Key Takeaways
- TRID combined four disclosure forms into two: the Loan Estimate (LE) and Closing Disclosure (CD)
- The Loan Estimate must be provided within 3 business days of receiving the 6 pieces of information that constitute an application
- The Closing Disclosure must be received by the consumer at least 3 business days before consummation (closing)
- Changed circumstances that permit a revised Loan Estimate include changed information, new information, and borrower-requested changes
- Zero tolerance applies to fees lenders control (underwriting, processing); 10% tolerance applies to lender-selected third-party services
- Three events require a new 3-day waiting period: APR increase > 1/8%, loan product change, or prepayment penalty added
TRID (TILA-RESPA Integrated Disclosure)
The TILA-RESPA Integrated Disclosure rule (TRID), also known as the "Know Before You Owe" rule, became effective October 3, 2015. It combined the disclosure requirements of TILA and RESPA into two streamlined forms: the Loan Estimate (LE) and the Closing Disclosure (CD).
Purpose of TRID
TRID was designed to:
- Simplify disclosures for consumers
- Make it easier to compare loan offers
- Reduce surprises at closing
- Integrate previously separate TILA and RESPA requirements
- Improve consumer understanding of loan terms and costs
What TRID Replaced
| Before TRID | After TRID |
|---|---|
| Good Faith Estimate (GFE) | Loan Estimate (LE) |
| Initial TIL Disclosure | Loan Estimate (LE) |
| HUD-1 Settlement Statement | Closing Disclosure (CD) |
| Final TIL Disclosure | Closing Disclosure (CD) |
Covered Transactions
TRID applies to most closed-end consumer mortgage loans:
| Covered | NOT Covered |
|---|---|
| Purchase loans | HELOCs (open-end) |
| Refinances | Reverse mortgages |
| Construction-permanent | Mobile home loans (not secured by real property) |
| Home equity loans | Business purpose loans |
| Loans made by persons not regularly extending credit |
What Constitutes an "Application"
Under TRID, an application occurs when the lender receives 6 pieces of information:
| Required Information |
|---|
| 1. Borrower's name |
| 2. Borrower's income |
| 3. Borrower's Social Security number (for credit report) |
| 4. Property address |
| 5. Estimated value of the property |
| 6. Mortgage loan amount sought |
Important Note
Once these 6 pieces are received, the 3-business-day clock for providing the Loan Estimate begins — regardless of whether the lender intends to proceed with the application.
The Loan Estimate (LE)
The Loan Estimate is a 3-page form that provides key information about the proposed loan.
Timing
| Event | Deadline |
|---|---|
| Receipt of application (6 pieces) | Within 3 business days |
| For LE, a business day = | All calendar days except Sundays and federal holidays |
| LE must be received by consumer | No later than 7 business days before consummation |
Content of the Loan Estimate
Page 1: Loan Terms and Projected Payments
- Loan amount, interest rate, monthly P&I
- Projected payments (including escrow)
- Costs at closing
Page 2: Closing Cost Details
- Loan costs (origination charges, services borrower cannot shop for, services borrower can shop for)
- Other costs (taxes, prepaids, initial escrow)
- Calculating cash to close
Page 3: Comparisons and Other Information
- Comparison over 5 years (total payments, principal paid)
- APR, TIP (Total Interest Percentage)
- Other considerations (appraisal, assumption, servicing)
The Closing Disclosure (CD)
The Closing Disclosure is a 5-page form that provides final loan terms and closing costs.
Timing
| Event | Deadline |
|---|---|
| Consumer must receive CD | At least 3 business days before consummation |
| For CD, a business day = | All calendar days (for receipt) |
| For consummation, a business day = | Days lender is open for substantially all business |
The 3-Day Waiting Period
The 3-business-day waiting period exists so consumers can:
- Review final terms before closing
- Compare CD to Loan Estimate
- Ask questions about changes
- Walk away if needed
What Triggers a New 3-Day Wait
A revised CD requires a new 3-day waiting period if:
| Change | New Wait Required |
|---|---|
| APR increases by more than 1/8% (0.125%) for fixed rate | Yes |
| APR increases by more than 1/4% (0.25%) for adjustable rate | Yes |
| Loan product changes (e.g., fixed to ARM) | Yes |
| Prepayment penalty is added | Yes |
Tolerance Limits
TRID establishes tolerance limits for closing costs — how much final costs can exceed estimated costs.
