Once again, the mortgage industry is scrambling. With a quickly approaching deadline, which was already extended once, many are still wondering how to properly prepare and adjust to meet the new requirements. As hectic and alarming as it sounds, changes like this are not new to our industry. We regularly see new changes taking place and new legislation being implemented.
This time, the legislation of choice is the “Truth In Lending Real Estate Settlement Procedure Initial Disclosure Act”. Yes, that is a mouthful, so we will stick with the more common abbreviation of TRID.
The intent of TRID is to not only streamline the process, but make the lending process more transparent, consistent, and clear to the consumer. Current disclosures include the Good Faith Estimate (“GFE”) and the Initial TILA Disclosure on the front end. On the back end of the process you have the HUD Settlement Statement and the Final TILA Disclosure. TRID is essentially combining these four disclosures and creating one document, the Loan Estimate (“LE”), on the front end, and another document, the Closing Disclosure (“CD”), on the back end.
So what does this mean? You are probably thinking, the mortgage industry has tons of documents and disclosures that are required, what is the big deal about two more?
TRID impacts more than just disclosures required by lenders/brokers. The effects of TRID will be seen throughout the mortgage industry as well as affiliated industries. One example is fees associated with the loan process. Among others, credit reports, surveys, and appraisals are some of the fees which will fall within a certain category that either allows for a minimal 10% fluctuation, or even a zero tolerance category that does not allow for any fluctuation of fees. There are circumstances that decide what category the fees fall into, these circumstances and more are clarified in this TRID_Overview.
As you can see, this long-named, shortly abbreviated new legislation is flexing its muscles over our industry. Lenders, brokers, banks, appraisers, and others affiliated with the industry are scrambling to decipher what responsibilities are going to fall to them and figure out what processes they are going to implement.
With all that being said, TRID is a good thing. Even with the anxiety, fear, and pressure of implementing new procedures, TRID will help in the long run. Ideally, TRID will clean up the closing table and help give the consumer a better idea of what they are getting themselves into thru the loan process. Transparency and clarity is much needed, and TRID is going to assist in that.
Come October 3rd, 2015, TRID is going to take effect, whether you are ready or not.
In an effort to make the TRID implementation as seamless as possible for our clients, Class Appraisal has come up with a proprietary process to streamline the appraisal portion of TRID. For more information and clarification on TRID, be sure to read over our TRID_Overview.