The CFPB has published revisions to the TILA and RESPA mortgage regulations in response to changes mandated by the Dodd-Frank Act. The revisions are known as the TILA/RESPA Integrated Disclosures, or TRID. Learn all about the changes by reading through these slides brought to you by Academy Mortgage Corporation
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New mortgage lending requirements effective August 1, 2015
“TRID is a major game-changer for how we originate
and close mortgages.” –Adam Kessler, President,
Academy Mortgage
Corp NMLS #3113 MAC0315-1785103440
2. Contents of this TRID PowerPoint Presentation
Section 1: Introduction
Section 2: Loan Estimate Form (LE)
Section 3: Closing Disclosure Form (CD)
Section 4: The New TRID Waiting Periods
Section 5: TRID and New Home Construction
Section 6: How Will TRID Impact Our Referral Partners?
Section 7: Now/Next
Summary: 3 Keys to TRID Success
“TRID is one of our top
three initiatives for
2015, so we’ll be well-
prepared for a smooth,
successful transition to
TRID.”
--Adam Kessler, President,
Academy Mortgage
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3. Section 1: INTRODUCTION
• CFPB (Consumer Financial Protection Bureau)
has published revisions to the TILA (Truth-in-
Lending Act) and RESPA (Real Estate Settlement
Procedures Act) mortgage regulations in
response to changes mandated by the Dodd-
Frank Act. The revisions are known as the TILA
RESPA Integrated Disclosures, or TRID.
• Academy is committed to preparing for these
TRID changes and will be a leader in
implementing and communicating these
changes to our Referral Partners and clients.
“TRID is one of our top
three initiatives for
2015, so we’ll be well-
prepared for a smooth,
successful transition to
TRID.”
--Adam Kessler, President,
Academy Mortgage
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4. • The revisions introduce 2 new integrated disclosures: the Loan
Estimate form (LE) and the Closing Disclosure form (CD). The
CFPB designed these new TRID forms to be easier for Borrowers to
read and understand the cost of getting a mortgage loan.
• In addition to the 2 new TRID forms, there are other rule changes
to Regulation Z and RESPA.
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5. Section 2: LOAN ESTIMATE FORM (LE)
The current GFE (Good Faith Estimate) and initial TIL
(Truth-in-Lending) forms will be combined into and
replaced by a new TRID form, the Loan Estimate (LE).
Timing and delivery requirements are essentially the
same for the LE as they have been for the GFE and TIL.
The new Loan Estimate form has 3 pages:
• Page 1 begins with general loan information and includes sections
for Loan Terms, Projected Payments, and Costs at Closing. NOTE:
The Borrower will now be provided the Estimated Cash to Close
amount, which is not included on the current GFE! 5
6. • Page 2 is a breakdown of Loan Costs, Other Costs, and a summary entitled
Calculating Cash to Close. What’s different on this page is how the costs are
broken down. The 800, 900, etc., series of fees no longer exists.
• Loan Costs include Origination Charges, Services You Cannot Shop For, and
Services You Can Shop For.
• Other Costs include Taxes, Prepaids, Initial Escrow Payment, and Other.
• Calculating Cash to Close includes a summary of all the charges and credits.
• NOTE: “Services You Cannot Shop For” will now be subject to zero tolerance,
where in the past these charges fell into the 10% tolerance category.
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7. • Page 3 has the Loan Officer’s contact and license information, a cost com-
parison of 5 years’ total cost, the APR, and Total Interest Percentage or TIP.
• The Total Interest Percentage is entirely new and discloses the total amount
of interest that the Borrower will pay over the loan term expressed as a
percentage of the loan amount. To find TIP, take the interest paid on the
loan and divide it by the loan amount. FOR EXAMPLE: If the Borrower’s
loan amount is $100,000, and they’ll pay $50,000 in interest over the life of
the loan, the Total Interest Percentage would be 50%.
• Page 3 also includes other loan considerations that you’re familiar with, like
assumption, late payment, and servicing.
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8. Section 3: CLOSING DISCLOSURE FORM (CD)
The current HUD‐1 and final TIL forms will be
replaced by a new single TRID form, the 5-
page Closing Disclosure (CD).
• Currently, the mortgage industry is
accustomed to the Lender providing
closing details to a Settlement Agent, who
then prepares the HUD-1, while the
Lender prepares the final TIL.
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9. • However, as of August 1, there will be only one document (the CD), so early
collaboration between the Lender and the Settlement Agent is critical in
order to have a timely and seamless transaction.
