What is TRID?

It’s the “Know Before You Own” rule, and it’s changing the mortgage process.

We asked Mike Bitrick, Vice President at First Heritage Mortgage to better explain the changes. 

TRID, or TILA-RESPA Integrated Disclosure, which is also known as the “Know Before You Owe” rule will change the mortgage process by altering some standard loan forms and practices.

Originally slated to go into effect August 1, the Consumer Financial Protection Bureau (CFPB) actually took effect on October 3, 2015.

On Wednesday, October 7, 2015, the House of Representatives approved HR 3192, “The Homebuyers Assistance Act,” which would provide a safe harbor for lenders who act in good faith to comply with the new TRID mortgage disclosure requirements. The bill will still need to be passed by the US Senate and signed by the President in order to become law.

Home buyers can expect to be using two new forms under TRID — the Loan Estimate and the Closing Disclosure. These two new loan forms are easier to understand and consolidate the earlier standard forms. The forms are also designed to work in combination with each other, which wasn’t happening with the previous forms.

The new forms clearly detail the loan amount, its terms, whether the amount can increase after closing for each section, and the feature of the loan, such as whether there is an early payment penalty or not.

The forms are designed to provide the buyer with more time to review the costs associated with the mortgage. The Loan Estimate document is due to the buyer three days after applying for the loan, while the Closing Disclosure must be presented three days before closing.

Many consumers may not understand how this impacts the home buying and home financing process. The implementation of TRID places multiple restrictions on how lenders can disclose estimated loan costs, when they are required to disclose costs and changes in initially estimated costs as a transaction moves toward closing. These restrictions can require a lender to have more information from the home buyer at time of loan application than in the past. It also requires quicker action and response from the home buyer throughout the mortgage application process. Many costs, such as legal fees, title insurance, and appraisal fees may not be known to the lender at time of application so estimates must be made. As the lender receives these exact costs from the various third parties engaged to perform these services they may be required to re-disclose accurate costs to the home buyer by providing another form for the buyer to acknowledge and sign. This process will create more paperwork and effort for the home buyer and potentially cause delays in loan approval if the homebuyer doesn’t act quickly.

TRID also requires the Closing Disclosure to be presented to the homebuyer at least three days prior to loan closing. This is a new time restriction that was not in place prior to TRID implementation on October 3, 2015. If a lender does not present the Closing Disclosure at least three days prior to closing the homebuyer is not allowed to close on the transaction as scheduled even if they wish to do so. Instead they must wait the three business days from the date of the Closing Disclosure to complete the home purchase. In order to avoid any potential delays as a result of the new TRID requirements home buyers will need to be more diligent and responsive than before to requests from their realtors and lenders.

These new restrictions make it more important than ever for home buyers to choose knowledgeable realtors and mortgage lenders to provide guidance throughout the transaction in order to eliminate any potential delays due to TRID requirements.

To learn more about these changes, contact Mike Bitrick, Vice President, First Heritage Mortgage LLC, NMLS# 414577, Corporate NMLS#86548, www.nmlsconsumeraccess.org

Spread the love

Written by
Posted in Asheville, Charlottesville, Fredericksburg, New River Valley, Wilmington
Tags: , , , ,
Comments closed

Comments are closed.

Join our Newsletter

×