What Are The 10 Rules About TRID?

There 10 rules to know about TRID! The Consumer Financial Protection Bureau (CFPB) created the TILA-RESPA Integrated Disclosure (TRID) Rule to improve mortgage disclosure forms to make it easier for consumers to understand the terms of their loans and closing costs. In order to ensure a timely closing, it is more important than ever that real estate agents communicate with their consumer, lender, and settlement professional. To start, we put together list to get start with 10 rules about TRID.

In addition to the below tips, we also have a helpful guide that walks you step by step through several TRID forms. 

Definitions

Finding a lot of unfamiliar acronyms in this article? Let’s start by breaking down what they are:

• TRID– TILA-RESPA Integrated Disclosure: This a “know before you owe” disclosure you will receive to understand terms and costs of closing.
• TILA-RESPA– This is an acronym for “Truth In Lending-Real Estate Settlement Procedures Act.”
• CFPB– Consumer Financial Protection Bureau
• CD– Closing Disclosure. You will receive this most likely from the lender.
• ECOA– Equal Credit Opportunity Act

10 Things to Know About TRID: The List

Number 1: The CD

Most loan applications use a form called a Closing Disclosure, also known as a CD. The lender, not the closing agent, may be preparing and delivering the CD.

Rule Number 2: Three Business Days

The CD must be delivered to the buyer/consumer at least three business days prior to the scheduled closing date.

This TRID rule is an important time to review the CD and check for errors. Use this time ask your agent any questions you may have.

Number 3: When The Agent Must Complete the CD

The closing agent must get information to the lender approximately 10 to 14 days prior to the closing date for completion of the CD to meet the delivery requirement.

You will need to communicate to the closing agent all your buyer paid charges 10 to 14 days prior to the closing date.

Number 4: Identification

The closing agent will need your real estate company’s state license number and your individual real estate license number for the CD.

Number 5: Involving the Seller

The CD sent to the buyer/consumer will not include the “seller’s side” of the transaction.

Keep in mind, the closing agent, not the lender, is responsible for providing the seller’s side of the CD.

In addition, the closing agent may decide to prepare a separate CD for the seller.

Number 6: Concerning Advanced Copies of the CD

An advanced copy of the CD will likely not be provided to the buyer/consumer.

The lender sends the CD to the closing agent when it is sent to the buyer/consumer.

The closing agent will receive the CD from the lender, who will then forward it on to the buyer/consumer.

NOTE: The settlement agent needs the written approval of the lender to give a copy of the CD to you. Additionally, Closing Disclosures are loan documents, and the lender handles them. This important to know about TRID rules!

Number 7: Changes to the CD

A new three day waiting period will be triggered if changes are made to the CD after the delivery to the buyer/consumer. These changes cause the Annual Percentage Rate to be inaccurate, and changing loan products or adding a prepayment penalty incur the waiting period as well.

Changes and adjustments affecting the value of the property (as determined by the lender) may trigger additional disclosure and review periods under the Equal Credit Opportunity Act (ECOA) controlling the delivery of the appraisals.

To help prevent this, you may want to consider two pre-settlement inspections or “walkthroughs” (e.g. first inspection 7 to 10 days in advance of closing and a second inspection on the day of the closing).

We’re getting close to the end of our 10 Rules about TRID. The next one is extremely important to consider.

Number 8: Concerning Title Insurance

The CD refers to the Owner’s Title Insurance as “optional.” Ask a Landmark Abstract agent or representative for more information on the benefits of an Owner’s Title Insurance Policy.

Number 9: Contract Terms

The TRID Rule may affect the contract terms that you help negotiate for either the buyer or the seller.

For example, a closing 30 days “out” may no longer be realistic.

If your contract form contains a “set” number of days for the closing to occur, then a minimum of 15 additional days may be advisable.

Also, if your contract form requires you to fill in a specific date, take additional time into consideration. It is important for you to communicate with the lender and the closing agent to determine a realistic time frame for closings.

Number 10: Changes Made After The Signed Contract

What system do you have in place to communicate changes to the contract (after it is been signed) to the lender?

Consider having a conversation with buyers about their need to respond immediately to lender requests and remind the seller they must follow the contract to the letter because not doing so may delay the closing.

For More Information about TRID

Enjoyed our article about the 10 Rules about TRID but still have questions? Visit the American Land Title Association’s Home Closing 101 site for more consumer resources.