• The new TRID rules make the Lender responsible for both the information
on the CD as well as delivery of the CD to the Borrower. So Academy
Mortgage has made the decision to take on both of these responsibilities
instead of relying on the Settlement Agent.
The new Closing Disclosure form has 5 pages:
• Page 1 lists the loan terms, payments, and a summary of the closing costs.
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10. • Page 2 breaks out the closing costs in detail and identifies who is paying for
the charges (and also “when” if charges are paid before closing).
• Page 3 calculates the cash to close and provides a summary of the
transaction that looks similar to the first page of the current HUD-1.
• Page 4 discloses loan features such as assumption, late payments, and
escrow account information. If applicable, there will be details that
describe the terms for an adjustable-rate or adjustable-payment mortgage.
• Page 5 lists loan calculations similar to the current TIL form, including the
new TIP calculation. It also provides other disclosures, as well as contact
information for the Lender, Real Estate Professionals, and Settlement Agent.
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11. Section 4: THE NEW TRID WAITING PERIODS
Avoid anxiety, surprises, and delays by understanding the new waiting period
requirements for the new Closing Disclosure (CD).
• Currently, the Borrower might not see the HUD-1 form until they sit down at
the closing table.
• Under TRID, the CD must be in the Borrower’s hands 3 business days
before closing. And if it needs to be mailed, you will need to plan on 3
additional business days for delivery. (A “business day” is defined as all
calendar days excluding Sundays and federal holidays.)
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12. • When TRID is implemented on August 1, careful planning, coordination, and
communication will be critical.
• The purchase contract should be drafted keeping these extra days in mind
so that closing dates can be met.
• Clear communication between Borrowers, Sellers, Real Estate Professionals,
the Lender, and Settlement Agent will minimize potential surprises or
delays.
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13. Section 5: TRID AND NEW HOME CONSTRUCTION
TRID presents unique challenges with new home construction. Careful
planning and communication will help avoid surprises and delays.
• As previously noted, the CD will replace the current HUD-1
settlement statement and final TIL disclosure that the industry is
familiar with using.
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14. • Today, most Lenders and Settlement Agents are able to accommodate last-
minute change orders that result in changes to the loan amount, closing
costs and/or sales price. Starting August 1, this flexibility will be very
limited. Once the Borrower has been provided the Closing Disclosure,
there are restrictions as to what can be changed.
• Planning and communication between Builders, Realtors, Lenders,
Settlement Agents, and Borrowers will be critical in order to meet closing
deadlines and avoid potential delays that could result in additional costs
to Builders in the form of construction loan extension fees, penalties, or
per-diem interest charges.
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15. Section 6:
HOW WILL TRID IMPACT OUR REFERRAL PARTNERS?
Here are 6 key TRID events that will impact our Referral Partners, followed by
Academy’s recommended best practices.
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16. >> Event 1: Meeting the contract settlement deadline. Real Estate Purchase
Contracts do not currently include the Closing Disclosure (CD) delivery as a key
deadline. Contract settlement deadlines could be delayed to provide sufficient
time for the CD to be delivered and reviewed in conformance with new TILA
guidelines.
>> Recommended best practices: Upfront communication between the
Realtor drafting the contract and the Buyer is essential. Discussions should
include the CD when establishing other key deadlines, such as due diligence,
appraisal, financing, and settlement. An addendum to the contract may provide
awareness to both Buyer and Seller that differentiate competing offers.
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17. >> Event 2: The CD is NOT a settlement statement. The CD document by itself
contains only signature lines for the Borrowers and a disclaimer that states that
signing the form only acknowledges receiving the form. Additionally, the
Borrowers do not have to accept the loan because they have signed the CD.
>> Recommended best practices: Academy is working with industry groups to
come up with a solution that will replace the HUD-1 Settlement Statement.
The HUD-1 can’t be used on transactions with an application date on or after
August 1, 2015, so it will be necessary to have a document in the settlement
package that authorizes settlement and disbursement from the title company.
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18. >> Event 3: Meeting the CD delivery deadline. Delivery waiting periods for the CD
state that the CD must be received by the Borrowers at least 3 business days prior to
consummation. From a Lender’s perspective, this rule is really 6 business days prior to
settlement because if the Lender cannot deliver and acknowledge receipt electronically
by the time the CD is ready for delivery, then 3 additional days are required for mail
delivery. Face-to-face delivery with a signature from the Borrowers 3 days prior to
settlement would satisfy the rule’s intent.
