Revolutionary Changes Coming With TRID
TRID which is making professionals in the market industry anxious will impact greatly on how lenders and consumers operate in the industry as from Oct 1, 2015. Also known as TILA-RESPA Integrated Disclosure Rule, TRID will bring a lot of significant changes in the mortgage process. Real estate agents as well as homebuyers will be affected by the change as different forms, processes and different timelines are imposed.
This changes are meant to smoothen the real estate process by making mortgages more transparent but there’ll be a learning curve. If you’re a stakeholder in the mortgage industry, take note of the following three changes that comes with TRID.
“The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy.” ~ Martin Luther King, Jr.
New Forms Are Coming
The homebuyer will be the center of all these changes and he will be receiving new disclosure forms explaining the loan estimate and closing. The loan estimate form will combine the Truth in Lending Disclosure Good Faith Estimate (GFE) in a shorter form that will be easier to understand. This form will explain the mortgage loan’s features, risks and costs. Under TRID, a lender can’t compose any fee at will except the fee of obtaining a client’s credit report until the client has received the loan estimate and has indicated an intent to continue.
The Closing Disclosure form combines the HUD-1 settlement statement and the final Truth-In-Lending statement into a simpler form that provides a detailed account of the entire real estate transaction, terms of the loan, closing costs and fees. This may changes are meant to transform the use of huge documents to a more manageable documentation which can be reviewed easily.
Tight Time Frame
Lenders will be required to provide a Loan Estimate form to clients within 3 business days of loan application. The Closing Disclosure form should also be provided within three business days before the consumer becomes contractually obligated to the mortgage which is closing (loan consummation). Changes to the terms of the loan will restart a new three-business-day waiting period. Both of these forms can be delivered by mail, electronic delivery and in person.
Effectiveness of the TRID
The TRID rules and regulations apply only to loan applications which will be reviewed after Oct. 1, 2015. About 10% of transactions will experience closing issues due to TRID (about 40,000 transactions a month). Lenders will after this time will be careful when offering mortgages so as not to be out of the compliance with the new rules. This may lead to delayed closing dates and mortgages. This will affect the tight timelines around settling into new homes.