TILA-RESPA Integrated Disclosure Rule
The new TILA-RESPA Integrated Disclosures (TRID) changes implemented by the Consumer Financial Protection Bureau (CFPB) took effect on October 3, 2015.
For more than 30 years, Federal law has required lenders to provide two different disclosure forms to consumers applying for a mortgage. The law also generally has required two different forms at or shortly before closing on the loan. Two different Federal agencies developed these forms separately, under two Federal statutes: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA). The information on these forms is overlapping and the language is inconsistent, resulting in frequently confused consumers.
To resolve these issues, the CFPB proposed updated rules and forms in July of 2012. After submission, they engaged in extensive consumer and industry research for more than a year by conducting large-scale quantitative study with approximately 850 consumers. In these efforts, they concluded that consumers were significantly more satisfied with these updated integrated disclosures than the previous (original) forms. These forms are written in easy to use, laymen terms and make it easier for consumers to locate and find key information, like interest rates, monthly payments, and costs to close the loan.
The Good Faith Estimate (GFE) and the initial Truth-In-Lending disclosure (initial TIL) have been combined into a new form called the Loan Estimate. Like the GFE and initial TIL, the LE is designed to be help consumers better understand the key features, costs, and risks of their mortgage loan. The LE must be provided to consumers no later than the third business day after they submit their loan application.
The HUD-1 and the final Truth-in-Lending disclosure (final TIL) have been combined into a new form called the Closing Disclosure. The CD is designed to help consumers understand all the costs of their transaction. This form must be provided to the consumers at least three business days before the loan is finalized at closing.
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|Old Rule||New Rule|
|Who is Responsible?||Closing Agent & Lender||Lender|
|Definition of Application||
|Delivery/Receipt Requirements of Initial Disclosures||Delivery of TIL, GFE, and other documents within 3 business days of receipt of application||Delivery of LE and other documents within 3 business days of receipt application|
|Delivery/Receipt Requirements of Closing Disclosures||Delivery of Final TIL, HUD-1, and other documents on or before closing||Receipt of CD at least 3 business days before closing
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|Delivery/Receipt Requirements of Revised Closing Disclosures||Revised Final TIL, due to inaccurate APR, received at least 3 business days before closing||Revised CD received at least 3 business days before closing if due to:
|Disclosure Delivery Methods||
|Real Estate Commission and
|Not reflected on GFE||Both will appear in the “Other” bucket of the LE|
|Total Fees||Lender’s and Owner’s Title Premiums appear in the same location||Lender’s and Owner’s Title Premiums are now separate according to “Required” and “Not Required”|
|Affiliate Fees||Generally, 10% tolerance bucket||Generally, zero tolerance/variance|
|Loan Features||Generally, found within the note||Now also reflected directly on the LE and CD|