TRID is an acronym that stands for TILA-RESPA Integrated Disclosures. It is a series of guidelines enforced by the Consumer Financial Protection Bureau (CFPB) to create a more consumer-friendly mortgage process. These rules specify what information mortgage lenders must provide to borrowers and when. TRID also regulates lenders’ fees and what is allowed as a mortgage matures.
Key Facts
- TILA: The Truth in Lending Act (TILA) is a federal regulation introduced in 1968 to discourage dishonest credit lending practices. It requires lenders to provide written information about interest rates and loan payments upfront before borrowers sign a loan agreement. TILA also offers borrowers the right to rescind or back out of certain mortgages within 3 days of receiving their Closing Disclosure without losing money.
- RESPA: The Real Estate Settlement Procedures Act (RESPA) regulates settlement costs (closing costs) and protects home buyers from unfair real estate practices. It requires mortgage lenders to provide information on settlement services, consumer protection laws, and real estate transactions to help borrowers estimate their fees and expenses accurately. RESPA also prohibits lenders from demanding large amounts from escrow before a loan is approved and regulates the use of escrow accounts.
TRID Disclosures
TRID guidelines ensure that borrowers receive two key disclosure documents from a mortgage lender: a Loan Estimate and a Closing Disclosure.
Loan Estimate
During the mortgage process, a lender must provide a Loan Estimate, also known as a good faith estimate. The estimate details the loan amount, estimated interest rate, closing costs, and other costs and terms connected to the loan.
Closing Disclosure
As the name suggests, you receive the Closing Disclosure when it’s time to sign and finalize your mortgage. The Closing Disclosure outlines the same information as the Loan Estimate, including the loan amount, interest rate, APR, closing costs, and other terms.
TRID Rules and Guidelines
Mortgage lenders must follow TRID guidelines when offering borrowers a loan, including:
- No application fee: Under TRID rules, a mortgage lender can’t charge any fee before they provide a Loan Estimate.
- Quick Loan Estimate delivery: A lender must issue a Loan Estimate within 3 days of receiving your mortgage application.
- Maintenance of estimates and disclosures: Your lender must keep a copy of your Loan Estimate at least 3 years after you sign your mortgage and a copy of your Closing Disclosure for at least 5 years.
- Closing Disclosure 3-day waiting period: Your mortgage lender must provide your Closing Disclosure at least 3 business days before you sign and finalize a mortgage.
- Furnish contact information: Your lender must provide their contact information and a way to contact the loan officer indicated in your Loan Estimate.
TRID and Home Buyers
TRID regulations can help shield home buyers from high-pressure or unfair sales tactics and help ensure they know what they’re signing on for when they agree to a loan.
TRID and Home Sellers
As a seller, you’re not responsible for the actions of your buyer’s mortgage lender. However, you may experience closing delays or last-minute cancellations if the buyer’s lender attempts to finalize a loan that broke TRID regulations.
History of TRID
TRID is a condensed version of two regulations, the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).
TILA
TILA requires lenders to provide written information about interest rates and loan payments upfront before you sign a loan agreement. It also offers borrowers the right to rescind or back out of certain mortgages within 3 days of receiving their Closing Disclosure without losing money.
RESPA
RESPA regulates settlement costs (closing costs) and protects home buyers from unfair real estate practices. It requires mortgage lenders to provide information on settlement services, consumer protection laws, and real estate transactions to help borrowers estimate their fees and expenses accurately.
Conclusion
TRID is a series of rules that dictate what information mortgage lenders must provide borrowers and when they must provide it. TRID rules also regulate what fees lenders can charge and how these fees can change as a mortgage matures. With the transparency provided by TRID, you can secure several Loan Estimates from multiple lenders and confidently compare different offers to get the best home loan option for you.
Sources
- What Is TRID In Real Estate? | Bankrate
- TRID: The Acronym Of Acronyms – First Corporate Solutions
- What Is TRID? | Rocket Mortgage
FAQs
What does TRID stand for?
TRID stands for TILA-RESPA Integrated Disclosures.
What is TRID?
TRID is a series of guidelines enforced by the Consumer Financial Protection Bureau (CFPB) to create a more consumer-friendly mortgage process.
What are the key TRID disclosures?
The two key TRID disclosures are the Loan Estimate and the Closing Disclosure.
What information is included in the Loan Estimate?
The Loan Estimate includes the loan amount, estimated interest rate, closing costs, and other costs and terms connected to the loan.
What information is included in the Closing Disclosure?
The Closing Disclosure includes the loan amount, interest rate, APR, closing costs, and other terms.
How long do I have to review the Closing Disclosure before signing?
You have at least 3 business days to review the Closing Disclosure before signing.
Can I back out of a mortgage after receiving the Closing Disclosure?
You have the right to rescind or back out of certain mortgages within 3 days of receiving the Closing Disclosure without losing money.
Who enforces TRID?
TRID is enforced by the Consumer Financial Protection Bureau (CFPB).