What is TRID and What Should Home Buyers and Home Sellers Expect?

What is TRID?   In short TRID is a new rule implemented by the Consumer Financial Protection Bureau.  TRID takes effect for any loans initiated after October 1st 2015.  The rule is intended to rid any inconsistencies by two federal acts that regulate the current mortgage qualification process.  TRID stands for TILA RESPA Integrated Disclusure.  Besides preventing inconsistencies between the Truth in Lending Act (TIL) and the Real Estate Settlement Procedures Act (RESPA), TRID is also meant to reduce documentation, limit fees, make documentation easier to understand, set forth clear timing guidelines, prevent surprises at closing and make it easier for consumers to shop mortgages.

TRID only applies to closed end consumer credit secured by real property.  So it does not apply to HELOC’s, reverse mortgages, unsecured loans or credit or credit secured by personal property.

Two New Forms Created by TRID

Loan Estimate- The new loan estimate form is combining the preliminary Truth in Lending and Good Faith Estimate into a 3 page document.  The new Loan Estimate document is designed to provide key terms of the loan as well as an estimate of all closing costs.  This form must be provided no later than 3 business day after an application is received.  Any change to interest rate, loan amount or other change in the numbers requires re-disclosure.  There is also a 7 business day waiting period after receiving the disclosure to close on the loan.

Closing Disclosure- The new Closing Disclosure form combines the final Truth in Lending and the HUD-1.  The Closing Disclosure is designed to help borrowers understand the costs associated in securing the loan.  The Closing Disclosure must be provided 3 business days before closing on a loan and is considered delivered 3 days after the document is mailed.

What Can Home Buyers and Home Sellers Expect With TRID?

Any changes in the financial details of the loan documentation will trigger basically a 10 day waiting period.  The 30 day closing is all but gone with the new disclosure laws triggered by TRID.

Realistically you should be looking at a minimum of 45 days to close and 60 days is probably more reasonable.  I would probably expect more delays than what already already occurs as attorneys, lenders, title companies and real estate agents try to effectively manage the new disclosure laws.

At the end of the day, TRID will add at least 15 days to the closing process but should provide mortgage consumers with better reporting of the numbers and documentation that shold be easier to understand for the consumer.

 

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