Today marks the 1st day of new federally mandated regulations known as “TRID” (TILA-RESPA Integrated Disclosures). The Consumer Financial Protection Bureau (CFPB) has introduced these new regulations as part of their “Know Before You Owe” initiative.
New forms are part of TRID whose purpose is to help make it easier for borrowers to understand complex mortgage documentation. Home mortgages are important for consumers so that they can achieve the dream of homeownership. As much as we try to make the mortgage process less complex for our clients it is still not as simple as we all would like. These new TRID forms look to help with the complexity by merging four forms into two forms.
The New Forms
During the mortgage process, we as the mortgage lender are required to give you these two new forms. One form, the Loan Estimate, you will receive early in the process. The second form, the Closing Disclosure, you will receive later on so you can review the final loan terms before you close.
The Loan Estimate
The Loan Estimate replaces both the initial Truth-in-Lending (TIL) statement and the Good Faith Estimate (GFE).
Within 3 business days after receiving certain information on your loan application (income, property value, etc.) you will be sent a Loan Estimate.
Your Loan Estimate (LE) consists of three pages. The first page lists general information about your loan:
Applicant info and property details
Loan type, purpose and terms
Projected payments during the loan term
Estimated closing costs and how much cash you’ll need at closing
The second page of the Loan Estimate breaks down the closing costs:
Origination Charges (this covers our expenses to do the loan)
Other Costs (third-party charges like homeowners insurance)
Calculation used to determine estimated cash required at closing
Adjustable interest rate table, payment table (for ARM loans only)
The last page shows information about your lender and further details to help you choose which loan is right for you:
Contact info for us “the lender” and your loan originator
Comparisons (consistent table format to make comparing different loans easy)
Other Considerations (details specific to this loan from this lender)
When you’ve decided on your loan option, you MUST sign the Intent to Proceed document. Without this consent, we as your lender cannot move forward with processing your loan.
The new Closing Disclosure replaces both the final Truth-in-Lending disclosure and the HUD-1 statement.
When your loan has been processed and is ready to close, you will have a final discussion with us to go over the loan and its terms. We want to make sure you understand and agree to everything. We will then provide you a Closing Disclosure detailing your loan terms.
The Closing Disclosure is designed to be easy to read and contains the same information as the Loan Estimate essentially. It will reflect your final fees, charges and includes additional information relating to your escrow account (which holds funds to pay your taxes & insurance(, if applicable. You need to review and confirm everything matches what you have agreed to.
The New 3-Day Waiting Period
We as your lender are required to give you a minimum of three business days to review the Closing Disclosure before your closing can take place. If changes to the Closing Disclosure are made, another three-day review period may be required.
To prevent a delay in the closing of your loan, it is important to acknowledge receipt of the Closing Disclosure as soon as you receive it.
Here at Mason-McDuffie Mortgage we have been working hard to make sure our clients have a seamless transaction with these new regulations. If you have any questions about the new regulations or forms, please contact your Loan Originator, or you can email us at firstname.lastname@example.org.