On October 3rd, the Consumer Financial Protection Bureau (CFPB) will enact a new rule in regard to the lending process.
What is changing and why?
The TILA-RESPA Integrated Disclosure (TRID) will marry four existing forms: the Truth in Lending (TIL) disclosure and the Good Faith Estimate (GFE) will become the ‘Loan Estimate,’ and the final TIL and HUD-1 Settlement Statement will become the ‘Closing Disclosure.’ The original forms were created by separate government entities and, as a result, the information was overlapping and conflicting. The purpose of this document integration is to provide clarity to consumers in mortgage lending transactions. These documents will more clearly represent all the costs associated with the loan, making the charges more evident and easy to understand.
How will this affect my transaction?
The ‘Loan Estimate’ will be designed to highlight the key costs, as well as any risks, associated with the transaction. This is required to be disclosed to the consumer no later than three business days after the completion of an initial application. The ‘Closing Disclosure’ will emphasize all of the costs associated with the transaction, and must be provided to the consumer at least three days prior to the consummation of the loan.
Who will be affected by this?
All consumers pursuing closed-ended mortgage loan transactions will be subject to these changes. However, TRID does not apply to HELOCs, reverse mortgages, or any non-permanent residence or dwelling (mobile homes, etc). The TRID exceptions will continue to use the disclosures that are currently in place.
Where can I find more information?
A comprehensive breakdown of the new TRID regulation has been compiled by the CFPB and can be found here on their website: http://www.consumerfinance.gov/.