TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 2

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 2

One of the triggers for a new three-day review period is if the APR becomes inaccurate between the time the Closing Disclosure (CD) is delivered and consummation. What if the APR decreases?

The Rule states that if the APR becomes “inaccurate” and the change is outside the 1/4 and 1/8 percent tolerance, the review period must be restarted. The Rule does not say if the APR increases, rather it says “becomes inaccurate.” A decrease in the APR of either 1/4 or 1/8 percentage point renders the quoted APR inaccurate. We deal with this same provision today.

Will we see the use of the new forms prior to the August 1 implementation date?

No, the Rule does not permit the use of the new forms for any loans where the loan application was taken prior to August 1, 2015. In reality, the title and closing industry may not see the new Closing Disclosure (CD) until well into fall by the time those loans get to consummation. Continue to use the HUD-1 for settlements on loans in which the loan application was taken prior to August 1, 2015.

How are last-minute changes made to the seller’s side of the Closing Disclosure (CD) that do not affect the buyer’s numbers?

It depends. If the lender is inputting the numbers onto the CD and uses the combined buyer-seller form, you will need to ask them to make any and all changes or get permission from them to make changes. Most lenders have indicated that they will be delivering only the borrower’s side of the CD and will rely solely on the closing/settlement industry to provide the seller’s CD. The Rule specifically tasked the closing/settlement industry with the responsibility of preparing and delivering the seller’s side, so if the lender is inputting the numbers but uses the buyer-only form, this will allow you to create and use the seller-only form, leaving you the opportunity to make the changes instantaneously. However, most lenders will require you to obtain their authorization prior to making any changes to the seller’s side of the CD. Be sure to talk to your lender(s) about this.

If we prepare and deliver the seller-only CD, we are required to supply the lender with a copy of the seller-only form. There is no delivery requirement regarding the seller’s portion of the CD or the seller-only form prior to consummation. The TRID Rule states that the delivery of the seller’s side must be made at the time of consummation.

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