TRID: I don’t think it means what you think it means

by MPA26 Feb 2015
The new integrated disclosure rule is set to take effect in August 1 and is something the mortgage industry has been warned about again and again. However, while many are aware of the rule, they are unaware of one of its key changes, according to a recent poll conducted by mortgage data firm Secure Settlements Inc. (SSI).

The firm polled 1,743 settlement agents nationwide from February 20 to 24 to inquire about their preparations for the CFPB’s new integrated disclosure rules. The results found 92% of the respondents were familiar with the new rules, but only 36% were familiar with the new closing disclosure form, which is available with instructions on the CFPB website.

The new TILA-RESPA Integrated Disclosure (TRID) rule establishes new forms, which are replacing the standard disclosure forms known as the Good Faith Estimate, Truth in Lending and HUD-1.  According to SSI, the purpose of the new forms is to bring greater clarity and transparency to consumers regarding the costs associated with their mortgages.

The new Closing Disclosure, which replaces the old HUD-1 Settlement Statement, is typically prepared by an attorney, settlement or title professional in collaboration with a mortgage lender.  Accuracy and completeness are critical as failure to properly prepare the forms will result in delays to a closing of a loan, as now consumers must be given three days’ time to review final disclosures in advance of the closing date.

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The poll also reported 61% of respondents said that they had taken steps to prepare for August 1st, while 39% have not done so yet.  Interestingly, only 33% of the respondents had been contacted by their lender clients to review the new form and process and to coordinate preparation and deliver of the disclosure. 

The CFPB is tasked with a difficult job in taking a complicated loan process and making it understandable to the average consumer,” Andrew Liput, president of SSI, said.  “Most borrowers have never seen a promissory note before, let alone the mortgage, title insurance report and dozens of disclosures and other loan documents that are placed before them at the closing table.”

When asked how the new rules will impact their businesses, some of the  comments included: the new form is “not necessary,” will  “cause confusion and uncertainty for the borrower,” will “increase fees and costs to consumers,”  will “delay closings,” and “seem designed to put small shops out of business.”

Many settlement agents were concerned that the new form will complicate not simplify the closing process, resulting in additional delays, increased costs, and overall consumer dissatisfaction.

Less than 40% of the respondents thought the new form was a positive thing for consumers, the industry and their practice.

“The new disclosures are an important step in the right direction, but without adequate preparedness by settlement agents, who are the professionals who are interacting with consumers at the closing, the effort is likely to result in much confusion for quite some time,” Liput added.  “Eventually as the industry comes around to understanding their new role in the closing process, the consumer will ultimately benefit.” 


Is TILA-RESPA a good or bad thing long term?