TRID Survival Guide: Consumer Edition

Transcription

1 TRID Survival Guide: Consumer Edition What you need to know about the TILA-RESPA Integrated Closing Disclosures. NFM Lending NMLS # 2893 Toll-Free:

2 Introduction NFM Lending is excited that you are considering us for your mortgage loan transaction. Since 1998, NFM Lending has assisted more than 20,000 consumers with experiencing or enhancing their American Dream. Starting with a small group of individuals in a Baltimore City, Maryland office, NFM Lending now serves consumers in 29 states with 36 branches located in: California, Florida, Indiana, Louisiana, Maryland, Nevada, North Carolina, New Jersey, Pennsylvania, Tennessee, Texas, Virginia, and West Virginia. Believing that an informed consumer is our best consumer, NFM Lending has designed this Survival Guide to further educate you on some very important changes that will be taking place on October 3, In response to the economic crisis the country faced as result of unsafe housing practices, Congress passed the Dodd-Frank Act. The Dodd-Frank Act mandated the creation of a council designed to combine the enforcement authority of the Department of the Treasury, The Federal Reserve, The Security Exchange Commission, and several other government agencies overseeing our financial markets. This council would have the responsibility to: Conduct rule-making, supervision, and enforcement for Federal consumer financial protection laws; Restrict unfair, deceptive, or abusive acts or practices; Take consumer complaints; Promote financial education; Research consumer behavior; Monitor financial markets for new risks to consumers, and; Enforce laws that outlaw discrimination and other unfair treatment in consumer finance. On July 21, 2011, the council named the Consumer Financial Protection Bureau formally took jurisdictions over mortgage regulations making it the federal agency in charge of mortgage lenders like NFM Lending. Since its inception, the Consumer Financial Protection Bureau has been very active in providing guidance to lenders to better protect you during the mortgage process. transaction is covered under TRID (and most are as shown below), the disclosures you receive and the timing in which you receive them will change. TRID goes into effect for most residential mortgage transactions that have entered the application stage on or after Saturday October 3, Below are important highlights of TRID. Replaces the Truth in Lending Statement/Good Faith Estimate with the Loan Estimate; Replaces the Good Faith Estimate/Truth in Lending Statement and HUD-1 Settlement Statement with the Closing Disclosure; What s Covered: - Purchase and Refinance closed-end credit transactions What s Not Covered: - Home Equity Lines of Credit - Reverse Mortgages - Mobile Homes - Vacant Land Consumer Benefits of TRID Better Communication TRID will require all lenders to operate under the same timelines when application is taken. Regardless of what lender you use once certain information is received, the lender must provide you with the new loan disclosures. Because TRID stipulates greater accuracy when a Loan Estimate and Closing Disclosure are provided, all parties to the transaction (the realtor, appraiser, lender and title On November 20, 2013, the Consumer Financial Protection Bureau (CFPB) finalized the TILA-RESPA Integrated Disclosure Act (TRID). TRID is a combination of two existing regulations, the Truth in Lending Act and the Real Estate Settlement Procedures Act. These rules have been in place in the real estate industry for over 30 years. If your 2

3 Introduction (cont.) company) must work closely together early on and throughout the entire loan process to ensure the costs associated with the loan transaction are communicated to you. The CFPB requires that if you are a buyer, you receive the Home Loan Toolkit booklet which provides helpful information about the home buying process and NFM Lending s responsibilities to you during the loan transaction. Better Forms While the previous forms provided a lot of helpful information to the consumer, the Loan Estimate and the Closing Disclosure look similar in nature and are easier to read. NFM Lending must provide you with the Closing Disclosure at least three business days prior to your scheduled closing/ settlement date. This gives you an opportunity to review the document, compare it to your Loan Estimate and ask any questions of your realtor or lender before you sit down at the closing table. Because this rule is one of the biggest changes the industry has addressed in over 30 years, until TRID has been in practice for a few months you should expect a contract that requires more days in order for settlement to take place (typically an additional 15 days) and more than one walkthrough inspection. The items related to the closing costs the consumer will pay are listed in alphabetical order. Important terms affecting the consumer such as the interest rate, the loan amount and monthly loan payments are addressed on the first page of the documents. Testing of over 800 consumers, the CFPB went to great lengths to design a form that is consumer friendly. Fewer Surprises Whether this is your first time buying a home or you re a step up buyer or refinancing, the lender is required to provide you with an estimate of costs in good faith. This means the lender must take all the information known at the time of disclosure in order to provide estimated fees related to the loan transaction. TRID TIP TRID applies to you as a consumer if you submitted your loan application on or after October 3,

4 The Loan Estimate: Page 1 Date issued, the purpose or type of transaction, the Loan ID #, if the rate is locked, and the lock expiration. General loan details, such as the loan amount, and projected interest rate and monthly principal. Projected payments, including Principal + Interest and mortgage insurance. Estimated closing cost information. 4

5 The Loan Estimate: Page 2 Lender fees, insurance fees, escrow payments, and other costs. Estimated total closing costs including insurance, lender Which services you can shop for, and which services you cannot shop for. TRID TIP If you have any questions about the forms, address them with your lender promptly. Waiting could delay your closing. 5

6 The Loan Estimate: TRID TIP You will receive the LE within three business days of the lender s receipt of your application. Estimates to help you compare this loan to other loans. Notice of free copy of appraisal, insurance, refinance information, late payment fees, & servicing notice. Signature to confirm that you have received the LE. This is not an acceptance of the loan. 6

7 The Closing Disclosure: Page1 TRID TIP You will receive the CD 3 days prior to your settlement/ closing date. Loan terms: amount, interest rate, prepayment penalty if applicable. Projected payments, mortgage insurance, escrow. Closing costs/ cash to close 7

8 The Closing Disclosure: Page 2 Lender s fees Third party services, broken down by those consumer shopped for and those the lender selected. All other costs, including HOA fees, property taxes, insurance, real estate commissions, and total closing costs (as shown on p. 1) 8

9 The Closing Disclosure: Page 3 Compares actual closing costs to those detailed in the Loan Estimate. Summary of costs to borrower and costs to seller TRID TIP The following changes to the loan will require re-disclosure of the CD and re-start the 3-day waiting period: 1. An APR increase of more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable-rate loans. 2. The addition of a prepayment penalty 3. The loan product itself changes, 9

10 The Closing TRID TIP You will likely have a walk-through before the CD is issued, and again right before settlement. Additional non-essential information including note information, estimated escrow statements, and negative amortization notices. 10

11 The Closing Disclosure: Page 5 Miscellaneous disclosures Total of payments, finance charge, amount financed, APR, TIP (Total Interest Percentage) Contact information for all parties involved Signature to confirm receipt of Closing Disclosure 11

12 For more information about TRID, visit 12