Mortgage Matters: TRID: TILA-RESPA Integrated Disclosure

TRID. If you’re not in the mortgage business, or you’re not a realtor, you probably have no idea what this acronym stands for. It stands for Tila-Respa Integrated Disclosure. Basically, what it’s doing is completely changing the regulatory document that we, as lenders, provide that says interest rate, closing costs, and things of that nature. A lot of people are talking about this. It’s going to go into affect around October 3rd. A lot of people are worried this is going to slow down some closings and the documents aren’t that good. I actually think the new documents are better than the old documents. The issue being is that all lenders are going to have to have new software, new systems, new business practices, third parties that support us, title companies. They’re going to have to re-learn how we do the closing documents. It used to be the HUD-1, now it’s going to be the closing disclosure.

The good faith estimate that we used to provide, is now going to be a lump estimate. Those are all the things that are going to change. What it’s going to do, is probably slow things down for a while until everybody learns the process. The spin on it, or I think what the negative in the short run is going to be, is they change some language about what the definition of an application is. They basically took the verbiage out saying anything a lender requires. That can be they require your pay stubs, they require your bank statements, they require you pay stubs to have an actual loan application. They’ve taken that verbiage out, so basically, if you provide a name, your income, your social security number, an estimate. You have a home identified that you want to buy and the amount of the purchase price, and the amounts you want to borrow, that’s now going to be considered an application that’s going to start the whole disclosure timeline.

We are not allowed to require any other information from you to basically say, “We can’t provide a loan estimate if you don’t give us this.” If you give us those five pieces of information, it starts everything. What’s going to happen is with lenders and pre-qualifications and pre-approvals, which we talked about in previous videos, about the amount of due diligence that banks, lenders, loan officers are doing to qualify people up front. There’s verbiage in here saying we’re not allowed to require information, I think there’s going to be less due diligence done now with a lot of the bigger shops, when they do their pre-qualifications or pre-approvals, because their not going to want to require any information and get in any kind of regulatory trouble.

I think that’s something, if you’re a home owner, you always want the lender to review your pay stubs, your tax returns, your bank statements. That’s going to make the process easier for you. That’s something we do. You’re really going to have to … Realtors you’re probably going to need to look out for your pre-qual letters from your big guys, or you’re pre-approval letters, because they probably have done less due diligence as a result of the new TRID disclosures.