NEW CONSUMER PROTECTION RULE FOR BORROWERS -TRID-

Effective October 3, 2015, the Consumer Financial Protection Bureau has incorporated the ‘Know Before You Owe Rule’. The Know Before You Owe mortgage initiative is designed to empower consumers with the information they need to make informed mortgage choices. It includes the implementation of the TILA-RESPA Integrated Disclosure rule, which is often referred to as “TRID.”The new rule aims to provide consumers with more time to review the total costs of their mortgage prior to closing. The Loan Estimate form is due to consumers three days after they apply for a loan, while the Closing Disclosure form is due three days prior to closing.
The current HUD-1 settlement form can be revised and delivered up to the day of settlement, but the new mortgage forms must be finalized and in the borrower’s possession three days prior to closing. If that deadline is not met, borrowers will receive another re-issuance of the closing disclosure and wait another three days. This means Buyers and Sellers will receive a separate HUD on the day of the closing, they will no longer see each others closing costs or proceeds.
As these new rules take effect, the hard work to deliver timely and efficient closings continues; extra time for closings and open lines of communication will be critical.

Seven Facts You Need To Know About The Mortgage Process
1. Pre-approvals Remain Unchanged By The New Rule.
2. Application Begins With A Loan Estimate
The lender must provide the Loan Estimate within three business days to the Borrower, however there is no set time frame for the Borrower to receive it. If the lender mails the Loan Estimate, the Borrower may receive the Loan Estimate more than three days after their application.
3. Borrower Must Indicate Their Intent To Proceed
Lenders won’t move forward with an application without a clear indication from the Borrower that they intend to proceed. After 10 business days if the lender does not hear back from the Borrower, the Borrower will have to start the application process from the beginning.
4. Lenders Can Charge Fees Once The Borrower Shows Intent To Proceed
Lenders may require Borrowers to provide payment before beginning the appraisal, processing, verification or underwriting processes.
5. Changes In Circumstances May Require A Revised Loan Estimate or Closing Disclosure
Common reasons why a Loan Estimate maybe revised:
1. Borrower decided to change loan programs or down payment.
2. Appraisal on the home came in higher or lower than expected.
3. Borrower’s credit decreased during the application process.
4. Lender could not document Borrower’s overtime, bonus or gifting income.
6. Borrower Must Receive Closing Disclosure 3 Business Days Prior To Closing
Lenders must provide the Borrower the Closing Disclosure three business days prior to closing so they can review the summary of the final loan terms. In the past, Borrower’s were pressured to accept changes in the loan terms on the day of the close.
7. Extra Three Day Loan Extensions Will Most Likely Not Occur
While rare, the only time an additional 3 day extension would be issued for a revised Closing Disclosure Are:
1. Increase in APR/interest rate, a decrease in the APR will not require a new Closing Disclosure.
2. A prepayment penalty is added to the loan making it expensive to sell or re-finance.
3. The loan product switches from an fixed rate to an adjustable rate.
Additional information regarding TRID can by found on:
Illinois Association of Realtors: http://www.illinoisrealtor.org/
and
National Association of Realtors:
http://www.realtor.org/topics/trid-tila-respa-integrated-disclosure