TILA-RESPA Integrated Disclosures (TRID)

Overview of TILA-RESPA Integrated Disclosures (TRID)

The TILA-RESPA Integrated Disclosures (TRID) rule was created to simplify the understanding and transparency of mortgage documents for borrowers. Introduced in 2015 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, TRID was an amalgamation of two previous federal mandates: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The primary purpose of these reforms was to combine different disclosures into fewer and clearer forms that could help consumers make more informed choices about their mortgages.

Examples of TILA-RESPA Integrated Disclosures (TRID)

Example 1: Loan Estimate (LE)
- Purpose: To provide an estimate of the terms and costs of the mortgage loan.
- Elements: Interest rate, monthly payment, and estimated closing costs such as appraisal fees, title insurance, and recording fees.
Example 2: Closing Disclosure (CD)
- Purpose: To offer a detailed account of the actual costs and terms of the mortgage transaction at closing.
- Elements: This includes final loan terms, projected monthly payments, and a breakdown of various closing costs.

Frequently Asked Questions (FAQs)

What are the key goals of TRID?

Goal 1: Reduce the number of mandatory disclosure forms.
Goal 2: Simplify the language and presentation of these forms.
Goal 3: Ensure borrowers are better informed about their mortgages and settlement costs.

Do TRID rules apply to all types of loans?

No, TRID rules specifically target most closed-end consumer mortgages, excluding home equity lines of credit (HELOCs), reverse mortgages, and mortgages secured by a mobile home or dwelling not attached to real estate.

How have TRID rules impacted the mortgage process?

TRID has notably extended the time borrowers have to review key mortgage documents, ensuring a mandatory three-business-day review period before closing.

Can terms on the Loan Estimate change before closing?

Some charges on the Loan Estimate can change before closing, while others are subject to “tolerance limits” that restrict how much they can increase.

Are real estate professionals required to provide TRID forms?

No, real estate professionals are not responsible for providing TRID forms; this responsibility lies with the lender and other loan processing parties.

Dodd-Frank Wall Street Reform and Consumer Protection Act: A comprehensive financial reform law enacted in 2010 to reduce risks in the U.S. financial system.
Truth in Lending Act (TILA): A federal law designed to promote informed use of consumer credit by requiring disclosures about its terms and cost.
Real Estate Settlement Procedures Act (RESPA): A law that helps consumers understand the real estate settlement process and prohibits certain unlawful practices by lenders.
Loan Estimate (LE): A document that provides borrowers with key information about a mortgage loan, including estimated interest rates, monthly payments, and closing costs.
Closing Disclosure (CD): A five-page form that provides final details about the mortgage loan the borrower has selected, including terms, payment schedules, and detailed closing cost breakdowns.
Good Faith Estimate (GFE): A federal form used prior to TRID that provided an estimate of settlement charges for a mortgage.
HUD-1 Form: A document formerly used up until October 2015 to itemize fees and services charged to borrowers at closing.

Online Resources

References and Suggested Books for Further Studies

Books:
- “The Dodd-Frank Wall Street Reform and Consumer Protection Act: From Legislation to Implementation to Litigation” by Davis Polk & Wardwell LLP
- “Mortgage Ripoffs and Money Savers: An Industry Insider Explains How to Save Thousands on Your Mortgage or Re-Finance” by Carolyn Warren
- “TRID Survival Guide: District and National Experts Offer Insights about TRID Implementation” by the Real Estate Institute Journal
Articles:
- “Understanding TRID - What Mortgage Disclosures Mean for You” from the Consumer Financial Protection Bureau.
- “TRID Implementations: Lessons Learned from Early Adopters” in the Journal of Real Estate Research.

Quizzes on TILA-RESPA Integrated Disclosures (TRID)

Real Estate Basics: TILA-RESPA Integrated Disclosures (TRID) Fundamentals Quiz

### What is the primary aim of TRID disclosures? - [x] Simplify mortgage disclosure forms. - [ ] Increase the number of disclosure forms. - [ ] Make loan costs higher for consumers. - [ ] Allow total flexibility in loan term estimates. > **Explanation:** TRID primarily aims to simplify the mortgage disclosure forms, making them easier for consumers to understand. ### What is a Loan Estimate? - [ ] A final summary of all loan costs. - [x] An initial estimate of loan terms and costs. - [ ] A form only required for commercial loans. - [ ] A document that outlines loan repayment scenarios. > **Explanation:** The Loan Estimate provides an initial estimate of loan terms and costs, helping borrowers understand their potential financial obligations. ### How many business days do borrowers have to review the Closing Disclosure before closing? - [ ] 1 business day - [ ] 2 business days - [x] 3 business days - [ ] 5 business days > **Explanation:** Borrowers must be provided with the Closing Disclosure at least three business days before closing to ensure they have time to review the final loan terms and closing costs. ### Which form did the Closing Disclosure replace? - [x] HUD-1 Form - [ ] Good Faith Estimate - [ ] Truth-in-Lending Disclosure - [ ] RESPA Form > **Explanation:** The Closing Disclosure replaced the HUD-1 Form, offering a detailed final account of the loan transaction. ### Do TRID rules apply to home equity lines of credit (HELOCs)? - [ ] Yes, they apply to all mortgage products. - [ ] Only when the HELOC is above $100,000. - [x] No, HELOCs are excluded from TRID. - [ ] Yes, but only in certain states. > **Explanation:** TRID rules do not apply to home equity lines of credit (HELOCs), focusing instead on most closed-end mortgage loans. ### Which document is essential at the start of the loan application process? - [ ] Loan Agreement - [ ] Promissory Note - [x] Loan Estimate - [ ] Closing Disclosure > **Explanation:** The Loan Estimate is essential at the start of the loan application process, providing borrowers with an initial account of their potential financial obligations. ### Which element is not included in the Loan Estimate? - [ ] Interest rate - [x] Final loan amount - [ ] Monthly payment estimate - [ ] Closing costs estimate > **Explanation:** The final loan amount is determined later in the process and is detailed in the Closing Disclosure. ### How has TRID made the mortgage process easier for borrowers? - [ ] By reducing the interest rates on loans. - [ ] By eliminating all closing costs. - [x] By simplifying disclosure forms and providing clear, consolidated information. - [ ] By requiring fewer documents during the application. > **Explanation:** TRID has made the mortgage process easier by simplifying disclosure forms and providing consumers with clear, consolidated information about their loans. ### Which federal agencies are involved in enforcing TRID regulations? - [ ] The Federal Housing Administration (FHA) - [ ] The Federal Reserve - [x] Consumer Financial Protection Bureau (CFPB) - [ ] The Securities and Exchange Commission (SEC) > **Explanation:** The Consumer Financial Protection Bureau (CFPB) is primarily responsible for creating and enforcing TRID regulations, alongside other federal agencies. ### What happens if a loan charge exceeds the allowable tolerance on the Loan Estimate at closing? - [ ] The borrower must pay the excessive charge. - [ ] The loan application is canceled. - [ ] The borrower must apply for a new loan. - [x] The lender must cover the excess amount. > **Explanation:** If a loan charge exceeds the allowable tolerance on the Loan Estimate at closing, the lender must cover the excess amount, not the borrower.