Section 4 Unit 3 The Tila-RESPA Integrated Rule (TRID)

Question 1

Introduction to TRID

Answer 1

TILA and RESPA and how they impacted disclosures that must be made to borrowers in mortgage loan transactions.
The Dodd-Frank Wall Street Reform and consumer protection ACT led to TILA and RESPA disclosures.
The end result TILA-RESPA Integrated Disclosures (TRID) 2015

Question 2

TRID is also referred as

Answer 2

Know before you owe

Question 3

TRID includes

Answer 3

The Loan Estimate and Closing Disclosure. Both of which are provided to borrowers at specific times in a mortgage transaction to make sure that borrowers understand loan terms and fees

Question 4

History of TRID

Answer 4

Lenders have been required to provide this type of disclosure for many years under the Real Estate Settlement Procedure Act (RESPA) and the Truth in Lending Act (TILA also known as regulation Z)

RESPA and TILA requires that consumers be provided with disclosures regarding the type of loan for which they are applying, all fees associated with that loan, and it’s payment schedule, as well as the full disclosure regarding the estimated costs. Also prevents MLO from receiving kick backs.

Question 5

Before 2015,

Answer 5

Good Faith Estimate HUD-1 Settlement Statement, Initial Truth in Lending Disclosure and Final Truth in Lending Disclosure forms.

All of this information has been combined and simplified into a more streamlined set of forms
Loan Estimate (LE)
and Closing Disclosure (CD)

When you hear TRID It means TiLA-RESPA Integrated Disclosures.

Question 6

TRID Exemptions

Answer 6

TRID does not apply to all loan transactions.

While most closed-end loans secured by real property (traditional mortgages, refinancing etc) are subject to TRID rules, some loans are exempt:

1. Reverse mortgages
2. Home Equity Lines of Credit (HELOC)
3. Loan secured by a mobile hime or dwelling that is NOT attached to real property
4. Loans made by an individual or entity that funds five or fewer mortgages in a year and it not a creditor.
   A couple of other loan types (Construction loans and loans secured by vacant land or at least 25 acres of land are subject to TILA

Question 7

Definition of a Complete Application

Answer 7

1. Borrower’s Name
2. SSN
3. Gross Monthly Income
4. Loan amount the borrower is applying for
5. Property Address
6. Estimate of the property value

Question 8

Completed application has ? days to provide LE form

Answer 8

3 days

Question 9

LE form contains

Answer 9

Loan amount
Locked Interest Rate
Payment amounts (Principal plus Interest)
Charges the buyer is likely to pay at settlement(estimates)
Mortgage Loan Specifics features, costs and risks (Penalties or balloon payments)
Total Interest Percentage (TIP): The total amount of interest that the borrower will have paid over the term of the loan as a percentage of the loan amount

Question 10

Additional Disclosures and Information

Answer 10

Home Loan Toolkit
Special Information Booklet
List of HUD-approved Home counselors

Question 11

The Closing Disclosure Form

Answer 11

Lenders must provide the CD form to borrowers a minimum of 3 days before loan consumption, which may or may not be same as the closing date.

Question 12

Use and Utility

Answer 12

Both the loan estimate form and the CD make information easy to understand for consumers as well as all other parties.
Important items, such as interest rates and monthly payments, are conspicuous.