No application fee: Under TRID rules, a mortgage lender can't charge any fee before they provide a Loan Estimate. The only fee a lender can charge before providing a Loan Estimate is the fee to run your credit report.
§1026.19 (e)(4)(i) If the Loan Estimate is required to be redisclosed due to a valid change in circumstance, it must be delivered to the borrower within 3(three) days of receipt of the information leading to the change.
TRID rules dictate what mortgage information lenders need to provide to borrowers and when they must provide it. TRID rules also regulate what fees lenders can charge and how these fees can change as the mortgage matures.
Most consumer mortgage loan closings are covered. Exceptions include reverse mortgages, open-ended loans such as HELOCS, loans for business, commercial, or agricultural purposes, and loans made to other than natural persons. Let me state the obvious: cash deals are not covered by TRID.
Timing Requirements – The “3/7/3 Rule”
The initial Truth in Lending Statement must be delivered to the consumer within 3 business days of the receipt of the loan application by the lender. The TILA statement is presumed to be delivered to the consumer 3 business days after it is mailed.
The consumer may, after receiving the disclosures required by this paragraph (c)(1), modify or waive the three-day waiting period between delivery of those disclosures and consummation or account opening if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency.
What should I do if I do not get a Closing Disclosure three days before my mortgage closing? If you have not received this document, you should request one from your lender immediately. You should also not go through with the closing until you receive and review the Closing Disclosure.
The TRID Rule applies to most types of mortgage loans. Mortgage loans to which the TRID Rule does not apply include HELOCs, reverse mortgage loans, or mortgage loans secured by a mobile home or dwelling that is not attached to real property.
The TRID rule requires lenders to provide two disclosure documents to lenders: a loan estimate and a closing disclosure. Because each document must be timed to give the borrower three days to look it over, it's sometimes referred to as the “three-day rule.”
According to the Consumer Financial Protection Bureau's final rule, the creditor must deliver the Closing Disclosure to the consumer at least three business days prior to the date of consummation of the transaction.
The aggregate amount of the charges paid by or imposed on the consumer at consummation may not exceed ten percent for fees originally disclosed on the LE. In the event these fees were not disclosed in good faith, they would be subject to the zero tolerance bucket.
The TRID rule provides that the borrower can waive the seven-business-day waiting period after receiving the LE and the three-day waiting period after receiving the CD if the borrower has a “bona fide personal financial emergency,” which requires closing the transaction before the end of these waiting periods.
TRID applies to most mortgages, construction-only loans, loans secured by vacant land or by 25 or more acres, home refinancing, closed-end home equity loans, and tax or estate planning for specified trusts.
Key Elements of TRID: Loan Estimate Form: Replaces the initial Truth-in-Lending disclosure and the Good Faith Estimate. It must be provided to borrowers within three business days of submitting a mortgage application. This form summarizes key loan terms, estimated loan and closing costs, and other critical information.
The rule does NOT apply to Home Equity Line of Credit transactions reverse mortgages mortgages secured by a mobile home or other dwelling that is not attached to real property. Also, TRID rules do NOT apply to loans made by a person or business that makes 5 or fewer mortgages in a calendar year.
For traditional mortgages, the most noticeable is the three business-day waiting period between receiving your closing disclosure and the consummation date (often known as your closing day). This three business-day rule was introduced in October of 2015, and it applies to both original mortgages and refinancing.
The Rule of 28 – Your monthly mortgage payment should not exceed 28% of your gross monthly income. This is often considered the “Golden Rule,” and many lenders abide by it.
Capacity, Credit, and Collateral
The three C's of underwriting play an essential role in the underwriting process. Regarding Capacity, your debt-to-income ratio is the most important component. Ideally, you would like your DTI ratio to be at or below 40%. There are home loan programs that allow up to a 50% DTI ratio.
WAITING PERIODS
If the Closing Disclosure is acknowledged on a Thursday, for example, the borrower can sign loan docs on the following Monday; Friday would be Day #1; Saturday would be Day #2; and Monday would be Day #3 (borrower can sign on Day #3).
What Happens If a Loan Estimate Is Not Sent Within the 3 Days? This is a violation of the law. If a lender fails to provide origination information, the applicant can report their creditor details to the Consumer Financial Protection Bureau.
The six items are the consumer's name, income and social security number (to obtain a credit report), the property's address, an estimate of property's value and the loan amount sought.
“Clerical” = does not affect a numerical disclosure and does not affect requirements imposed by § 1026.19(e) or (f). 2. What is a clerical error? • CD discloses incorrect settlement service. provider as recipient of a payment.