Focus on New Lending Disclosure Laws
TRID, a lending disclosure law, was passed by the Consumer Financial Protection Bureau two years ago with the goal of making borrowing more transparent for homebuyers.
Since implementation, the law has impacted the mortgage process for our clients. It has made loan pricing comparisons and cost disclosures easier to understand, but it has also made closing preparations more time-consuming.
TRID requires lenders to provide consumers with certain disclosures during the loan application and closing process. These disclosures summarize the terms of the loan, such as the interest rate, and the costs associated with obtaining the loan.
TRID has also built upon laws already in place regarding Truth-in-Lending and closing statement disclosures with new documents called the “Loan Estimate” and “Closing Disclosure.”
These documents are presented to buyers during the lending and closing process to better itemize costs of taking on a mortgage, assist in comparing closing costs across lenders, and understanding final details before closing.
What is important to note as a borrower is that your Closing Disclosure outlining loan terms must be delivered to you at least three (3) business days prior to your closing taking place.
If there is a change in your APR (1/8 of a point for fixed and 1/4 for adjustable), a new prepayment penalty or changes in the overall loan product, a new three (3) day waiting period must commence.
These changes may impact you if you choose to let your rate float to closing, or change mortgage terms leading up to your closing date, and must be factored in to your timing.
There is also the general reality of the law’s effect of adding steps and grace periods to the process that purchasers must anticipate when planning for their move.