TILA - RESPA Integrated Disclosure
You may have heard some news regarding the enforcement of the upcoming TRID regulations. The CFPB (Consumer Financial Protection Bureau) will be giving companies and individuals a grace period from enforcement actions (fines, penalties, etc.), but the changes with regards to the regulations will still occur as of August 1, 2015
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directs the Consumer Financial Protection Bureau (Bureau) to integrate the mortgage loan disclosures under TILA and RESPA
TILA - Truth in Lending Act
RESPA - Real Estate Settlement and Procedures ACT
Firstly, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate. Similar to those forms, the new Loan Estimate form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan.
Secondly, the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) have been combined into another new form, the Closing Disclosure.
These forms must be provided to consumers at least three business days before consummation of the loan.
Pros and cons to waiting the extra time before closingPROS
- I always say to my customers, that we don’t want to be rushing to closing like our hair is on fire. We want to be taking all of the steps under control and have plenty of time to look at everything and ask questions. With the three day wait, you will have three days to study your closing statement and prepare any questions that you may have.
CONS - On the flip side, if you have your life in a moving van waiting to close, an extra 3 or 4 days is a long time. Especially when the hotel room is $100 a night.
Here are some examples of what the new forms will look like.
Trid Closing Disclosure
Here is a cheat sheet to use on the timing of the disclosures. The way I remember it, is, if we are sending electronically (email) we need 4 days.
If we are sending regular mail or Fed-ex we need 7 days.
With this new change we will need to take into account the extra time needed at the end of the process. We have heard that some lending institutions will require a 45 contract going forward after August 1, 2015. My company does not require the 45 day contract, but please keep in mind an extension to the contract may be required.