If you’re thinking of buying a house in 2018, and it’s a been a few years since you’ve checked out the real estate sales regulation landscape, you’ll want to know about TRID, or the TILA-RESPA Integrated Disclosure (TRID) regulation. TRID went into effect in October of 2015, so for many buyers on the market today it’s a new regulation, and one that may be hard to wrap their heads around.
Simply put, TRID is a rule from the Consumer Financial Protection Bureau, under which banks are required to give property buyers more time to look over their loan documents.
The “Know Before You Owe” regulation
Under TRID, or the “Know Before You Owe” rule, banks must give consumers both information required by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) within set timelines. If that looks like alphabet soup to you, you’re not alone. So let’s take a closer look at what that means.
Fewer Forms, and a Streamlined Process
It’s important to note that with TRID, several forms have been combined, with the goal of simplification.
- The Good Faith Estimate and Initial Truth in Lending disclosures are folded into the Loan Estimate.
- And the HUD-1 and the final Truth In Lending disclosures have been combined with the form detailing the closing costs, known as the Closing Disclosure.
TRID Offers Consumers More Time to Consider Details
Under TRID, consumers must have at least three business days before closing to review their combined Loan Estimate with all of the anticipated fees, charges and line items. In addition, the Closing Disclosure must be provided at least three days before closing. Experts say the regulation is aimed at protecting consumers from any financial surprises at closing.
Lenders warn the regulation can slow the lending process and lengthen closing time by a week or more over the usual wait. That may be an important consideration for buyers and sellers operating on a tight timeline.
A New Timeline, for the Benefit of Consumers
In the past, some documentation (namely the HUD-1 statement) has been given to parties associated with a property sale just a day in advance. Consumer advocates say that essential documentation sometimes arrived just a day before or the day of closing, giving buyers very little time to read and understand the information. Under TRID, property buyers, like you, will have a little more breathing room and time to consider those all-important details before closing.