Subdivisions: TRID Takes Effect
The Consumer Financial Protection Bureau’s (“CFPB”) TILA-RESPA Integrated Disclosure Rule, commonly known as “TRID,” is finally scheduled to take effect on October 3, 2015. The TRID rules were issued in November 2013 and amended portions of Parts 1024 and 1026 of Title 12 of the Code of Federal Regulations. Implementation was originally scheduled for August 1, 2015, but was pushed back by the CFPB. The new TRID rules will apply to loan applications for most closed-end consumer mortgages received on or after October 3, 2015. Applications previously received will be subject to the pre-TRID disclosure requirements. Additional requirements that restrict lender activity take effect on October 3, 2015 regardless of whether a loan application has been received.
The cornerstone of TRID is the integration of certain disclosure forms that consumers receive in connection with applying for and closing on a mortgage loan. Under TRID, consumers must receive the “Loan Estimate” after they submit a loan application. The “Closing Disclosure” is provided to consumers prior to closing of the loan. TRID also imposes a number of other rules regarding pre-disclosure activity by lenders, specific deadlines for the consumer’s receipt of disclosure forms, and the allowable variances between costs disclosed on the Loan Estimate and Closing Disclosure, among others.
Although TRID’s requirements primarily target the activity of mortgage lenders and settlement agents, TRID impacts homebuilders as well. Notably, the Closing Disclosure must be received by the homebuyer at least three business days prior to the closing of the loan. If there are certain changes to the loan, a revised Closing Disclosure must be provided and a new three-business-day waiting period is triggered. Homebuilders should work closely with lenders and settlement agents to ensure that closings go smoothly during TRID implementation. Homebuilders may also want to consider adjustments to their purchase contracts and sales process to adapt to TRID, such as minimizing last minute changes to the home sale that have the potential to trigger a new Closing Disclosure waiting period and delay closings.
The CFPB has published a variety of guidance materials and sample documents on its website.