Key aspects of the TRID forms and rules for mortgage disclosure documents.
The Loan Estimate
The Loan Estimate (LE) replaced the Truth-in-Lending Disclosure (TIL) and Good Faith Estimate (GFE) in Oct. 2015. Overall, the Loan Estimate is intended to give more information about the key features, costs and risks of the loan that is being applied for. A Loan Estimate is required to be disclosed to a Borrower once a complete loan application (including the subject property address) is received by the Lender. Click here for a Sample Loan Estimate.
The first page of the LE has general loan details: the projected loan amount, interest rate, monthly payments, projected payments for principal and interest, mortgage insurance payments, escrow, and closing costs.
The second page of the LE details the Lender fees, and specifies which third-party services you may shop for, and which services you cannot shop for. This page also details other costs, such as property taxes, insurance, lender credits, seller credits, and funds needed to close.
The third page of the LE details comparison information, such as the total amount you could expect to pay over the life of the loan under these terms, as well as the APR and Total Interest Percentage (TIP). The third page of the form also makes you aware of the free copy of the appraisal you will receive (usually by email). This is the page you will sign once you agree to the loan terms.
The Closing Disclosure
The Closing Disclosure (CD) replaced the final Truth-In-Lending (TIL) and Settlement Statement (or HUD-1). The Closing Disclosure must be received by the borrower at least 3 business days before loan closing. This allows a borrower time to compare the Closing Disclosure with the information on the Loan Estimate. Click here for a Sample Closing Disclosure.
The Closing Disclosure is similar to the previously used HUD-1 form in content and is subject to fewer reasons for re-disclosure. A replacement CD, and an additional 3 business day waiting period, is required only if:
There is a change of more than 1/8 percent in the APR
The loan product has changed
Less significant changes can be disclosed at or before closing without triggering an additional three-day waiting period.
There are a few additional changes in the Closing Disclosure that are intended to provide borrowers with useful information. For example: An alphabetized list of settlement services fees, with none of the services bundled.
Realtors & Buyers can avoid closing delays by following these simple steps
Determine who will prepare the Closing Disclosure and start communications pertaining to fees and other items that must be paid at Settlement by the Buyer. At Iberiabank Mortgage, our Closer will prepare the Closing Disclosure and send it directly to the buyer - on time.
Identify the Settlement Agent (Title Company) early in the loan process. We work closely with all Settlement Agents to coordinate the loan closing.
Allow for plenty of time on the contract closing timeline so that all parties can facilitate the Settlement on time. This will eliminate any undue stress on all parties related to the closing date.
Provide all pertinent info. up-front - the Closing Disclosure requires the Name, Address, License Number and Email Address for the Realtor & Broker.
Collect and provide items that must be included on the Closing Disclosure at least 7-10 days in advance of the Settlement date. These can include:
Fees and Reports related to the Commissions, HOA Dues, Property Inspections, Surveys, Home Warranties, Pest Inspections, Well Tests, etc...
If possible, conduct a walk-through prior to issuance of the Closing Disclosure in order to add any inspection items that may come up and need to be addressed through seller or lender credits on the Closing Disclosure. A subsequent walk-through can be conducted the day before settlement (consummation) and minor fee changes can be reflected on a final Closing Disclosure.
Your Local Lender
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Direct: 479.695.3702 Cell: 479.435.1130