3 Things Every Realtor Should Know About TRID
We are less than four months away from the much anticipated October 3rd implementation of major TILA-RESPA changes. That’s right! Major changes are just around the corner and we’re helping our realtor partners get prepared by understanding how the changes will affect them. Integrated mortgage forms, disclosure documents, and the scheduling of loan closings – we know that homebuyers will be expecting you to be up-to-date on how these changes will affect their home buying process. That’s why we’ve broken it down into these top three (3) changes you need to know about!
The Loan Estimate
Good Faith Estimates and Truth in Lending Disclosures forms will be combined into a new three (3) page form, the Loan Estimate or “LE”. Loan Estimates must be delivered to the borrower within three (3) business days of taking a loan application. The intent of the LE is to provide borrowers with the lender’s costs as accurately as possible.
The Closing Disclosure
Another major form integration replaces the HUD-1 Settlement Statement and final TIL disclosure with the Closing Disclosure or “CD”. The new five (5) page CD must be delivered to the borrower at least three (3) business days prior to closing. The days of the one-day delivery requirement for the HUD-1 are behind us. Changes in the loan terms could trigger an additional three-day waiting period, even with the “bona fide financial emergency” exception.
Less Information to Apply for a Loan
Under the new TILA-RESPA ruling, a loan application is defined as the collection of these 6 items: 1) borrower’s name, 2) borrower’s social security number, 3) borrower income, 4) property address, 5) estimate of property value, and 6) mortgage loan amount. The “catch all” seventh item is no longer required to complete the mortgage application.
These rules apply to most mortgages with the exception of home equity lines of credit – HELOCs, reverse mortgages and mortgages for dwellings not attached to land. These exceptions as well as mortgage applications taken prior to October 1st, 2015 will continue with traditional GFE and TIL forms.
Realtors! These changes will transform the closing process. It is most important to note that with the new timelines set, last minute changes at closing should be avoided as it may delay closing for your client. A good practice is to prepare documents up to 7 days prior to closing and do walk-throughs ahead of time. You can also find much more at The Consumer Financial Protection Bureau, including helpful documents and webinars to prepare for the upcoming transition.