The rule is also known as the TILA-RESPA Rule or TRID. It created new Loan Estimate and Closing Disclosure forms that consumers receive when applying for and closing on a mortgage loan. The Loan Estimate replaced the RESPA Good Faith Estimate (GFE) and the early Truth in Lending 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 TILA-RESPA Integrated Disclosure (TRID) rule requires two forms: the Loan Estimate and the Closing Disclosure. The Loan Estimate form is a three-page document that provides an estimate of the loan terms, projected payments, and closing costs.
TRID rules apply to MOST consumer credit transactions secured by real property. These include mortgages, refinancing, construction-only loans closed-end home-equity loans, and loans secured by vacant land or by 25 or more acres.
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.
TRID is an acronym that stands for TILA-RESPA Integrated Disclosures. (TILA is the Truth in Lending Act, and RESPA is the Real Estate Settlement Procedures Act.) It's a federal consumer-protection law that requires lenders to disclose certain types of key information to borrowers.
Now, a single integrated Closing Disclosure combines these two documents into one disclosure form. The TRID Rule does not apply to home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or a dwelling that is not attached to real property.
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 is an acronym that stands for TILA-RESPA Integrated Disclosures. It combines two federal laws, the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). Both protect borrowers by requiring lenders to disclose key information about mortgage loans within mandatory timelines.
The three-day period is measured by days, not hours. Thus, disclosures must be delivered three days before closing, and not 72 hours prior to closing. Note: If a federal holiday falls in the three-day period, add a day for disclosure delivery.
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.
Tolerance Requirements
The TRID Rule sets tolerance levels for certain loan charges disclosed on the Loan Estimate. There are three categories of charges with different tolerance standards: Zero Tolerance - Fees that cannot increase at all between the Loan Estimate and the Closing Disclosure.
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.
A common violation that's been plaguing lenders has to do with the issue date on the Loan Estimate and Closing Disclosure. Many lenders are producing Loan Estimates and Closing Disclosure forms with the same issue date, and this is a clear violation of TRID's new required timelines.
The TRID Rule has an exemption for any lender making five or fewer loans per year.
The provisions of the act apply to most types of consumer credit, including closed-end credit, such as car loans and home mortgages, and open-end credit, such as a credit card or home equity line of credit.
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 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 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.
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.
What are the two major features of the TRID Rule? The two major benefits of the TRID Rule are combining several forms and additional statutory disclosure requirements into two forms, which will reduce paperwork and consumer confusion. 10 business days after the Loan Estimate was originally provided.
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.