Recently, the largest changes in more than 30 years were made in federal mortgage disclosure requirements.  On August 1, 2015, the forms that have become second nature for generations of loan originators, attorneys, and borrowers—including the Good Faith Estimate (GFE), HUD-1, and Truth-in-Lending—are no longer used for new real estate transactions.  In their place are two completely new forms and a new set of requirements for how and when they are provided to borrowers.

Pursuant to the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) has integrated the mortgage loan disclosures under two Federal statutes:  the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA).  The new TILA-RESPA Integrated Disclosure Rule (also called TRID) replaces the four existing disclosures for closed-end credit transactions secured by real property with two new forms:

  • A Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application; and
  • A Closing Disclosure that must be provided to the consumer at least three business days prior to consummation of the transaction.

CFPB also released guidance for complying with the new requirements for all applications received on or after August 1, 2015.  TRID applies to most closed-end consumer mortgages, including certain loans that are not currently subject to RESPA such as:  construction-only loans; loans secured by vacant land or by 25 or more acres; and credit extended to certain trusts for tax or estate planning purposes.  TRID does not apply to home equity lines of credit (HELOCs), reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property.  The final rule also does not apply to loans made by persons who are not considered creditors.

The CFPB’s compliance guide for industry constituents can be found here.  The complete TILA-RESPA Integrated Disclosure Rule and the Official Interpretations are available here.

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