What Is TRID And How Does It Affect Purchase And Refinance Mortgages

This Article ON What Is TRID And How Has TRID Changed The Mortgage Industry Was UPDATED On November 1st, 2018

What Is TRID?

• Many consumers still ask What Is TRID and are not quite clear with this four letter word
• In order to make loan disclosures simpler and more easy to understand, the Dodd-Frank Act directed the Consumer Financial Protection Bureau (CFPB) integrate all TILA and RESPA mortgage disclosures
• It was integrated under the TILA- RESPA Integrated Disclosures (TRID) rule
• This is also referred to as “Know Before You Owe.”

In this article, we will cover and discuss what TRID is.

Know Before You Owe

All home loans originated after October 3, 2015, are subject to “Know Before You Owe,” which can be broken down into three elements to assist consumers:

1. Disclosures
2. Timing
3. Electronic Loan Process

What Is TRID: The Three Elements Of TRID Explained

Disclosures:

Consumers can now breathe easier, as they will only receive two disclosures, rather than the previous four.

• The new forms are more straightforward
• It was easier to understand
• Has the same format for easier comparison
• Prior to October 3rd, consumers received an Initial Truth-in-Lending and Good Faith Estimate at the beginning of the process, which has been replaced by the Loan Estimate
• And, at the end of the process, the consumer received a Final Truth-in-Lending and HUD-1 Settlement Statement, subsequently replaced by the Closing Disclosure
• The four previous forms all had different formats and were difficult to read and understand

The simplification and standardization of these forms are a very positive change for consumers.

Does TRID Delay Mortgage Closings

Timing:

• The new rules regarding the delivery times of the disclosures are one area that the lending and real estate communities fear
• This is because it may cause delays for consumers
• The new timelines for delivery of disclosures are strictly outlined and enforced by the CFPB
• The Loan Estimate must be delivered to the consumer three business days after a completed application is submitted
• This is the same as the old rule with the Good Faith Estimate
• Along with the Loan Estimate, the lender will send an Intent to Proceed form
• Lenders may not begin the process of requiring processing documentation or ordering an appraisal until the consumer signs, acknowledges and returns the Intent to Proceed
• If at any time during the process there are changes to any loan terms, such as loan amount, loan program or locking in an interest rate, a revised Loan Estimate must be delivered
• And loan consummation may not occur less than four business days from delivery
• Which puts a burden on the consumer to make all final decisions well in advance of loan consummation
• Prior to loan consummation, the consumer now has ample time to review and understand the terms of their loan
• This holds true because Closing Disclosure must be delivered to the consumer no less than three business days prior to loan consummation

At this point in the process, it’s incumbent on all of the involved parties, consumers, real estate agents, settlement agents, and lenders to work closely together to ensure there are no delays.

Electronic Loan Process

Electronic Loan Process:

• To satisfy the disclosure timing rules and closing deadlines, many lenders have adopted a fully electronic loan process
• This includes online applications, secure document portals, email delivery, and electronic signatures
• Nearly a week can be saved if not using the slow back and forth of the U.S. Postal Service
• Modern technology in the mortgage industry has changed the process for the better and is huge money- and time-saving benefit for consumers

 About The Author

Michael Gracz is a senior loan officer for Gustan Cho Associates. Mike is a contributing associate editor and writer for Gustan Cho Associates Mortgage & Real Estate Information Resource Center. We are honored to have Mike as part of our team due to his extensive knowledge in all areas of lending and mortgage regulations.

• Mike Gracz loves what he does; making the dream of home ownership become a reality
• Michael loves to write informative blogs about mortgage lending and real estate
• He feels that education is the key in having every home buyer informed and educated in making the most important decision of their lifetime; a home purchase

Mike is an expert in all loan programs from government loans to Fannie/Freddie, to non-prime mortgage loan programs.

• Mike feels that education is key in being a great manager so he is always up to date with the latest mortgage rules and changes
• He makes sure that all of his loan officers and support staff are educated and have the latest updates on all mortgage lending guidelines
• Mike Gracz of Gustan Cho Associates is not just available to his borrowers 7 days a week, but also to his staff and colleagues

Borrowers who are in need of a pre-approval letter and/or are in the mortgage process not and are not happy with your current lender, contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. Michael Gracz of Gustan Cho Associates is available 7 days a week, evenings, holidays, and weekends.