To the mortgage industry, TRID stands for TILA/RESPA Integrated Disclosures. For consumers, the regulation is called KNOW BEFORE YOU OWE!
If you have been in the market for a new house and have been speaking with a realtor or mortgage specialist, you may have heard the term, “TRID,” bouncing around. TRID is an overhaul of the mortgage industry and loan practices mandated by the government. TRID officially began with loan application dates as of October 3rd and beyond.
As a consumer, TRID was implemented to make the mortgage process more transparent and easier to understand with a more predictable process. The goal of the regulation is to ensure that consumers fully understand the mortgage process and all the costs associated with obtaining a loan. The regulators are also hoping that TRID will help consumers do more shopping for mortgage services by making side-by-side cost comparisons easier to break down. Here is a quick primer and some TRID survival tips to consider.
New terms used by TRID and the old ones, which they have replaced.
Good Faith Estimate of Closing Costs = Loan Estimate or LE
Truth in Lending Disclosure = Now part of the Loan Estimate or LE
HUD = Closing Disclosure or CD
Final Truth in Lending = Now part of the Closing Disclosure or CD
Borrower = Consumer
Lender = Creditor
Closing = Consummation
Here are some tips to make your loan process as smooth and headache-free as possible.
• Quickly provide every document your creditor requests and be prepared to provide more.
• Obtain your insurance at the time of application to get the task out of the way. At latest, insurance must be in place two weeks prior to consummation.
• Be prepared to liquidate funds early.
• If receiving a gift, have the creditor-required gift documentation completed right away and have the funds transferred early for verification purposes (at least two weeks prior to consummation).
• Do not do anything that impacts your financial profile once you start home shopping. Do not move money, apply for credit cards or other consumer loans, do not change jobs, do not co-sign on any debt, do not cancel or close any credit accounts. Talk with your loan originator first if you need to take any of these actions.
• You must receive the Closing Disclosure three business days prior to consummation or the closing will be delayed.
• There is a hardship provision, however it is very difficult to prove.
• Your consummation (closing) will be postponed if one of the following actions occur between receiving the CD and the consummation; the APR on the loan varies by an eighth or more, the loan program changes or there is an addition of a pre-payment penalty.
The bar has been raised for mortgage and real estate professionals in order to provide you the most transparent and highest quality of service. Please do not hesitate to ask any questions you may have. Your real estate and mortgage professionals are there for you!