TILA RESPA Integrated Disclosure (TRID) Resources

TILA RESPA Integrated Disclosure (TRID) Resources

Overview

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What is the TILA-RESPA Integrated Disclosure (TRID) Rule?
Specific Issues faced by consumers in the mortgage closing system

Benefits

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What are the benefits of the new rules and forms?
What transactions are not covered under the new rule?

History

History of Integration Efforts

For more than 30 years, TILA and RESPA have required lenders and settlement agent to provide borrowers who apply for a mortgage loan different, but overlapping disclosure forms regarding the terms of the loan and its costs. Throughout this time period, the duplicitous nature of the forms was identified as being inefficient and confusing for both the consumer and to the industry that they were borrowing from.

There have been previous efforts to integrate the TILA and RESPA disclosure forms, inspired by the complexity, amount and overlap of information in the forms. Congress enacted the Economic Growth and Regulatory Paperwork Reduction Act of 1996 which required the board and HUD to “simplify and improve the disclosures applicable to the transactions under TILA and RESPA, including the timing of the disclosures, and to provide a single format for such disclosures which will satisfy the requirements of each such Act with respect to such transactions.”

If the agencies found that legislation was necessary or appropriate to simplify the disclosures, a report was to be submitted to Congress with recommendations. The Board and HUD did NOT propose an integrated disclosure, but did submit a report that concluded that “meaningful change could come only through legislation” and provided their recommended revisions for TILA and RESPA. The agencies made recommendations to amendments both to TILA and RESPA in their report. These included a clearer definition of finance charge, and replace the “some fees in, some fees out” approach with “all costs the consumer is required to pay in order to close the loan, with limited exceptions.” The report did not result in legislative action.

In 2009, the Board published the 2009 Closed-End proposal which included sweeping changes to the TILA disclosures and stated the Board would continue to work with HUD toward an integration of the two disclosure form system. The proposal also stated that consumer insight would be used to better tailor the forms for mortgage loan purposes. Ten months later in July 2010, the Dodd-Frank Act was enacted by Congress, transferred authority under TILA and RESPA to the Bureau and that the Bureau would write a singular disclosure scheme for both the opening and closing of a loan.

To access the new features of our real estate closing software, EasyCDF, click here.

New Forms

Two new forms created by TILA-RESPA

 

Loan Estimate Form
Replaces two current Federal Forms. 

  • Good Faith Estimate designed by HUD under RESPA
  • Truth in Lending Disclosure designed by Board of Governers of the Federal Reserve Board under TILA
  • New form also incorporates new disclosures required by Congress
  • Provision by Mortgage Broker: loan estimate form is to be provided to consumer upon receipt of an application by a mortgage broker
  • Timing: Lender provides consumer form no later than 3 business days after the consumer applies for a mortgage loan
  • Limitation on Fees: Consumer cannot be charged fees under the consumer has received the Loan Estimate form AND have communicated their intent to proceed with the transaction
  • Disclaimer on Early Estimates: Estimates can be provided to consumers prior to the application, but must contain a disclaimer to prevent confusion with the Loan Estimate form

Learn more about the Loan Estimate Form

Closing Disclosure Form
Replaces two current Federal Forms

  • The HUD-1 form, designed by HUD under RESPA
  • Truth in Lending disclosure designed by board under TILA
  • New form also incorporates new disclosures required by Congress

Timing: Consumers must be provided the Closing Disclosure form at least 3 business days before the consumer closes a loan. If significant changes are made between delivery of the form and the closing, such as changes to the APR above 1/8 a percent, changes to the loan, or a prepayment penalty has been added, the consumer must be given a new form with an additional 3 business day waiting period after the new form is received.

Provision of Disclosures: The creditor is responsible for delivering the CDF to the consumer. Settlement agents may also provide the form, as long as they comply with the requirements. The final rule acknowledges the settlement agents role in the closing of real estate and mortgage loan transactions in addition to their preparation of HUD-1. Any uncertainty regarding the role of settlement agents is avoided and there is sufficient flexibility for creditors and settlement agents in deciding the most efficient means of delivery of the CDF to consumers. In addition to the features you already may be familiar with from Easy HUD, including automatic tax calculation and one-click electronic 1099-S filing, discover other ways EasyCDF will improve your real estate closing business.

CFPB Resources

TRID Compliant Closing Disclosure Forms for 2015

Download these resources from the CFPB to familiarize yourself with the new law changes.

Implementation Issues

TILA RESPA Implementation Challenges

Because of the impact the implantation of TILA RESPA will have, there are some outstanding issues. For instance some lawmakers are asking for a “hold harmless” period. On October 7, 2015 the U.S. House of Representatives passed a bill that would provide such a grace period for five months, through February 1, 2016 for good-faith efforts to comply with the new TRID changes. The bill now faces the Senate, where its future remains uncertain.

Below are links to related news stories related to TILA RESPA:

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