TRID I: Getting from Pre-Application to Loan Estimate

TRID I: Getting from Pre-Application to Loan Estimate

At the MBA’s Legal Issues and Regulatory Compliance Conference in Chicago, the MBA is dedicating an entire tract to the TILA and RESPA Integrated Disclosures (“TRID”).  TRID is the integration of the GFE and Initial TIL into the Loan Estimate (“LE”) and the integration of the HUD-1 and the Final TIL into the Closing Disclosure Statement (“CD”).  These integrated disclosures become effective August 1, 2015, and MBA is doing all it can to get those in the mortgage industry and related settlement services industries ready.  The TRID tract at the conference is being streamed live and can be accessed through the MBA website.

High-level takeaways from Sunday’s TRID sessions:

  • The CFPB is continuing in its efforts to review and respond to challenges caused by TRID before it becomes effective.  CFPB offers the following websites for education and training.  www.consumerfinance.gov/regulatory-implementation/tila-respa/  and www.consumerfinance.gove/eregulations/

  • Creditors should try to scrub their pipelines before August 1 of potential loans they believe will not result in an application, or for which they may have already received the six items of information necessary to equate to an application.

  • Wholesale lending operations should consider the following: 

    • If broker is identifying to the consumer the creditor who will be providing the loan, that creditor is bound by the disclosure.

    • Creditor and brokers should try to use standardized nomenclature.

    • Creditors should apply standardized characteristics for loans.

    • Brokers who have the authority to choose third-party vendors must make sure that vendors’ fees are consistent and will guaranty their accuracy aside from a “change in circumstance.”

  • Pre-Approvals and Pre-Qualifications still exist, but a change in information which would alter these does not necessarily equate to a “change in circumstances” that permits the issuance of a new LE.

CD and other Pre-closing/consummation issues:

  • Creditor has ultimate responsibility for CD and closing, so it needs to make sure that it has work-flow communication processes in place so that vendors and settlement agents can provide and receive information in a manner that permits the CD to be provided three days before consummation.  Consummation is the point when the borrower is obligated and is defined by the creditor.  Consequently, that definition should be contained in the closing instructions and the settlement agent must be cognizant of that definition.

  • Creditor should consider providing its third party vendors with a uniform way of getting their information into the system, such as a data portal.

  • Settlement agent needs to understand creditor’s document retention obligations.

  • CD is not required to be signed by the borrower.  However, if the creditor requires such a signature, then a disclosure must be provided that signing the CD does not bind borrower to follow through with the loan.  If signature is not required, borrower must get notice that the delivery of the CD does not bind him/her.

  • CD must be delivered to anyone who has the authority to rescind the loan.

  • The CD may be delivered by hand, mail or via email (the latter only if permission has been obtained).  How it is delivered affects when the “3 days before consummation” can be or must be calculated.

  • Obtaining prompt information on the recording costs after closing is important because if the costs are different than the LE or CD, the creditor must refund the difference (outside of tolerances, if any) within a specified time frame.

For creditors, brokers and escrow/settlement agents TRID will go live August 1 whether you are ready or not.  Consequently, all those who will be affected and must be apply should be working together.  There is real market advantage to be able to assure your partners, vendors and customers that on August 1, the processes and procedures that are in place will work to allow loans to close.

For more information on this session recap or to discuss your questions, please contact Francis X. “Trip” Riley.