Zero Tolerance (0%)
These fees cannot increase from LE to CD:
| Zero Tolerance Items |
|---|
| Lender's origination charges |
| Transfer taxes |
| Fees paid to an affiliate |
| Fees for services where lender does not permit shopping |
10% Tolerance
These fees can increase by up to 10% in aggregate:
| 10% Tolerance Items |
|---|
| Recording fees |
| Third-party services if lender selected provider (and borrower used that provider) |
| Services borrower shopped for and selected from lender's written list |
No Tolerance Limit
These fees have no limit on increases:
| Unlimited Variance Items |
|---|
| Prepaid interest |
| Property insurance premiums |
| Services borrower shopped for independently |
| Third-party services where borrower selected own provider |
Changed Circumstances
A changed circumstance allows the lender to issue a revised Loan Estimate with different terms or costs.
Types of Changed Circumstances
| Type | Examples |
|---|---|
| Changed information | Information at application was inaccurate or changed |
| New information | Information not available at time of LE |
| Extraordinary events | Natural disaster, civil unrest |
| Borrower-requested changes | Different loan amount, lock extension |
Timing for Revised LE
If changed circumstances permit a revised LE:
- Must be provided within 3 business days of discovering the change
- Must be received no later than 4 business days before consummation
- Revised LE resets tolerances for affected fees
Rate Lock Timing
Special rules apply when interest rates are locked:
| Scenario | LE Timing |
|---|---|
| Rate not locked | LE provided when rate changes does not require new LE |
| Rate locked at application | LE must reflect locked rate |
| Rate locked after initial LE | Revised LE within 3 business days of rate lock |
| Lock expires | Revised LE if terms change |
Lock Extension
If the rate lock expires and borrower requests extension:
- Extension fee can be charged
- Treated as borrower-requested change
- Revised LE can be issued
Comparison Requirements
The Closing Disclosure must include a comparison showing:
Closing Cost Comparison
Side-by-side comparison of:
- Loan Estimate costs
- Final costs
- Differences (did you pay more or less?)
Cash to Close Comparison
Comparison showing changes in:
- Closing costs
- Cash to close amount
- Explanation of differences
Cure Provisions
If fees exceed tolerances, lenders must cure the violation:
Cure Process
| Step | Requirement |
|---|---|
| Refund excess | Return amount exceeding tolerance to borrower |
| Timing | Within 60 days of consummation |
| Method | Check mailed or credited to escrow account |
Key Dates Summary
| Document | When Required |
|---|---|
| Loan Estimate | Within 3 business days of application |
| Revised LE (changed circumstance) | Within 3 business days of change |
| Revised LE delivery deadline | 4 business days before consummation |
| Closing Disclosure | Consumer receives 3 business days before consummation |
| New 3-day wait triggers | APR > 1/8%, product change, prepayment penalty added |
Key Takeaways
- TRID combined 4 forms into 2: Loan Estimate and Closing Disclosure
- Application = 6 pieces of information (name, income, SSN, address, value, loan amount)
- LE due within 3 business days of application
- CD due 3 business days before consummation
- Zero tolerance for lender-controlled fees; 10% tolerance for lender-selected services
- Changed circumstances allow revised LE with reset tolerances
- New 3-day wait required for APR increases > 1/8%, product changes, or prepayment penalty added
- Cure excess fees within 60 days of consummation
Under TRID, what 6 pieces of information constitute a loan application that triggers the Loan Estimate timing requirements?
The Closing Disclosure must be received by the consumer at least how many days before consummation?
Which of the following would require a new 3-day waiting period after the initial Closing Disclosure is provided?