September 21st, 2015 9:49 AM by Steve Iltis
This month’s blog will be on the new TRID laws that are coming into
effect on October 3, 2015. One major change is that the GFE and TIL (also known
as the Good Faith Estimate and the Truth in Lending) disclosures will be
combined into one disclosure called The
Loan Estimate. The goal of this document is to make the terms, estimates
and closing costs of the loan transaction crystal clear to the borrower. The
aim is to create a transparent mortgage industry in which everything is made
apparent to the borrower. This is advantageous to the borrower since it gives a
clear picture and facilitates an easier way to compare brokers when shopping
for a mortgage. The Loan Estimate must
be provided to the borrower no later than three business days after the loan
application is submitted.
Another new document from the new TRID updates is the Closing Disclosure Document. This will
combine the HUD-1 (the itemized settlement statement on all fees incurred and
services charged during the mortgage process) and the Truth in Lending
disclosure (TIL). This form also aims to provide a clear picture of all the
transaction, charges, and features of the loan to the consumer. Once again,
this is to add more transparency to the mortgage industry. The closing
disclosure document needs to be provided three business days before the loan
disburses to the borrower or consummation of the loan.
The timing of these new disclosures must
be on point. The Consumer
Financial Protection Bureau (CFPB) has made the three business days rules non-negotiable.
These disclosures and documents are applicable to most all close ended consumer
mortgages. However the rules do not apply to home equity lines of credit,
reverse mortgages, mortgages for mobile homes. They also do not apply to
creditor that makes less
than five mortgages in one year.
There has been much speculation on how these new TRID
regulations will affect timelines for closings.
The National Mortgage News
website published an article by Brian Collins reviewing how rate lock periods
and contract will be affected by the new TRID regulations; “TRID May
Force Lenders to Mothball 30-Day Rate Locks”. In the article Collins quotes mortgage and real estate
professionals on how they see the mortgage industry adapting to these new
changes. Ken Trepeta, President and Director of the Real Estate
Providers Council warns
realtors that last minute changes to Closing Disclosures will not be accepted
by lender and will no doubt cause delays. Pete Mills, a Senior
Vice President for the Mortgage Bankers Association is quoted recommends agent
to write 45 day contracts for their clients, "until things are worked out
and people get used to the new processes." However the new reliance on 45
days locks may sway Lenders to change more for 45 days locks- we will have to
wait and see how lenders react to rate lock periods. If you
are interested in more information on the new TRID disclosures and rules that
go into effect on October 3, 2015 we highly recommend checking out the Consumer
Financial Protection Bureau website at http://www.consumerfinance.gov/.