Unlocking the Mystery: 6 Key Pieces of Information for TRID Compliance
The TILA-RESPA Integrated Disclosure (TRID) rule, also known as the Know Before You Owe rule, was introduced by the Consumer Financial Protection Bureau (CFPB) in 2015. This rule has changed the way mortgage loans are processed, and it aims to improve transparency and simplify the mortgage loan process for borrowers.
However, TRID compliance can be challenging for lenders and mortgage brokers. To help you navigate this regulatory landscape, here are six key pieces of information you need to know for TRID compliance.
1. The Impact of TRID on Disclosures
Under TRID, lenders are required to provide two new forms to borrowers: the Loan Estimate (LE) and the Closing Disclosure (CD). The LE is given to borrowers within three days of the loan application, and the CD is provided at least three days before closing.
The forms are designed to be more consumer-friendly and provide clear information about the loan terms, closing costs, and fees. It is important to ensure that all information provided on these forms is accurate and consistent with other loan documents.
2. The Importance of Accurate Calculations
TRID mandates specific calculations for fees such as the annual percentage rate (APR), finance charges, and total payments. These calculations must be precise and consistent across all loan documents.
Inaccurate calculations could lead to noncompliance with TRID, resulting in substantial penalties and fines. Hence, it is crucial to use a reliable mortgage loan software that ensures consistent and accurate calculations.
3. Compliance with Timeframes
TRID has specific timeframes for providing disclosures to borrowers. As mentioned earlier, lenders must provide the LE within three days of the loan application and the CD at least three days prior to closing.
Failing to meet these timeframes can result in delays, penalties, and legal disputes. Therefore, it is vital to have efficient processes and systems in place that ensure timely delivery of these disclosures.
4. Monitoring Changes in Loan Terms
TRID requires lenders to provide revised disclosures to borrowers in case of changes in loan terms, such as an increase in the interest rate or a change in the loan product. Any changes to the loan triggering a new CD must be provided to the borrower three days before the closing.
It is vital to monitor any changes made to the loan terms and ensure that the borrower is informed of these changes within the required timeframe to maintain TRID compliance.
5. Ensuring Uniform Closing Costs
TRID requires lenders to provide borrowers with accurate and consistent information on closing costs and fees. The CD must list all fees and charges associated with the loan, including third-party fees.
Having a system for monitoring and analyzing third-party vendor fees is necessary to ensure uniformity and consistency in closing costs and fees. TRID compliance requires lenders to estimate the borrower’s closing costs accurately and provide revisions if necessary.
6. The Importance of Training and Education
TRID compliance is a complicated and ever-changing regulatory landscape. Lenders must keep up with the changes and ensure that their staff is adequately trained to understand these regulations and follow them.
Providing regular training and education on TRID compliance can help lenders avoid costly penalties and legal battles. Moreover, compliance training can improve the efficiency of the loan processing system, increasing customer satisfaction.
Conclusion
TRID compliance is essential for lenders to avoid penalties, fines, and legal disputes. The key information highlighted in this article can help lenders navigate the regulatory landscape and create an efficient loan processing system. It is crucial to maintain transparency, accuracy, and consistency in all stages of the mortgage loan process to comply with TRID.
