What TRID and the Simplified Mortgage Disclosures Mean for Consumers:
The mortgage process is detailed and complex. Many of the forms from application through closing overlap and create confusion. Consumers often worry that their mortgage contains risky features or that their costs will increase suddenly at closing. The new Truth in Lending/RESPA Integrated Disclosures or “TRID” was designed to reduce paperwork and to make the complex mortgage process less confusing for the consumer.
The new forms were set to be used for new applications taken on or after August 1, 2015. There is a proposal to extend this date to October 1, 2015. This will give lenders more time to prepare for the new process. Specific benefits of the new forms and disclosure include:
- Using clear language and design that will help consumers understand complicated mortgage loan and real estate transactions.
- On the new forms, the interest rate, monthly payments, and the total closing costs will be clearly presented on the first page.
- Providing more information about the costs of taxes and insurance and how the interest rate and payments may change in the future.
- Warning consumers about features they may want to avoid, like penalties for paying off the loan early or increases to the mortgage loan balance even if payments are made on time.
- Making the cost estimates consumers receive for services required to close a mortgage loan more reliable, for example, appraisal or pest inspection fees.
- Requiring that consumers receive the Closing Disclosure at least three business days before closing/funding on the mortgage loan. This wait period will allow consumers to compare the final terms and costs to the terms and costs they received in the estimate.
Sample forms are available at: http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
Buyers and sellers should anticipate some processing and closing delays during the last quarter of 2015. Lenders have updated software to accommodate the new forms and the secure delivery methods required to prove receipt of such forms. These changes along with the required three day waiting period for the final Closing Estimate, mean that it would be prudent to write most contracts for “on or before 45 days” after October 1, 2015 to avoid extensions. Keep this in mind when negotiating your offer.
If you have questions regarding TRID, or any mortgage topic, please feel free to reach out us: Info@smsorlando.com.
Synergy Mortgage Services
Company NMLS# 327590
Licensed Mortgage Brokerage