The “Know Before You Owe” Initiative
For the last 30 years, Federal law has required lenders to provide consumers with two different disclosure forms when applying for a mortgage, followed by two more forms just before or during closing on the loan. Because the information on these forms is overlapping and the language is inconsistent, consumers often find the forms confusing. Meanwhile, lenders and settlement agents tend to see them as a burden to provide and explain.
With the TILA-RESPA Integrated Disclosure Rule, which was implemented on 10-03-2015 and is more commonly known as TRID, these four forms are being replaced with two new forms. The first is a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application. The second form is a Closing Disclosure that must be provided to the consumer at least three business days prior to closing. When all is said and done, the home buying process will be extended by about 15 days.
TRID applies to most closed-end consumer mortgages. It does not apply to reverse mortgages, HELOCs (home equity lines of credit), or mortgages secured by a mobile home/dwelling not attached to land. Nor does the rule apply to loans made by persons who are not considered creditors. There is also a partial exemption for certain transactions associated with housing assistance loan programs for low and moderate-income consumers. The rule DOES apply to community banks, though if the bank extended credit (including mortgage loans) to the consumer up to 25 times in the previous or current calendar year, it does not.
Ultimately, TILA-RESPA Integrated Disclosure puts more responsibility on lenders for both the timeline and the accuracy of the information to the consumer. To comply with the TRID rule lenders must obtain necessary information, including title premium and related closing costs, earlier in the process. But all of this will give consumers a better idea of what they are spending and will spend over the life of the loan, which in turn will aid them in comparison shopping while trying to get financing for a new home.
For more detailed information on the TILA-RESPA Integrated Disclosure Rule, visit the official website of the Consumer Financial Protection Bureau.
If you’re considering a move to Dallas, or are relocating for work, there’s no better home and community resource than The Dream Connectors. Together, Sylvia Seabolt and her mother Gale have decades of experience in the Southeast Dallas real estate market. Sylvia was the 2013 Texas Chapter of Women’s Council of REALTORS® President, and is currently serving on the National Executive Committee for Women’s Council of REALTORS®. A resident of Rowlett, Sylvia loves spending time with her family on Lake Ray Hubbard. For expert advice on communities and schools in southeast Dallas, contact The Dream Connectors today at 972-226-1900 or email Sylvia directly for a quick response!