Business & Merchant

Last Updated on Friday, 29 January 2016 03:21

By Roger Dolanch Broker/Owner

TRID is the acronym for Federal legislation that overhauled the documentation that mortgage consumers receive throughout the finance process and at the closing table. It was implemented on October 3, 2015.

The TILA-RESPA Integrated Disclosure (TRID) rules were designed by the Consumer Financial Protection Bureau in an attempt to make the mortgage process easier for consumers to understand.

Homeowners who previously financed homes and are purchasing again will likely notice several differences under TRID. While the old settlement document was referred as the HUD Uniform Settlement Statement, it is now reformatted and titled the Closing Disclosure. Based on the fresh new design of the form, first time homebuyers will hopefully find the documentation clear and easy to understand. Experienced buyers will see the same information, but in a different format.

When a borrower applies for a mortgage or shortly thereafter, they are given a Loan Estimate from the lender. This actually replaces two previous documents, simplifying the process. The Loan Estimate will clearly list all costs associated with the loan, whether it’s loan fees or other expenses such as taxes, insurance and escrows to name a few.

Another part of this implementation that has changed is the process that leads up to the actual settlement. Prior to TRID, the closing documents were able to be prepared, amended and finalized literally minutes before closing. Now, all finalized documents need to be prepared at least three business days before closing. If there is a change of any sort, the closing will be delayed a minimum of three days, often a week, and possibly longer. Whether it is a home purchase or a refinance, the process is designed to give the borrower adequate time to review all the details with whomever they need to, be it their mortgage professional, attorney, etc.

Now that borrowers have the time to consider it all, the expectation is that the closing process will proceed more smoothly than it did in the past. Some borrowers may have found this last stretch of the process stressful and confusing in the past. There are those that felt there wasn’t sufficient time to read and understand all of the documents they were signing.

However, a delayed closing often provides its own stress factors. It can become very problematic for both the seller and the buyer who have made arrangements with movers, closed on the home they were selling or terminated a lease and have nowhere to go, turned over utility bills.

One thing that hasn’t changed and is crucial to make it to the closing table in a timely manner is the documentation required from the borrower when loan application is made. If they cannot produce the paperwork the lender requires of them in timely manner closings may be delayed.