The Consumer’s Guide to TRID

How will the new regulations change your next mortgage loan and settlement?

What is TRID

TRID, an acronym for a combination of recent regulations designed to protect the consumer, will completely reform the mortgage industry and settlement process.

• TILA (Truth in Lending Act)

• RESPA (Real Estate Settlement Procedures Act)

• Integrated (new combined settlement forms)

• Disclosure Rule (new disclosure requirements )

A little history…

The U.S. economy and middle class Americans continue to struggle as a result of the banking-mortgage meltdown and real estate collapse that began in late 2006. Wall Street’s most recent turmoil nearly took down the entire banking industry along with the U.S. economy.

As a result, Congress passed the “Dodd-Frank Wall Street Wall Street Reform Act” in 2010 which created the Consumer Financial Protection Bureau (CFPB), and gave them a mandate to reform, regulate and enforce Wall Street and the financial industry.

And TRID is one of those reforms.

TRID will change the way consumers

apply for a mortgageas well as the final settlement process.

The Consumer’s Guide to TRID

•New Processes

•New Forms

•New Rules

Why care about TRID?

TRID protects the consumer during the mortgage and settlement process. • Lenders must use standardized forms to disclose their rates, loan

terms and associated fees making them easier to understand and compare.

• Lenders must clearly identify on their estimates the services that consumers may or may not shop for.

• TRID regulation eliminates the lender’s ability to make last-minute changes to your rate, fees or terms without properly re-disclosing it.

These new disclosure requirements and procedures go into full effect for loans that are applied for on or after October 3rd, 2015

When does TRID go into effect?

October 3, 2015

What does it cover

TRID Covers:

• All consumer mortgages, whether for a purchase or a refinance.

TRID does NOT cover:

• Home equity loans• Reverse mortgages • Mortgages secured by mobile

homes or dwellings that are not attached to real property (i.e., land)

• Rule does not apply to loans made by creditors that make 5 or fewer mortgage loans per year

What constitutes a loan application?

• You have officially applied for a loan when you have provided the following information:– Name – SSN (to pull credit) – Income – Loan amount sought – Estimate property value – Property address

• If the borrower does not provide a property address, it is not considered a loan application and a Loan Estimate does not need to be issued.

– TRID prohibits requiring income documentation prior to issuing a Loan Estimate

– However the borrower can volunteer the information prior to the loan application

• New settlement forms clearly disclose loan terms, and new rules put an end to last minute changes, surprise fees.

• Consumers have 10 days from when the loan estimate was delivered or placed in the mail to indicate intent to proceed with the loan.

• New loan estimate form clearly indicates which services the buyer/borrower has the right to shop around for.– For example, title insurance, settlement

services company, termite inspection.

TRID’s Big Wins for consumers applying for a mortgage

What happens next?

• Within 3 business days of receipt of the loan application, the lender must deliver or place in the mail a Loan Estimate

• The Loan Estimate must be delivered or placed in the mail no later than 7 business days prior to settlement.– Consumer can only waive the 7-business day waiting

period in the event of a “bona-fide personal financial emergency.”

New Forms are Standardized

Information on the Truth In-Lending Statement (TIL) and the HUD-1 Settlement Statement (HUD-1) are integrated to become the Closing Disclosure

GFE

Loan

Estimate

TIL HUD-1

Closing

Disclosur

e

Good Faith Estimate becomes the Loan Estimate Form

No more “Last Minute”

Have you ever had a settlement where it was about an hour before closing and you still hadn’t seen the final numbers because your lender hadn’t provided the settlement company with their closing instruction yet?

If so, you’ll like this change.

The 3 Day Rule

• The three-day rule is one of the biggest changes to the mortgage process and one of the biggest benefits to consumers. – The lender must provide the borrowers with a final

Closing Disclosure 3 days prior to closing. – If during that 3 day period your lender changes your

APR, loan terms or adds a prepayment penalty, they need to re-disclose and the 3 day clock gets reset.

Sample Forms

Visit our website for sample documents along with detailed explanations of the new forms.

Preview Sample Documents

Visit ALTtitle.com for more sample documents for buyers and sellers.

What is a business day?

• Loan Estimate Business Day– Day when the creditor’s offices are open to the public for

carrying out substantially all of its business functions • Closing Disclosure Business Day– All calendar days except Sundays and federal legal

holidays • Mailbox rule– Documents are considered received 3 business days

after mailed.

• Lenders are responsible for ensuring that the figures provided on the Loan Estimate are as accurate as possible, although certain variations are permitted.

• The new Loan Estimate Form clearly indicates the third party services consumers can shop for. In those instances they are not required to use the service provider offered through either their lender or real estate broker.

The Key Takeaways fromTRID

• Lenders are suggesting that consumers allow 45-60 days from the time they sign their Agreement of Sale to final settlement.

• Consumers should get organized and select their lender and title company early on in the home buying process to ensure a smooth and timely transaction.

The Key Takeaways fromTRID

For more information on the disclosure rule, visit the CFPB website.

Communication will be the key to a successful transaction under TRID

Borrower/Buyer

Title / Settlement Company

Mortgage Lender

Choose ALT to coordinate your next transaction

Borrower/Buyer

Lender

Seller

Realtor

@ALTtitle

Savvy home buyers can lower their

closing costs by

up to $700 or more

at the settlement table with ALT!

Connect with us!

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Email us at info@ALTtitle.com

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