each other fees to refer consumers to each other.

TILA and RESPA were created in 1968 and 1974 respectively, and enforcing them now falls to the Consumer Financial Protection Bureau (CFPB), an agency created in July 2011.

As of October 3, 2015, the CFPB combined all mortgage rate and fee disclosures mandated under TILA and RESPA into two simple forms to make it easier for consumers to understand their mortgages.

This initiative is called the TILA-RESPA Integrated Disclosure Rule, often referred to as TRID.

The New Disclosures

TRID requires consumers to receive two disclosures -- one at the beginning of a transaction, and one at the end.

Within three days of applying for a home purchase loan, the lender must send you a Loan Estimate Form, which provides a detailed line-item breakdown of fees, cash needed to close, rate, terms, and costs over the life of the loan. The lender must also obtain your intent to proceed before it can move forward.

At least three days before closing, the lender must send you a Closing Disclosure Form, which looks almost exactly like the Loan Estimate, but adds a breakdown of costs paid buy buyer versus seller versus third parties. This means you're reviewing final terms in the same format you saw initially, and you've got time to digest it.

The links above are CFPB samples of each form so you can see what you'll get from every lender you apply with.

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Loan Estimate Disclosure and Timing Rules

The CFPB allows for mail or electronic delivery of the Loan Estimate.

If you applied with a lender who's using mail delivery late on a Wednesday, they would mail your Loan Estimate and intent to proceed disclosures Thursday, you might get it Saturday, and they couldn't collect fees and order your appraisal until they received your consent Monday, which is already day six into the process.

If you applied with a lender who's using electronic delivery late on a Wednesday, they could deliver your Loan Estimate and intent to proceed disclosures for you to consent to online that evening, and they could collect fees and order appraisal that same evening, all on the first day of the process.

Closing Disclosure and Timing Rules

The Closing Disclosure looks almost exactly the same as the Loan Estimate, making it easy to check if line item closing costs match originally quoted terms. It also provides further clarity on closing costs by showing which line item costs are paid by the buyer, seller, and third parties.

The lender must provide this information to you at least three days before closing, excluding Sundays and holidays, and day one is the day after you get the Closing Disclosure.

For example, if you received your Closing Disclosure on a Wednesday, the three-day waiting period is Wednesday, Thursday, Friday. Then they can fund your loan and close your home purchase on Saturday, which is day four from the time you received the disclosure and is the earliest you could close on your loan. However, you could opt to close later if that works better for the buyers and sellers.