TRID Rule Overview

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Questions and Answers

What is the main purpose of the TRID rule?

To simplify the loan process for lenders

To regulate the fees charged by settlement agents

To eliminate all previous disclosure requirements

To integrate mortgage disclosures for better consumer understanding (correct)

Which two disclosure forms were replaced by the Loan Estimate under TRID?

Good Faith Estimate and HUD 1 Settlement Statement (correct)

Final Truth-in-Lending Disclosure and HUD 1 Settlement Statement

Good Faith Estimate and Final Truth-in-Lending Disclosure

Initial Truth-in-Lending Disclosure and HUD 1 Settlement Statement

Who is responsible for the accuracy of the Loan Estimate and Closing Disclosure?

The CFPB

Settlement agents

The borrower

Lenders (correct)

Which type of loans is NOT covered by the TRID rule?

HELOCs Signup and view all the answers

What does the Closing Disclosure replace under TRID?

Final Truth-in-Lending Disclosure and HUD 1 Settlement Statement Signup and view all the answers

Which entity is responsible for the Seller Closing Disclosure on purchase transactions?

The settlement agent Signup and view all the answers

What new form is required for refinance transactions under the TRID rules?

Loan Estimate Signup and view all the answers

What is a key requirement for lenders regarding the TRID forms?

Lenders must use CFPB-provided forms without adaptations Signup and view all the answers

What must lenders provide to applicants within three business days of application?

The 'Your Home Loan Toolkit' booklet Signup and view all the answers

Which of the following is NOT a requirement for mortgage lenders under the CFPB rules?

Delivering the HUD Special Information booklet Signup and view all the answers

What is an Affiliated Business Disclosure?

A disclosure listing settlement service providers and their affiliations Signup and view all the answers

When must mortgage lenders provide a free copy of all appraisals to the applicant?

After the appraisal report is completed but before closing Signup and view all the answers

What does the Annual Escrow Account Statement provide for the loan servicer?

An accounting of receipts and disbursements from the escrow account Signup and view all the answers

What is included in the loan costs incurred by the borrower?

Lender charges and third-party charges associated with obtaining the loan Signup and view all the answers

What is the Annual Percentage Rate (APR)?

The cost the borrower pays each year to borrow money, including fees. Signup and view all the answers

Which of the following describes a 'zero tolerance' category under the TRID rule?

Changes can only occur if there has been a change of circumstances Signup and view all the answers

What does 'initial escrow payments at closing' primarily cover?

Setting up the borrower's monthly escrow for taxes, insurance, and mortgage insurance Signup and view all the answers

Which option is considered a 'changed circumstance' under TRID?

The lender receiving new information not previously disclosed. Signup and view all the answers

How are lender credits treated concerning total closing costs?

They are deducted from the total closing costs Signup and view all the answers

How must the lender document a consumer's intent to proceed?

By documenting the stated intent in writing. Signup and view all the answers

What does the Total Interest Percentage (TIP) measure?

How much interest the borrower will pay over the life of the loan. Signup and view all the answers

Which document must be provided separately from the Loan Estimate when the borrower can shop for settlement services?

Settlement Service Providers List Signup and view all the answers

Within what time frame must the Loan Estimate be delivered to the consumer?

Within three business days of application receipt. Signup and view all the answers

Which of the following would NOT be considered a valid changed circumstance under the TRID rule?

The borrower provided false information about income Signup and view all the answers

What is the purpose of comparing the Loan Estimate to other Loan Estimates?

To assist the borrower in understanding the overall loan costs Signup and view all the answers

What constitutes an 'application' under RESPA requirements?

The collection of six specific pieces of information. Signup and view all the answers

What important content is included on Page 1 of the Loan Estimate?

General loan information and borrower identification. Signup and view all the answers

What is the aggregate tolerance for changes allowed within the ten percent category under TRID?

Ten percent above the disclosed aggregate total Signup and view all the answers

What must lenders ensure regarding the costs and fees disclosed in the Loan Estimate?

They disclose in good faith based on the best available information Signup and view all the answers

When can a consumer modify or waive the seven-business-day waiting period for loan consummation?

In case of a bona fide personal financial emergency. Signup and view all the answers

What type of charges fall into the 'No Tolerance' category under TRID?

Prepaid interest and property insurance premiums Signup and view all the answers

Which of the following loans is not subject to RESPA?

Loans secured by vacant land. Signup and view all the answers

Which criteria must be fulfilled for a lender to provide a Loan Estimate?

The lender must have the six pieces of information defined by RESPA. Signup and view all the answers

When should a revised Loan Estimate be issued due to changed circumstances?

Within 3 business days of awareness of change Signup and view all the answers

What defines a 'business day' for the Loan Estimate under TRID?

Any day the office is open to the public for business. Signup and view all the answers

Which of the following is NOT a valid reason for changes in loan charges?

Borrower's decision to back out of the loan Signup and view all the answers

What must happen to settlement service fees if the lender chooses the service provider?

They must be disclosed in the Loan Estimate Signup and view all the answers

Which of the following is true regarding mortgage brokers providing the Loan Estimate?

Brokers can provide it, but lenders remain accountable for defects. Signup and view all the answers

Which statement regarding Loan Estimate delivery methods is correct?

Electronic delivery can be used only if consumer consent is obtained. Signup and view all the answers

What is the significance of the APR disclosed in the Loan Estimate?

