The new ‘TRID”, Integrated Disclosure Rule will kick in on October 3, 2015. This combines the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) disclosures into one, the TILA-RESPA Integrated Disclosure Act (TRID). This new disclosure replace the well-known HUD-1 and the closing disclosures for an easier to use and more understandable form. Besides the clarity of this showing relevant items as the interest rate, monthly payments, and the total closing costs, this form highlights costs of taxes and insurance, how the interest rate and payments may change in the future and penalties for paying off the loan early or increases to the mortgage loan balance even if payments are made on time.
In addition, this new form discloses costs for services required to close a mortgage as appraisal or pest inspections fees. The rule prohibits increases in charges from lenders, their affiliates, and for services for which the lender does not permit the consumer to shop unless a specific exception applies. Examples of the specific exceptions include when information provided by a consumer at application was inaccurate or becomes inaccurate, or when the consumer asks for a change in the services.
These are the highlights of the Loan Estimate Form:
- Loan Estimate must be provided to the consumer by hand or by mail within 3 business days of receiving loan application.
- If there is a circumstance change after provision of Loan Estimate creditor can revise the Loan Estimate within 3 business days, but this is narrowly defined.
- A revised Loan Estimate must be provided no later than 7 business days before consummation.
- Consummation (differentiated from closing or settlement) occurs when the consumer becomes contractually obligated to the creditor on the loan.
These are the highlights of the Closing Disclosure Form:
- Consumers must receive the Closing Disclosure at least 3 business days before closing.
- Revised Closing Disclosure – A waiting period of 3 additional business-days applies when changes to the Closing Disclosure result in:
- An increase to the APR that becomes inaccurate by more than 1/8th of a point,
- The addition of a Prepayment Penalty, or
- The change of a loan product.
- Final Closing Disclosure must capture the actual costs the consumer paid for the mortgage, including costs that changed at the closing table.
- If the final loan cost changes within 30 calendar days post-consummation a revised Closing Form must be delivered within 30 days of the change.
- All tolerance violation consumer refunds must be made within 60 days of closing.
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