TRID

TILA RESPA Integrated DisclosureCFPB New Rules and Regulations

Consumer Financial Protection Bureau (CFPB) GoalsConsumer Financial Protection Bureau (CFPB) creates and enforces TILA-RESPA Integrated Disclosure (TRID).

TILA-RESPA rule consolidates four existing disclosures (GFE, Initial TIL, Final TIL and HUD-1) into two forms: Loan Estimate (LE) and Closing Disclosure (CD).

CFPB Goal

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 for which they are applying.

Closing Disclosure is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction.

Consumer Financial Protection Bureau (CFPB) Goals

The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan.

The forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.

TILA-RESPA Integrated Disclosure Rules (TRID)

• The new LE and CD will be effective for the applications dated on or after 3rd Oct’2015.

• Lenders will be required to use GFE, HUD-1 and TIL for applications received prior to 3rd Oct’2015.

• TILA-RESPA rule does not apply to HELOCs, Reverse Mortgages and Mobile Homes or not attached to real property.

Loan Estimate and Closing Disclosure

Loan Estimate

Loan Estimate replaces Good Faith Estimate and Initial Truth In Lending

Loan Estimate should be disclosed to borrower within 3 business days of application received.

Closing Disclosure

Closing Disclosure replaces Final Truth In Lending and HUD-1

Closing Disclosure must be received by borrower at least 3 business days prior to closing.

Standard LE goes with standard CD and Alternate LE goes with Alternate CD.

Wholesale Loan Estimate

• Wholesale Loan Estimate does not disclose the broker compensation paid by creditor.

• Wholesale LE should reference the Creditor and the broker.

• The broker compensation fees is disclosed in Closing Disclosure.

Change of Circumstances

• Lender may only use revised or corrected LE when specific requirements are met.

Intent to Proceed

• Once the borrower has given an intent to proceed the LE becomes binding.

• Lender must honor fees on the binding LE and may only revise fees if a valid change of circumstance (CofC) has occurred.

• If there is no CofC then any fee outside the tolerance violation must be paid by the lender.

Tolerance Violations

Three categories of tolerances:

• Zero % Tolerance Category- the fee cannot increase at all.

• 10% Tolerance Category- fees can increase up to 10%.

• No tolerance- fees can change.


• What charges are subject to (zero) 0% tolerance?

• For all other charges, creditors are not permitted to charge consumers more than the amount disclosed on the Loan Estimate under any circumstances other than changed circumstances that permit a revised Loan Estimate

• These zero tolerance charges are:

• Transfer taxes.

• Fees paid to the creditor, mortgage broker, or an affiliate of either

• The consumer is not permitted by the creditor to shop for the third-party service provider for a settlement service


What charges are subject to a 10% cumulative tolerance?

• Charges for third-party services and recording fees paid by or imposed on the consumer are grouped together and subject to a 10% cumulative tolerance.

• These charges are:

• Recording fees

• The charge is not paid to the creditor or the creditor’s affiliate

• The consumer is permitted by the creditor to shop for the third-party service, and the consumer selects a third-party service provider on the creditor’s written SPL.


What charges are subject to no tolerance?

• Creditors are permitted to charge consumers more than the amount disclosed on the Loan Estimate without any tolerance limitation.

• These charges are:

• Prepaid interest; property insurance premiums; amounts placed into an escrow, impound, reserve or similar account.

• For services required by the creditor if the creditor permits the consumer to shop and the consumer selects a third-party service provider not on the creditor’s written list of service providers.

• Charges paid to third-party service providers for services not required by the creditor

Valid Change of Circumstances

Changed circumstance affecting the settlement charges

Changed circumstance affecting eligibility

Revisions requested by consumer

Interest rate dependent charges

Expiration of the initial Loans Estimate

Delayed settlement date on construction loan

TILA-RESPA Quick Reference Guides

• http://www.consumerfinance.gov/regulatory-implementation/tila-respa

• http://www.realtor.org/topics/trid-tila-respa-integrated-disclosure

Sample of Loan Estimate

http://files.consumerfinance.gov/f/201403_cfpb_loan-estimate_fixed-rate-loan-sample-H24B.pdf

CD Replacing HUD-1 and TIL


Improved consumer understanding

Risk factor

Short term and loan term costs

Monthly payments

Better comparison shopping

Comparison of competing loan offers

Shopping for closing costs


Avoid costly surprises at the closing table

• Easier comparison of the Estimate and final loan terms of the loan

• More time to consider the choices

• Limits on closing cost increases

General Review about the Closing Disclosure

• CD is a Combination or replacement of the final TIL and HUD.

• Lender is liable for the content and the delivery of the disclosure

• CD must be received by the borrower three specific business days before closing.

• All persons on Title on a rescindable transaction (refinance)

• Primary borrower on a non-rescindable transaction

• CD may not be delivered the same day as the LE

• Standard LE goes with standard CD and Alternate LE goes with Alternate CD

• Changes in APR of more than 1/8% increase, product change, or addition of a prepayment penalty require an additional 3 day waiting period.

• There is a 30 day limit on numerical and 60 day revision for the clerical only

TIMING IS CRITICAL

Borrower must received the CD prior 3 business days prior to the day of closing .

Lender will protect the delivery deadline by sending it themselves by following (mail box) rule . The 6 days ahead a time However, it must be received 3 days ahead of closing.

The very latest time is 60 days post closing that can be non numerical or we consider only clerical revision made on the CD to reflecting actually the disbursement and the closing figures the corrected revised CD may be delivered to the borrower within 60 days of closing.

The 30 days correction timeline is for Numerical issues like inaccurate fee or something disclosed on the CD at the time of closing we have 30 days to make that corrections and non of these correction can affect the APR and ADDED PRE-PAYMENT PENALTY or change the product to the Loan .

Closing Delays

There are three primary reasons why a new closing disclosure would require a 3 days waiting period?

- APR is inaccurate or increased by 1/8% or more

- Product change “ 30 years fixed to 15 years fixed or ARM to Fixed.”

- Pre-payment penalty was added.

As long as the change is not one of the above ,the transaction is only subject to the buyer’s right to wait 24 hours to sign. If that right is waived ,the transaction could close the same day.

Thank You!

Documents

TRID