For those of you who plan to purchase a home using home financing, the world of closing your escrow is about to change and change Big!
TRID, which stands for Tila/Respa Integrated Disclosures, are the new govenment mandated closing documents to be used by lenders in the closing of escrows where home financing is used. This new disclosure process is due to go into effect on mortgage applications dated on or after October 3, 2015. Presently, it is the lender that provides the Good Faith Estimate (GFE) and the Truth-In-Lending to borrowers as the initial disclosures. With TRID, both the GFE and initial Truth-In-Lending disclosure forms will be combined by the lender into one new form called the Loan Estimate (LE).
Currently at closing, the buyer receives the HUD-1 Settlement Statement and final Truth-In-Lending disclosure. These forms will now be combined into one new form called the Closing Disclosure (CD) which will be prepared by the lender.
With the initial GFE and Truth-In-Lending, the fee tolerance was 10% for all required services that the borrower can Not shop for, such as appraisals, credit reports, tax service, etc. With the new Loan Estimate (LE) the fee tolerance is 0% for the same such fees.
Now for the Big change! Currently the HUD-1 form is provided at settlement or closing and is prepared by the title or escrow company. With the new Closing Disclosure (CD), it is prepared by the lender and must be received by the borrower at least 3 business days prior to loan settlement or the close of escrow. This means that the days of buyers signing loan documents then followed by a quick close of escrow are gone. Buyers and sellers must now adjust their way of thinking regarding closing escrows and allow for the required 3 business days to pass for the closing to take place.
So, what does TRID mean to you? Better protection to home buyers in need of home financing with the possibility of a delay in your close of escrow. Working with an experienced agent can help guide you in targeting your actual closing date.
For more information regarding TRID, please let me know.