TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 1

26 Jan

We will pass along a number of questions and clarifications of TRID every day for the next several days.

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

Volume 1

Do you know what determines whether the Closing Disclosure (CD) form is delivered three days in advance?

The lender is responsible for the delivery of the CD but the Rule allows the lender to designate another party to handle the delivery. Because the requirement is so strictly defined and the penalties so severe, it is believed most lenders will make the delivery and not allow another party to deliver. We, as the closing industry, are not responsible to “police” the delivery but need to be cautious if we hear something contrary to the Rule. With regard to the specifics of calculating the three-day advance disclosure requirement, the definition of business day comes into play. If the CD is not hand-delivered to the consumer (or delivered in a manner that affirmatively confirms delivery by the consumer) then an additional three days are added to the time period. This is the case even if the document is sent electronically.

The definition of a “business day,” as it applies to the delivery of the CD, differs from the definition used for the delivery of the Loan Estimate (LE). A business day for CD purposes is all calendar days other than Sundays and the ten Federal holidays. Therefore, Sundays and the ten federal holidays must be removed from the count. If you do not hand-deliver the CD, the time period will most typically expand to seven days in advance of the closing (three days in transit, three days for review plus one Sunday or federal holiday when applicable).

What are the three charges that would cause a triggering of the new three-day review period?

After the delivery of the Closing Disclosure (CD) and prior to consummation the three instances UNDER THIS RULE where a new three-day review period is required are:

1) If a pre-payment penalty is added,

2) If the loan product changes, or

3) If the APR becomes inaccurate.

Other changes are allowed without retriggering the three-day review period. However, if the change requested affects the value of the property causing the lender to require a revised appraisal, the Equal Credit Opportunity Act (ECOA) may cause a delay because the ECOA requires the delivery of the final appraisal three days prior to consummation. Do the regulations in the Rule affect the three-day right of rescission on refinances giving the borrowers three days prior to signing plus three days after? The three-day right of rescission does not change with the Rule. Therefore, the consumer will have three days prior to consummation to review the loan terms, fees and changes and three days after consummation to reconsider the entire loan offering. 4

What constitutes consummation on a loan with a three-day right to cancel: is it at the signing or after the expiration of the rescission period?

Consummation is defined as the day the borrower becomes obligated to the debt. Therefore, typically it is the day the promissory note is signed or in accordance with your state’s definition of “obligated.” A CFPB staff member put it simply saying consummation is the day of signing not at the end of rescission, “Because you can’t rescind what you haven’t accepted.”

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