TILA/RESPA Integrated Disclosure (TRID)

The Consumer Financial Protection Bureau (CFPB) has designated October 1^st, 2015, as the implementation date for the TILA/RESPA Integrated Disclosure rule (TRID). As the real estate and mortgage industries prepare for the implementation of TRID, there are many questions. Will the new rules and disclosures delay real estate transactions from closing on time? How will the new guidelines effect home buyers, real estate agents, title companies, and mortgage professionals?

According to the CFPB, the new disclosures required under the TRID rule were developed from feedback that they received from approximately 850 consumers (CFPB, 2015). The CFPB used this information to create new easier to understand disclosures under the guidelines of the TILA and RESPA Acts. Effective October 1st, 2015, lenders will be required to use these new easier to understand disclosures. The new disclosures will give the consumer a better understanding and clarify much of the confusion on the previously used good faith estimate (also referred to as the “loan estimate”) and truth-in-lending disclosure statement used by the lending community.

In most real estate transactions, there are changes throughout the approval and closing process. According to the TRID rule, the loan estimate can only be modified due to specific changes which are allowed within this regulation. These adjustments can range from appraisal repairs, loan type changes, or credits from the lender or seller to the borrower. Below is a brief description of what constitutes a required re-disclosure, due to a change during a mortgage transaction under the TRID rule.

• Annual Percentage Rate (APR) - If the APR changes by more than 1/8 of one percent for a fixed loan or 1/4 of one percent for an adjustable loan, re-disclosure is required. A decrease in the APR does not constitute re-disclosure. Although, lenders have been required to re-disclose the APR changes described above since 2009.
• Change of Loan Type - If the mortgage type is changed from a fixed to an adjustable or balloon loan or vice versa, re-disclosure is required under the TRID rule.
• Prepayment Penalty - If a prepayment penalty is added to the mortgage, under the TRID rule re-disclosure would be required.

There are certain changes that may occur during a mortgage transaction that would require re-disclosure; but the three day waiting period would not be imposed. The changes that do not require the three day waiting period include, but are not limited to the following:

• Typos and Misspellings – If the loan is at the point where the buyer and seller are signing the closing documents, typos and misspellings can be corrected immediately.
• Final Walk-Through - A few days before closing on any house, it is advisable to do a final walk-through to make sure that there has been no damage to the house and no alterations have been made by the seller to the purchase agreement; such as: minor damage (broken window), or missing appliances. The three day waiting period is not imposed in either of these situations.
• Title Companies/Closing Documents - If the interest rate, term, and loan program on a mortgage are not altered, but the payment changes due to property taxes, the three day waiting period is not imposed.

This article briefly summarizes the changes imposed by the upcoming implementation of the TRID rule. For further guidance, please contact the CFPB for clarification.

Source:

CFPB (July, 2015). TILA-RESPA Integrated Disclosure.

Michael Zuren, PhD

I have 25 years experience in the mortgage banking industry. My experience includes the following loan types: (1) HomePath, (2) OHFA, (3) FHA 203k, (4) VA, and (5) USDA financing. I have been serving Cuyahoga, Lake, Geauga, and Ashtabula counties in Northern Ohio... more