Call me lazy but here is an article from the Campbell & Brannon, LLC Newsletter that I copied and pasted for you. It gives relevant information in regards with the recent changes that the Financial Protection Bureau (CFPB) introduced on 10/3/2015. Buyers will now find two new sets of disclosures for their loan applications.
- The Closing Disclosure replaces the HUD Settlement Statement and the Final Truth in Lending:
- The Loan Estimate replaces the current GFE and the initial Truth in Lending
Top 10 Considerations regarding TRID (TILA-RESPA Integrated Disclosure)
1. October 3, 2015: TRID affects loan applications made on or after October 3rd, 2015 but has no effect on cash closings.
2. Closing Disclosure: The CD generally will be constructed by lenders, working together with the closing attorney. This will be a similar process to how the current HUD Settlement Statement is assembled. Once the CD is complete, it’ll be sent by the lender, only to the buyer. The CD contains the borrower’s private loan information, which the lender cannot share with other parties.
3. Settlement Statement: Once the CD has been sent to the buyer, the closing attorney will likely generate a settlement statement, similar to the current HUD, to send to all parties several days prior to closing. The closing attorney is not required to do so as TRID changes are implemented solely to protect borrowers.
4. 3 Days of Review: The Closing Disclosure (CD) is to be reviewed by the purchaser at least 3 business days prior to closing (not counting Sundays and bank holidays).
5. The “Mailbox Rule” states that if the CD is mailed or emailed to the borrower or delivered by means other than in person, the borrower is considered to have received the disclosures three business days after they are mailed or delivered. This time period is in addition to the required three day waiting period after the CD has been received before the closing. The borrower will be able to waive this mailbox rule by acknowledging receipt of the CD, and this process will likely vary depending on the lender.
6. TRID delays (requiring a re-disclosure of the CD) are caused ONLY by three things, all of which are uncommon:
- The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed rate loans or ¼ of a percent for adjustable rate loans. A decrease in APR will not require a new 3-day review if it is based on changes to interest rate or other fees.
- prepayment penalty is added (very uncommon).
- basic loan product changes, such as a switch from a fixed rate to an adjustable rate, or to a loan with interest only payments.
7. Closing Delays: Even if the CD has been issued, it does not mean that the loan package has been prepared by the lender and sent to the closing attorney. Although buyers will have time to understand the figures, typical closing delays may still occur.
8. Title Insurance: On the Closing Disclosure, owner’s title insurance will have the word (optional) next to it in Section H, at the bottom of page 2. The current HUD does not list this as optional. Purchasing owner’s title insurance is always strongly encouraged, and we expect more buyers to inquire about the necessity of purchasing title insurance, putting more responsibility on agents and closing attorneys to explain title insurance.
9. Trusted Lenders: It will be important to only work with trusted lenders while adjusting to the new lending requirements. Selling agents should encourage purchasers in doing so, and listing agents should educate sellers on the risks of accepting an offer from a potential purchaser using an unknown or less-than-reputable lender. Remember, cash offers can later add financing. Also, it will be important to ask the purchaser’s lender about the suggested amount of time for the contract period and rate lock.
10. Back-to-back closings are not recommended as the industry adjusts to TRID changes.