In the wake of the 2008 mortgage crisis and in response to the Dodd-Frank Act, the Consumer Financial Protection Bureau (“CFPB”) developed and enacted the TILA-RESPA Integrated Disclosure (“TRID”) rule. TRID goes into effect October 3, 2015 and brings about numerous changes in the transactional real estate world. These changes affect everyone involved in closed-end real estate transactions, including buyers, sellers, realtors, lenders, and settlement agents. Jeffrey Schummer, VP of Education Development at the MBA commented:
The CFPB developed and designed the integration of TILA and RESPA and the consolidation of forms associated with most closed-end real estate transactions to make shopping for a loan easier, as well as to protect consumers from unexpected changes at the closing table. While these changes will be a boon to all once established, the transition may be a bit bumpy at times.
There are two primary changes associated with TRID.
- The Loan Estimate form will replace the Good-Faith-Estimate (GFE) and Initial Truth-in-Lending (TIL) forms
- The Closing Disclosure form will replace the HUD-1 and Final TIL forms
- Timing requirements
- The Loan Estimate must be provided by the lender within three business days of receipt of the buyer(s)’s loan application
- The Closing Disclosure must be delivered to the buyer(s) (by the lender or the settlement agent, dependent upon circumstances) at least three business days prior to consummation of the loan
As the professionals at Stewart Title so succinctly stated, “The Consumer Financial Protection Bureau’s whole purpose is to ensure that consumers get the information they need to make the financial decisions they believe are best for themselves and their families. As a title company we can get behind that.”
As your settlement agent, we, too, can get behind that. Be assured that Goosmann Rose Colvard & Cramer, P.A. is steadfastly working to ensure we are ready to meet the coming challenges together. There will be a learning curve for everyone in the industry, as well as inevitable hiccups. However, continued cooperation with our network of professionals, a little bit of patience all around, and a lot of communication and teamwork will guarantee a successful transition.
A phrase used often in current industry media is “Collaboration is King.” This sums the whole thing up nicely. Lenders and settlement agents, realtors and their clients, buyers and sellers will all have to work side by side to build a streamlined closing environment full of transparency and security for all parties.
Not every real estate transaction will be subject to TRID. The following types of transactions are exempt from the new rule:
- Home-equity lines of credit (“HELOCs”)
- Reverse mortgages
- Loans secured by a detached dwelling, such as a mobile home, or vacant land
- Loans written by creditors who write five or fewer notes per year
For those who are affected, or for anyone seeking further education on TRID, there are a multitude of resources available. Stewart Title has a nicely compiled list of useful links on their website. This resources page also has links regarding ALTA Best Practices, which GRCC is proud to follow.