How Home Title Companies Can Help with TRID
As an attorney-run home title company, our services go beyond title searches and title insurance. Our legal expertise means that we can offer support and advice to real estate agents, helping them to understand and comply with complex protocols.
One such procedure is the recent TILA-RESPA Integrated Disclosure Rule – also known as TRID – that came into effect in October last year.
What is TRID?
TRID refers to the integration of two previous federal statutes that covered mortgage loan disclosures: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA).
TILA protects citizens from unfair credit billing and credit card practices, by ensuring that lenders provide them with accurate loan cost information so that they may ‘shop around’ when looking for certain types of loans. Under TILA, the borrower has three days to evaluate the given information and either accept or rescind the loan agreement, without any loss to the borrower.
Similarly, RESPA is a consumer protection statute that requires lenders to provide borrowers with information on all the costs associated with a variety of home loans. Lenders must provide borrowers with a Good Faith Estimate, including loan terms and all related fees – allowing them to budget for the closing costs or back out of the transaction. Furthermore, borrowers must receive a statement that details the estimated costs alongside the actual paid-for cost of the home at closing, so that homeowners have accurate records of the transaction history.
Both of these statutes protect consumers from predatory loan practices. In the interests of simplifying the buying process, the Consumer Financial Protection Bureau (CFPB) amalgamated these two laws, creating the TILA-RESPA Integrated Disclosure Rule.
How TRID Works
Where borrowers would’ve previously received four separate disclosures or forms from their lenders, TRID now ensures that there are only two forms: the loan estimate and the closing disclosure.
The lender must have delivered or mailed the loan estimate to the borrower within three days of receiving their loan application. The closing disclosure must be given to the borrower at least three days before the transaction is to be consummated (usually the closing date when all the paperwork is signed).
These three-day ‘grace periods’ ensure that lenders send timely and accurate information to borrowers as quickly as possible, and that borrowers have time to look over and reconsider the mortgage agreement without unreasonable pressure from the lender.
TRID also means that lenders can be held responsible for the accuracy of the forms, and could face a lawsuit or CFPB enforcement if these forms are not completed properly.
What This Means for Realtors
TRID makes it easier for your clients to understand and finalize their mortgage loan transactions when buying a home. The amalgamation of these laws means that consumers receive standardized forms with consistent language and terminology across the loan estimate and closing disclosure.
Because the lender can be held liable for inaccurate paperwork, many lenders now insist on preparing and completing the forms themselves. However, the borrower or their realtor can still select the title company to handle closing, if the title company is licensed and TRID compliant. The title company must provide the consumer with additional disclosure forms at closing to indicate the actual title insurance costs.
For more information about how we can help you and your clients comply with TRID regulations, contact Florida Home Title Company today.