The Consumer Finance Protection Bureau’s (CFPB) TILA-RESPA Integrated Disclosure (TRID) regulations caused many changes in the real estate industry. The changes are intended to make the real estate purchase process more transparent for borrowers and to streamline the process, eliminating duplicate forms and data requirements.
One of the biggest and most confusing changes under TRID is the use of two new forms: the Loan Estimate (LE) and the Closing Disclosure Form (CDF). These forms replace old forms and combine the overlapping data requirements of four of the current Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) forms.
By reducing the data requirements down into two forms, lenders can eliminate duplicate data entry, make it easier for borrowers to locate key information, and will save time during the real estate closing process.
The New Forms: The Loan Estimate and the Closing Disclosure Form
The two new forms don’t require any new information; they simply consolidate information that was already being collected from four forms down to two.
The Loan Estimate provides borrowers with disclosures and information regarding their mortgage. The data covers loan costs and transaction terms that should help borrowers better understand the key components, costs, and risks of the loan. This form replaces the existing RESPA GFE and the initial TILA disclosure for most residential real estate transactions.
The Closing Disclosure Form is used in transactions that require use of the new Loan Estimate form. The CDF is the final disclosure provided to borrowers. It reflects the true costs of the closing, rather than just the estimated costs, as were provided by the Loan Estimate. The CDF replaces the existing HUD-1 and the final TILA disclosure forms.
The new Loan Estimate and Closing Disclosure Form will be used for most consumer mortgages, but not all. In most cases, lenders and real estate settlement agents will be using the old HUD form and the new LE and CDF documents, depending on the type of real estate transaction being processed.
When to Use the Old HUD Forms
Use the current HUD forms required by TILA and RESPA in the following situations:
- Home equity revolving lines of credit
- Reverse mortgages
- Mortgages secured by a mobile home
- No-interest second mortgages
When to Use the New Loan Estimate and CDF
Lenders and real estate settlement agents will use the new LE and CDF documents for:
- Most closed-end consumer mortgages
- Construction-only loans
- Loans secured by vacant land or by 25 or more acres
Using the correct forms isn’t the only change settlement agents have to worry about. There are also strict new timing requirements to follow.
The LE must be provided to borrowers or placed in the mail no later than the third business day after the loan application has been received.
The CDF must be provided to borrowers no later than three days before the closing.
Software Can Help You Meet Form and Timing Requirements
Although the new process and timing requirements sound intimidating, they don’t have to be. Easy Soft’s EasyRealEstate Suite is the all-in-one software solution that real estate settlement attorneys need to ensure compliance with TRID. Easy Soft has designed the suite to walk real estate settlement attorneys through the closing process, saving time, avoiding errors, and streamlining the process with automatic data population of the correct forms.
The EasyRealEstate Suite includes:
- EasyCDF (MISMO and TRID Compliant)
- Easy HUD
- Real Estate Documents
- Easy Amortization
EasyRealEstate is available in desktop and cloud versions and comes with an unconditional, 30-day money-back guarantee and unlimited, live-by-phone technical support valid as long as the subscription is active.
Contact Easy Soft today at 1-800-905-7638 to learn more about our EasyRealEstate Suite and how it can help your firm manage real estate closings in-house.