The new TILA-RESPA Integrated Disclosures (“TRID”) go into effect Saturday, October 3, 2015. Consequently, it is important for lenders to review the new forms and understand the timelines which will govern most consumer lending transactions secured by real property.
The TRID disclosure requirements will apply to most closed-end consumer credit transactions secured by real property with the exception of home equity lines of credit, reverse mortgages and loans secured by mobile homes. Two forms created by the Consumer Finance Protection Bureau (“CFPB”) comprise the new disclosures requirements—(1) the Loan Estimate and (2) the Closing Disclosure. A sample Loan Estimate can be found here while a sample Closing Disclosure can be found here.
The Loan Estimate replaces the Good Faith Estimate and Preliminary TILA forms and must be provided to the borrower no later than the third business day after receiving an application from a consumer. An application will be deemed to have been submitted when consumers provide their (1) name; (2) monthly income; (3) social security number; (4) property address; (5) estimated value of property and (6) requested loan amount.
The Closing Disclosure replaces the HUD-1 and Final TILA disclosure. The Closing Disclosure must be provided to the borrower three business days before closing. A delay in providing the Closing Disclosure will delay closing. In addition, changes to loan terms which result in amending the Closing Disclosure could also delay closing.
These new disclosure requirements are designed to be more consumer-friendly and easier to understand, but lenders must be aware of the potential drawbacks. Both the Loan Estimate and Closing Disclosure invite consumers to contact the CFPB with complaints regarding improper loan figures, confusing terms, or closing delays. The disclosures also require additional information not included in the disclosures they replace including detailed interest rate lock information, specific loan comparison figures, and future refinance considerations. With 30 days remaining until the TRID disclosure requirements become effective, lenders must use this time to ensure a smooth transition towards compliance with these mandatory procedures.