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TILA/RESPA INTEGRATED DISCLOSURE (TRID) GUIDELINES


WHAT IS TILA/RESPA?

Beginning with new loans received this October, the Consumer Financial Protection Bureau (CFPB) is making several sweeping changes to two regulations that have been impacting our industry since 1974: The Truth in Lending Act (TILA) and The Real Estate Settlement Procedures Act (RESPA).

While the overreaching goal of these changes is to make the mortgage application and closing process less stressful for applicants, there are several changes our industry will need to adapt to in the coming months.

So, what is changing?

NEW DISCLOSURES

The CFPB is retiring several disclosures that have been informing—and often confusing—consumers for decades.

  • The Good Faith Estimate and initial Truth in Lending disclosures will be consolidated and replaced by the Loan Estimate (LE).
  • The HUD-1 Settlement Statement and final Truth in Lending disclosures will be consolidated and replaced by the Closing Disclosure (CD).

The LE and the CD are designed to present information in a format that is easier for the average consumer to digest.

NEW TIMELINES

Just like today, lenders will be required to provide all upfront disclosures—including the Loan Estimate—within three business days of receiving a borrower’s application. To alleviate last minute stress, lenders will also be required to provide the Closing Disclosure to a borrower at least three business days before going to settlement. Minor changes—such as the addition of a seller credit—may be made to the Closing Disclosure without resetting the three day waiting period.

NEW FEE TOLERANCES

Just like today, lenders will generally be bound to the fees they initially disclose to their applicant. If the final fees on the Closing Disclosure exceed those on the Loan Estimate, the lender must reimburse the difference to the applicant subject to the following tolerances:

  • Transfer taxes, all fees retained by the lender, and all lender-required 3rd party fees the borrower cannot shop for (e.g. appraisal, credit report, etc.) will be subject to a 0% tolerance.
  • Recording fees and all lender-required 3rd party fees which the borrower can shop for but elected not to will be subject to an aggregate 10% tolerance.
  • All other fees will be subject to unlimited tolerances.
      CURRENT GUIDELINES   GUIDELINES AS OF
OCTOBER 3, 2015
 
  Application Definition  
  • Applicant name
  • Applicant income
  • Social security number
  • Property address
  • Estimated value of the property
  • Mortgage loan amount sought
  • Any additional information deemed necessary by the lender (often referred to as the "catch-all" element)
 
  • Applicant name
  • Applicant income
  • Social security number
  • Property address
  • Estimated value of the property
  • Mortgage loan amount sought
 
  Pre-Closing Disclosures  
  • Initial TIL and Good Faith Estimate (GFE)
 
  • Loan Estimate (LE)
 
  Closing Disclosures  
  • Final TIL and HUD-1 Settlement Statement
 
  • Closing Disclosure (CD)
 
  Exempt Loan Types  
  • HELOCs
  • Reverse mortgages
  • Loans not secured by a dwelling (e.g. mobile homes)
  • Bridge loans including the initial phase of a construction-to-permanent transaction
  • Vacant land
 
  • HELOCs
  • Reverse mortgages
  • Loans not secured by a dwelling (e.g. mobile homes)
 
  0% Tolerance Fees  
  • Fees retained by the lender or broker (e.g. origination points, processing fees)
  • Transfer taxes
  • Lender credits tied to the rate
 
  • Fees retained by the lender or broker (e.g. origination points, processing fees)
  • Transfer taxes
  • Lender-required 3rd party fees which the borrower cannot shop for (e.g. appraisals, credit reports)
  • All lender credits (both "flat" and those tied to the rate)
 
  10% Tolerance Fees  
  • Recording fees
  • 3rd party fees for lender-required services which the borrower CANNOT or DID NOT shop for (e.g. appraisals, title exam)
 
  • Recording fees
  • 3rd party fees for lender-required services for which the borrower CAN shop but elected not to (e.g. title exam if borrower chooses provider identified by lender)
 
 
Unlimited
Tolerance Fees
 
  • Interest
  • Prepaids and escrow deposits
  • Non-lender-required 3rd party fees (e.g. survey, HOA)
  • "Flat" lender credits
 
  • Interest
  • Prepaids and escrow deposits
  • Non-lender-required 3rd party fees (e.g. survey, HOA)
  • Owner's title insurance (this is now considered a non-lender-required service)
 
  Tolerance Calculation  
  • Tolerance calculation chart is included on page 3 of HUD-1
 
  • No tolerance calculation chart on Closing Disclosure
 
 
Disclosure of
Lender Credits
 
  • Only lender credits tied to the rate are disclosed upfront via the Good Faith Estimate
 
  • All lender credits (both "flat" and those tied to the rate) must be disclosed upfront via the Loan Estimate
 
 
Closing Timing
Requirements
 
  • No timing requirement on the delivery of the HUD-1
 
  • Closing Disclosure must be provided to borrower at least three days prior to closing, NO EXCEPTIONS!
 

 

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4100 Monument Corner Dr., Suite 100
Fairfax, VA 22030

Toll Free: 800-867-6859

Email Us: info@gmmllc.com

Our Mortgage Loan Originators are registered and comply with the National Mortgage Licensing System (NMLS) and Registry. NMLS Consumer Accesssm, nmlsconsumeraccess.org, is a free service for consumers to confirm that the financial-services company or professional with whom they wish to conduct business is authorized to conduct business in their state. George Mason Mortgage's NMLS ID is 153400.

This is not a commitment to lend. All loan applications are subject to credit and property approval. Annual Percentage Rate (APR), and program, rates, fees, closing costs, terms and conditions are subject to change without notice and may vary depending upon credit history and transaction specifics. Other closing costs may be necessary. Flood and/or property hazard insurance may be required. To be eligible, buyer must meet minimum down payment, underwriting and program guidelines.


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