You would think the world was ending! At least that’s what it sounds like when I hear folks talking about the TILA-RESPA Integrated Disclosure rule (TRID) – otherwise known as “Know Before You Owe.” It’s created a bit of nervousness in the industry as banks attempt to interpret and implement new programs and systems to adhere to new government regulations. As a mortgage professional, I strive to provide my clients with all the facts, so that they understand the components of their loan. The real question is will these new requirements provide incremental clarity or just make an already complex process more unclear?
I wanted to see what someone outside of the mortgage industry thought about these changes. My friend Liz, a local social media marketing consultant, shares her thoughts:
TRID from the perspective of an industry outsider
I’ve always believed that the best way to learn something is to help others understand it, so when Geoffrey asked me to write about the upcoming changes the mortgage industry is facing I was all in. His request seemed simple enough, but as I dug in I found more questions at every turn. I also found lots of answers, and can now share with you a
summary of what changes to expect, when they will take effect, and what they mean to you.
What: The Consumer Financial Protection Bureau is the regulatory agency that oversees consumer finance markets by making and enforcing rules, and increasing our (consumers) control over our financial worlds. One of these rules is called the TILA-RESPA Integrated Disclosure Rule (commonly referred to as TRID – yes, an acronym despite the first two “words” already being an acronym), and was originally enacted in May 2011. TRID’s original purpose was to simplify the loan process and to make it easier for people to understand their loans. Last year, the CFPB proposed updates to TRID in order to make it easier for lenders to comply without inconveniencing consumers. That all sounds pretty reasonable, right? Now it’s time to implement…
When: Well, right about now. Applications received prior to October 3rd are not subject to the new regulations and will proceed under the previous rules, so if you started the process before that date, this won’t apply to you. For the rest of us, October 3rd is the date.
How: This is my favorite part, because the real answer is that Geoffrey and his team handle the “how”, but I’ve done my homework and I can give you more than that. There will be two new forms to complete: the Loan Estimate (LE) form replacing the Good Faith Estimate and the Initial Truth in Lending Disclosure, and the Closing Disclosure (CD) form replacing the HUD-1 and the Final Truth in Lending Disclosure. There is a mandatory three day waiting period from the time the borrower receives the Closing Disclosure form until closing. Weekends (Saturdays and Sundays in most cases), and federal holidays aren’t included in those three days.
Why: Seriously, this seems to be in keeping with the CFPB’s mission to simplify processes and protect consumers. While I bet the stack of papers we see at closing is still substantial, they’ve been reduced by a few, and the waiting period just means that we (borrowers), have more time to review critical information before we close on the loan.
Bottom Line: While the changes are making a big impact to the mortgage industry, they should be seamless for consumers – assuming you’re working with the right people. Geoffrey and First United are well prepared and are committed to maintaining their service level. You’ll send them the same six pieces of information that were always required to initiate your loan application (name, income, SSN, property address, home value, and loan amount), and then maintain open communication throughout the process. Easy-peasy!