It might sound like a new peace treaty, but TRID is one of the biggest changes we have seen in the mortgage industry. TRID is the acronym for the Truth-In-Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure (TILA/RESPA Integrated Disclosure). Before you doze off, let me explain why this is important.
TRID was created out of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This new rule was also referred to as “Know Before You Owe”, which makes sense from a consumer perspective. The mortgage industry and federal government have been working on the final version of this rule since 2010; the final rule was completed in December 2013 and implementation begins on August 1, 2015.
Anyone applying for a mortgage to purchase a home or to refinance their existing mortgage, as of August 1, 2015 will be receiving all new disclosures to explain the upfront numbers and the final numbers at closing. The upfront disclosures will be called the “Loan Estimate” (LE). This will replace the old disclosures called the Truth-In-Lending (TIL) and the Good Faith Estimate (GFE). The new “Loan Estimate” combines the two forms into one-three page disclosure that is easier to read and understand. It provides a summary of loan terms and gives a clear estimate of costs associated with the loan. Most importantly, the new “Loan Estimate” gives a clear summary of the bottom line cost of completing the home purchase. The new “Loan Estimate” must be delivered to the borrower(s) within three days of the loan application.
The new “Closing Disclosure” (CD) will replace the final Truth-In-Lending (TIL) and the HUD-1 Settlement Statement. This new five-page form will provide a detailed accounting of all the final figures for the purchase or refinance, as well as all final terms related to the mortgage for a purchase or refinance. This disclosure must be delivered to the borrower(s) three business days prior to closing. These strict delivery requirements are designed to do away with any last minute changes at the closing table.
Maintaining a focus on the customer experience is critical to the health of our industry. Change can be difficult, but improving the home purchase experience for our customers will be well worth the effort.
My advice to first-time home buyers is to act now — homes are selling fast. Spring is here, so now is the time to take advantage of historically low rates and great home prices. If you are moving up or downsizing, get your home listed with Shorewest and begin your search for a new home. Time is truly wasting because we do expect rates to rise and prices to increase.
Vice President, Wisconsin Mortgage Corporation
Categories: Quarterly Newsletter