December 28th, 2017 6:47 AM by Jackie A. Graves, President
Effective October 3, 2015, the U.S. government made significant
revisions to the rate and fee disclosures consumers receive in the beginning
and end of every mortgage transaction. These disclosures come with specific
timing requirements that impact all home financing transactions.
an overview of the disclosures and associated timing rules so you can plan your
home financing properly.
financing homes in the U.S. are protected from fee abuses by two main
and RESPA were created in 1968 and 1974 respectively, and enforcing them now
falls to the Consumer Financial Protection Bureau (CFPB), an agency created in
of October 3, 2015, the CFPB combined all mortgage rate and fee disclosures
mandated under TILA and RESPA into two simple forms to make it easier for
consumers to understand their mortgages.
initiative is called the TILA-RESPA Integrated Disclosure Rule, often referred
to as TRID.
requires consumers to receive two disclosures — one at the beginning of a
transaction, and one at the end.
three days of applying for a home purchase loan, the lender must send you a Loan
Estimate Form, which provides a detailed line-item breakdown of
fees, cash needed to close, rate, terms, and costs over the life of the loan.
The lender must also obtain your intent to proceed before it can move forward.
least three days before closing, the lender must send you a Closing
Disclosure Form, which looks almost exactly like the Loan Estimate,
but adds a breakdown of costs paid buy buyer versus seller versus third
parties. This means you’re reviewing final terms in the same format you saw
initially, and you’ve got time to digest it.
links above are CFPB samples of each form so you can see what you’ll get from
every lender you apply with.
Loan Estimate Disclosure and Timing Rules
CFPB allows for mail or electronic delivery of the Loan Estimate.
applied with a lender who’s using mail delivery late on a Wednesday, they would
mail your Loan Estimate and intent to proceed disclosures Thursday, you might
get it Saturday, and they couldn’t collect fees and order your appraisal until
they received your consent Monday, which is already day six into the process.
applied with a lender who’s using electronic delivery late on a Wednesday, they
could deliver your Loan Estimate and intent to proceed disclosures for you to
consent to online that evening, and they could collect fees and order appraisal
that same evening, all on the first day of the process.
Closing Disclosure and Timing Rules
Closing Disclosure looks almost exactly the same as the Loan Estimate, making
it easy to check if line item closing costs match originally quoted terms.
It also provides further clarity on closing costs by showing which line item
costs are paid by the buyer, seller, and third parties.
lender must provide this information to you at least three days before closing,
excluding Sundays and holidays, and day one is the day after you get the
example, if a lender sent your Closing Disclosure on a Wednesday, the three-day
waiting period is Thursday, Friday, Saturday. Then they can fund your loan and
close your home purchase on Monday, which is day six from the time you received
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