If you have ever purchased a home, or have started the process of home buying you might be familiar with the term “TRID Rider”. If you have not heard it yet, you will. But what does it mean? How does it affect your home buying process? Does it help you in any way? Why am I asking you all these questions? I really want to get you question things, and thinking. TRID talk is still somewhat new, especially considering it was only enacted on October 3rd of 2015, with final revisions in July 2017. With it still being fresh on the scene there’s quite a bit of confusion, and lots of questions being asked. I am going to start off with expanding upon the terms and simplifying the main points the TRID, while giving some information that’s useful to you as a consumer. Also at the bottom I have including some links for visuals, the rule in detail, and other useful information.

Consumer rights

TRID: TILA-RESPA Integrated Disclosure

  • Know-Before-You-Owe Law
  • Went into effect October 3rd 2015
  • Helps borrowers understand their financing
  • Gives buyer 3 business days to review the CD, and ask any questions before signing
  • Requires two separate easy to read documents(formerly 4 confusing documents)
    • Loan Estimate(LE)
      • easy to read
      • clearly sets forth terms
      • only valid for 10 days
      • provides consumer with GFE of costs
      • must be given within 3 business of receiving consumer application
    • Closing Disclosure(CD)
      • must be given at least 3 days prior to closing
        • Exceptions:
          • last-minute change causes APR to be inaccurate
          • borrower wants to change loan program
          • prepayment penalty added to loan
      • if any question loan originator can give additional information
      • mirrors LE for ease of reading
      • must contain actual terms and costs
      • creditors must re-disclose terms and costs on CD if changes occur to make CD inaccurate
        • changes require new 3 day window
      • Buyer has right to review CD on business day prior to closing
      • Changes after closing must occur within 30 days
        • non-numerical clerical errors
        • documented refunds for tolerance violations
        • an event that causes the CD to become inaccurate after closing due to buyer or seller

1. Truth in Lending Act(TILA)

  • Enacted in 1968
  • Federal Law
  • Informed use of consumer credit
  • Requires disclosures about terms and costs
  • Standardized how borrowing costs are calculated and disclosed
  • Gives consumers the Right to cancel certain credit transactions that involve a lien on principle dwelling
    • Regulates certain credit card practices
    • Provides fair and timely resolution of disputes
  • Does not regulate charges imposed on consumer credit, except for certain high cost mortgage loans
  • Requires uniform disclosure of costs and charges

2. RESPA- Real Estate Settlement Procedures Act(RESPA)

  • Passed in 1974
  • Protects potential homeowners
  • Requires lenders to provide more information at certain points during the loan settlement process
  • Better educate homeowners with shopping real estate services
    • eliminates kickbacks, referral fees and dual tracking
    • imposes limitations on escrow accounts
  • Provides disclosures i.e. Good Faith Estimate(GFE)

Seeing the information set up into points makes it a lot easier to view, however I know it may not make it any easier to understand. So we can now see what TRID stands for, and that it is designed to protect the home buyer… But how exactly is that done? Let my simplify things, because if you have ever dealt with a mortgage I am sure you know they can be confusing.

The TRID rule is designed to give you the information you need to make an informed decision on the mortgage that is right for you. What TRID does is to simplify and consolidate loan disclosures while still providing all the required information, and give a very specific timeframe in which documents are to be provided for potential buyers to review. The LE and the CD are now set up to be easy to read, that makes them easier to understand. The two forms are very similar, mirroring each other, with terms and costs that are in a language that is much more understandable, this makes potential problems, issues or any errors quick and easy to spot and correct. With the timeframe setup it helps for a more streamlined closing, and assure that the process is on-time.

The responsibilities you have as a homeowner is to review your LE and your CD as soon as you get them, be sure there are no errors, and if you question anything bring it to your lenders attention ASAP. Being sure to keep your RealtorĀ® in the loop, will also help to allow the process to continue moving along in a timely fashion, and if anything needs to be adjusted they can keep the sellers agent informed as well. Check out the LE and CD samples below! Get to know your forms before buying a home and you can do it with confidence.

 

Loan Estimate Sample

Closing Disclosure Sample

Detailed Summary of Rule

Guide to Owning a Home

Home Loan Tool Kit

Closing Disclosure