Operation #KnowBeforeYouOwe
6 important things about #TRID
1.
The start date for the replacement of the
current HUD-1 Settlement Statement & Good Faith Estimate starts August 1,
2015.
A.
T.R.I.D., TILA RESPA integrated disclosure will
replace both of these forms in efforts to reduce paper work and eliminate
confusion. Real Estate brokers will now need to have more involvement in the loan process. Instead of a GFE-Good Faith Estimate & initial TIL disclosure, borrowers will now receive a 'Loan Estimate' document which must be provided within 3 days of application submission. The current HUD-1 & final TIL disclosure is being replaced by the Closing disclosure statement and must be received 3 days prior to closing if delivered in person. (See rules for email and mailbox delivery)
B.
The CFPB, Consumer Finance Protection Bureau
developed the forms to comply with a federal requirement to make mortgage
disclosure documents easier to understand.
C.
The 5 page Closing Disclosure & 3 page Loan
Estimate combines several forms into one and additional statutory disclosures
into just 2 forms.
D.
The new forms will be easier to read for
borrowers. Interest rates, payment information and total closing cost will be
printed clearly on the 1st page making it easier for consumers to
compare mortgages. Names and phone numbers of mortgage brokers, lenders and other service providers are present so that borrower's can call the appropriate person if they have questions when signing.
2.
Closing Attorney/Settlement Agent & Lender/Creditor
must successfully collaborate to prepare & provide the closing disclosure
to the borrower within the specified time.
A.
Since underlying information concerning the loan
resides within 2 different systems, Loan centric info. In the lender’s loan
origination system and property centric information in the closing attorney’s
system, pressure will be on the Lender and Closing Attorney to combine
information for a 3rd party system to issue the final CD.
B.
The goal is for the Loan origination system and
settlement system to communicate in order to make this process electronic and
prevent the rekeying of lender fees and calculations populated by the lender as
well as title fees, pro-rations and property related info. done by the
settlement agent.
3.
The new Closing Disclosure must be delivered 7
days prior to closing.
A.
The common misconception of this rule is that
the disclosure must be delivered within 3 days.
B.
With mail and email being allowed as means of
delivery, it is understood that just because the document was mailed, doesn’t mean
the borrower got it and just because it was emailed also does not prove the
borrow has received it.
C.
If the CD, Closing Disclosure is not delivered
in hand to the borrower, you have to give them a 3 day time-frame to open and
read the document. That makes 6 days. The numbers also have to be prepared and
checked for accuracy prior to being sent, so that makes it 7 days.
4.
The new Closing Disclosure is dynamic. If the
transaction is a purchase it will be different from the Disclosure used if the
transaction is a refinance.
5. New safety precautions also call for lenders and others involved in the transaction to raise the standard in protecting the borrower's NPPI (Non-Public Personal Information) which is any data or information considered to be personal and not subject to public view. New data encryption software platforms will be installed to accommodate these new efforts. Some of the protected information includes; Names, Social Security #'s, credit/debit cards numbers, State I.D. #'s, Driver's License #'s, D.O.B. & health records.
5. New safety precautions also call for lenders and others involved in the transaction to raise the standard in protecting the borrower's NPPI (Non-Public Personal Information) which is any data or information considered to be personal and not subject to public view. New data encryption software platforms will be installed to accommodate these new efforts. Some of the protected information includes; Names, Social Security #'s, credit/debit cards numbers, State I.D. #'s, Driver's License #'s, D.O.B. & health records.
6.
Some in the industry say the old HUD-1 will
stick around for certain transactions. They are also hoping that the CFPB will
allow a 60 day non-enforcement rule to assist lending professionals and title
agents with implementing the new changes.
For more detailed information, presentations and webinars on
the change, click the links below.
