In October 2015, the Consumer Financial Protection Bureau implemented the TILA/RESPA Integrated Disclosure (TRID) – or more simply – the Know Before You Owe mortgage disclosure rule. These new rules were designed to make the process of getting a mortgage easier to understand while giving potential borrowers the proper tools to shop around and compare loan terms.
Under these rules, lenders are required to furnish borrowers with two straightforward new documents called the Loan Estimate and the Closing Disclosure. In addition, for most mortgages, lenders must give borrowers three business days to review the terms, costs and fees associated with the loan prior to acceptance. To further protect the borrower against unexpected charges at closing, the new rules establish limitations to the timing and amount of changes a lender can make to some of the costs included in the Loan Estimate.
The new forms present key information such as interest rate, monthly payments, and closing costs more clearly so that borrowers are able to make better, more informed decisions. Here are some additional details on these documents and the rules that accompany them:
The new Loan Estimate form replaces both the Good Faith Estimate and Truth in Lending Act disclosure documents. These two disclosures have now been combined into one form that must be provided to the borrower within three days of the date of their loan application. The new regulations increase the importance of accuracy in the information lenders present to borrowers in the Loan Estimate and accompanying documentation so that fewer adjustments need to be made before and at closing.
The new Closing Disclosure – which must be provided to the borrower during the closing process – is a single form that combines the final Truth in Lending and HUD-1 settlement statements. Certain discrepancies between the Closing Disclosure and the Loan Estimate will require the lender to create a new document and allow an additional three business days for the borrower to review and sign off on.
If you would like more information about how to get a mortgage loan, the home loan experts at Cliffco Mortgage Bankers would be happy to help. Call us today at (516) 408-7300.