>> Recommended best practices: E-CONSENT! Referral Partners can help the Lender
by reinforcing the importance of e-consent to their clients. It is not typical in today’s
high-production environments to meet face-to-face with the Borrowers prior to
settlement. Although this is an option, it is a potential inconvenience from any
perspective. Academy has an e-consent acquisition and fulfillment process to deliver
the CD. Academy will effectively communicate with Partners to ensure settlement
deadlines are not jeopardized due to delays in delivering the CD.
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19. >> Event 4: Double closings—situations where there are two separate trans-
actions occurring at the same time. This is typically the Buyer and Seller, who
have transactions occurring at the same time, possibly with 2 different Lenders
involved. One Lender’s performance in delivering the CD can impact the other,
and vice versa. If both Lenders deliver on time, there should be no impact.
>> Recommended best practices: Communication and expectations are the
keys to success here. Knowledge of where both transactions are at is critical to
knowing how to plan moving arrangements, setting up utilities, coordinating
wire transfers, obtaining keys to a new home, etc. Keep in mind that a Lender
can’t control the actions of another Lender, so delays are absolutely possible.
Mentally preparing for all of the moving pieces will allow you to succeed more
than you will struggle.
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20. >> Event 5: A Buyer’s last-minute change order requests on new construction
increases the settlement charges. If the change causes an increase in APR
beyond 0.125% or a change in the Borrower’s loan product, then the 3-day
waiting period (and potential 3-day delivery period) prior to settlement starts
over.
>> Recommended best practices: TRID guidelines specify that a Lender can no
longer re-disclose a revised Loan Estimate (LE) once a CD has been given to the
Borrowers. If changes occur after the CD is provided, then delays in settlement
can occur. Best practice may be to have a change order deadline if one does
not already exist.
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21. >> Event 6: Borrowers may not understand the CD. The CD is now delivered
to Borrowers ahead of settlement. The challenge with this is that many
Borrowers may not understand all of the information provided on the 5-page
CD form without the assistance of a Settlement Agent, who (prior to TRID)
would have been at the table with them.
>> Recommended best practices: Realtors and Loan Officers must prepare
themselves for questions related to the CD, because usually they are the only
ones the clients know or interact with prior to settlement. Realtors and Loan
Officers can also prepare their clients by communicating that the CD document
is coming. They can offer to meet with the clients if they have questions or
concerns about the CD.
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22. Section 7: NOW/NEXT. Here’s a quick comparison of how Academy originates
and closes mortgages NOW with how we’ll do it NEXT, when TRID starts on
August 1:
Initial Disclosures
• NOW: The GFE and the initial TILA disclosures
• NEXT: The GFE and initial TILA forms will be combined into one new form,
called the Loan Estimate (LE).
Closing Disclosures
• NOW: The HUD‐1 Settlement Statement and final TILA disclosure
• NEXT: The HUD‐1 and final TILA forms will be combined into one new form,
called the Closing Disclosure (CD).
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23. “Application” definition
NOW: 7 elements
1. Consumer’s name
2. Consumer’s income
3. Consumer’s Social Security number
4. Property address
5. Estimated value of the property
6. Mortgage loan amount sought
7. Interest rate (Lender’s Catch‐All)
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NEXT: 6 elements
1. Consumer’s name
2. Consumer’s income
3. Consumer’s Social Security number
4. Property address
5. Estimated value of the property
6. Mortgage loan amount sought
24. Fee tolerances for required services that the Borrower can NOT shop for
NOW: The fee tolerances are 10% for required services that the Borrower can
NOT shop for (appraisal, credit report, tax service, etc.).
NEXT: The fee tolerances are 0% for required services that the Borrower can
NOT shop for (appraisal, credit report, tax service, etc.).
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25. Preparation of the settlement statement
NOW: The Settlement Agent prepares the HUD‐1; the Lender (Academy)
prepares the final TIL form.
NEXT: The Lender (Academy) will prepare the Closing Disclosure form.
Delivery of the closing settlement statement
NOW: The HUD‐1 form can be provided at closing.
NEXT: The CD must be received by the Borrower at least 3 business days
before loan settlement.
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26. Summary: 3 KEYS TO TRID SUCCESS
1. Know the TRID terms, rules, and challenges: LE, CD, “application,”
waiting periods, tolerances, deadlines, change orders, etc.
2. Know Academy’s recommended best practices.
3. Careful, upfront planning and ongoing communication and
coordination among ALL PARTIES are essential to our successful
implementation of TRID!
Thank you!
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27. “TRID is a major game-changer for how we originate and close
mortgages.” –Adam Kessler, President, Academy Mortgage
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