It reflects the true cost of borrowing expressed as an annual rate Signup and view all the answers

What must occur if a lender needs to issue a revised Loan Estimate (LE) due to a change of circumstances?

It must be issued at least 4 days prior to consummation. Signup and view all the answers

When must a lender ensure that the borrower receives the Closing Disclosure (CD)?

At least three business days before consummation. Signup and view all the answers

Which scenarios allow lenders to make corrections to a Closing Disclosure after it has been issued?

Inaccuracies discovered post-closing. Signup and view all the answers

What is necessary for a borrower to modify or waive the three-day waiting period after receiving the Closing Disclosure?

A written statement describing the emergency. Signup and view all the answers

How does a revised Closing Disclosure affect tolerance limits?

It resets the tolerance limits. Signup and view all the answers

What can be provided as a 'cure' for tolerance violations?

A refund directly to the consumer. Signup and view all the answers

What is the maximum number of days a lender has to issue a corrected Closing Disclosure after learning about the need for a revision?

3 business days. Signup and view all the answers

Which of the following is included on Page 5 of the Closing Disclosure?

Contact information for the lender. Signup and view all the answers

Under what circumstances can a borrower legitimately waive the three-day waiting period for the Closing Disclosure?

In cases of a bona fide personal financial emergency. Signup and view all the answers

When does the right of rescission begin for rescindable transactions after providing the Closing Disclosure?

Three business days after the CD is provided. Signup and view all the answers

Which of the following statements regarding the Loan Estimate and Closing Disclosure is true?

A revised LE can affect previously disclosed charges. Signup and view all the answers

What additional disclosures are found on the Closing Disclosure that were not on the Loan Estimate?

Total of Payments and Finance Charge. Signup and view all the answers

Which of the following should a lender NOT do when a Closing Disclosure needs correction?

Make corrections via verbal agreement. Signup and view all the answers

What main purpose does the Closing Disclosure serve?

It is the final disclosure reflecting the actual terms of the transaction. Signup and view all the answers

Study Notes

TRID (TILA-RESPA Integrated Disclosure) Rule

Replaced dual RESPA (Reg X) and TILA (Reg Z) disclosure requirements with integrated Loan Estimate (LE) and Closing Disclosure (CD) forms.
Effective October 3, 2015.
Lenders are fully responsible for the accuracy of both the LE and CD.
Applies to most federally-related mortgage loans secured by real property or cooperative units.
Excludes HELOCs, reverse mortgages, chattel-dwelling loans, and loans by non-creditors.
Some exceptions for low-income borrower assistance and certain types of TILA-subject but non-RESPA loans (construction, vacant land, or large acreage loans, and some credit extended to trusts).

Loan Estimate (LE)

Replaces Good Faith Estimate (GFE) and initial Truth-in-Lending disclosure.
Required delivery within three business days of application receipt.
LE must contain good faith estimates of costs and terms.
- Key aspects include: General Loan information, detailed breakdown of costs, cash-to-close estimate, APR and TIP, comparisons, and additional information (appraisal needs, assumption possibilities, future refinancing implications).
Lender is responsible for errors in the LE.

Closing Disclosure (CD)

Replaces final Truth-in-Lending disclosure and HUD-1 settlement statement.
Required delivery no later than three business days before consummation.
Contains final transaction terms and costs.
Reflects actual amounts where possible.
Must be updated for any substantial changes.
Lenders are responsible for accuracy, but may estimate aspects when necessary.

Key Terminology

Annual Percentage Rate (APR): Annualized cost of borrowing including fees.
Total Interest Percentage (TIP): Total interest paid over the loan life divided by the loan amount.
Loan Consummation: The point when a borrower becomes legally obligated; determined by state law.
Business Day (LE): Days when lender offices are open for most business activities.
Business Day (CD): All calendar days except Sundays and legal holidays
Intent to Proceed: Borrower’s declaration of intent to move forward with the loan. Documentation is required.
Changed Circumstances: Specific events (e.g., changes in creditworthiness) permitting revised disclosures or resetting tolerance limits.

Tolerance Categories

Some variations between disclosed and actual costs are allowed.
Zero Tolerance Applies to certain lender charges, rates, or fees which must match estimates.
10% Tolerance Allows for up to a 10% variance from disclosed estimates with changed circumstances.
No Tolerance Applies to certain costs like prepaid interest and escrow amounts.

Additional Disclosures and Requirements

Settlement/Service Providers List: Lenders must provide a list of settlement service providers if shopping is allowed.
Affiliated Business Disclosure: When lender affiliations exist.
Free Appraisal Copies: Lenders must promptly provide copies of appraisals, often within three days of report completion (but may be waived) - Especially for high-value loans.
"Your Home Loan Toolkit": Explains TRID disclosures and the home-buying process.

Key Differences Between LE and CD

CD is the definitive, final disclosure
LE provides estimates, and is subject to revision.
The structures and content are similar.
Key content differences (seller-side vs refinances)
CD provides final amounts, including seller or third-party payments and includes summaries for transactions accounting for categories similar to LE format

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Description

Dive into the TRID (TILA-RESPA Integrated Disclosure) Rule and understand its impact on loan disclosures. This quiz covers key elements like the Loan Estimate (LE) and Closing Disclosure (CD), their requirements, and exclusions. Test your knowledge on mortgage loan regulations effective since October 2015.