TRID,
or TILA-RESPA Integrated Disclosure, also known as the “Know Before You Owe”
rule will change how mortgages are done through altering the loan forms and
practices. The effective date was Oct 3,
2015. All residential loan application taken on or after Oct 3rd
2015 will be under this new rule. The over sight of this new rule is the CFPB
or Consumer Financial Protection Bureau.
There
will be two new forms under TRID for home buyers — the Loan Estimate and the
Closing Disclosure. These two form are said to be easier to understand then the
previous GFE = Good Faith Estimate and HUD1 = Closing Statement. The new forms are more specific with
the terms, loan amount and whether the amount can increase after closing for
each section of the form. It will also detail features of the loan like a
prepayment penalty or balloon payment. TRID being part of TILA-RESPA will affect
all 1-4 unit residential purchases and refinances of owner occupied property. Excluding
Reverse Mortgages, investment or commercial properties.
The
regulation also gives the buyer more time to review the closing costs and all
fees associated with the mortgage loan. The first new form received by the
buyer is the Loan Estimate due 3 days after applying for the loan. The second
new form received by the buyer is the Closing Disclosure and must be presented
three days before closing.
Anytime
there is a correction or addition to forms they must be sent back to the buyer
for another review and be signed. This is going to cause delays in the closing
process. It is recommended that at least for a short time until the closing process can be
managed properly the Realtors add a couple weeks to new escrows.
The
industry has been preparing for TRID for months with new software for the new
forms, training of loan officers, closing agents and other effected personnel.
The burden is on the lender for compliance and the CFPB has given no shake out
period or buffer period for mistakes that may happen. Just last week
on Oct 7, 2015 just 4 days after the effective day of TRID the house passes “Homebuyers
Assistance Act” H.R. 3192 which will provide a hold harmless period until Feb
1, 2016 for good faith efforts to comply with the TRID rule. The vote was 303
to 121, now the bill is headed to the Senate, however the White House is not
supportive of this new bill and has threaten to veto any hold harmless bill.
My personal option is that we have been preparing for this change for several
years, we knew the GFE they introduce Jan 1, 2010 that was supposed to be
easier to understand for the consumer was just the opposite. The old HUD1 is
not hard to understand but it’s normally not seen by the buyer until the day of
closing. That doesn’t give the buyer enough time to review the figures. I like
the new forms and looking forward to seeing them and the new time line
restrictions in play, I see some delays in the beginning but soon will be
business as usual for our industry. The lenders are ready and we will all
benefit from a well informed buyer.
I think
our political representative in the house and senate are wasting valuable time
on this issue. Go fight for world peace, clean water and food for every human
being on earth. We got this!
If you
have any questions about TRID give me a call or email me.
Thank you for visiting my Blog, your comments and questions are welcome and encouraged.
Thank you for visiting my Blog, your comments and questions are welcome and encouraged.
Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926
