CFPB: TILA-RESPA Integrated Disclosure
On October 3, 2015, the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure (TRID) rule will impact the disclosure of settlement fees and delivery of the new Closing Disclosure form to borrowers in real estate transactions. Communication among the borrower, lender, and title company will be essential to insure that there are no delays in getting all parties to a successful closing.
The new rule will apply to most consumer mortgages on residential property. Loan products that are exempt include home equity lines of credit and reverse mortgages. One important aspect that is changing is that lenders will now be ultimately responsible for all third party vendors (including title companies) and the accuracy of the new forms that will be issued to borrowers, causing some lenders to take over the production of the new closing disclosure form whereas previously the title companies would have handled that.
TRID combines several of the closing documents into one Loan Estimate Form given to the borrower after a loan application is made, and one Closing Disclosure form given to the borrower ahead of the closing, or what is now called a consummation.
The Loan Estimate form must be provided to the borrower 3 business days after a loan application is made. The Closing Disclosure form must be provided to the borrower 3 business days before consummation of the loan. The rule outlines what is considered a business day and when a borrower is considered to have received the form. There are also tolerance limits on what fees are able to change from the original estimate and by how much they can change.
It’s possible that the consummation could be delayed and a new 3 day waiting period is required if certain changes are made to the loan product. These changes include an increase in the APR (annual percentage rate), a change in the type of loan product, or the addition of a prepayment penalty. Any other changes to the loan would not trigger this new 3 day waiting period.