Back on October 3, 2015 the government rolled out something called TRID which is a acronym which has acronyms in it. So it is basically a double acronym that stands for TILA/RESPA Integrated Disclosure Rule. TILA stands for Truth In Lending Act and RESPA stands for Real Estate Settlement Procedure Act.
Now that we got that out of the way, what the heck does it mean? Basically it means that there are now a new set of forms and regulations that lenders have to follow when you apply for a loan. TRID was created because of all the fallout from the 2008 recession where the housing market was devastated. The goal is to make the entire process of applying for a loan or mortgage a lot simpler and transparent than it was before. It really was implemented to help the consumer with something that was probably too complicated before.
Probably the biggest thing to come out of this is that the lender has to give you full disclosure on what fees they are going to charge you and how much your payments are going to be, three days before the loan is supposed to be complete. This gives you time to read everything over and make an informed decision. The disclosure form is supposed to be very clear so that almost anyone could understand it.
Here are some facts about this new rule:
- Pre approvals will not change
- The application process starts with a loan estimate and no fees can be charged at this point.
- The borrower must indicate that they wish to proceed in writing
- Once the borrower decides to proceed with the loan, the lender can charge fees
- If circumstances change, a new loan estimate or closing disclosure may be needed
- The borrower must receive the disclosure at least three business days before the loan is supposed to close.
Make sure that you find a lender that has already proven to have closed a lot of mortgages so that you can be sure that they know what they are doing and have adapted to the new rules and regulations. This way you can avoid any delays from a lender that hasn’t fully gotten up to speed yet on TRID.
For the consumer this is a great thing, so make sure you take the time to read your disclosure and fully understand what you are being charged for, and how much you will have to pay every month for your mortgage.
More details are here