The mortgage industry has seen substantial change over the past few years. The Consumer Financial Protection Bureau (CFPB) introduced new rules that amend existing requirements for mortgage disclosures. In an effort to keep our customers informed, we've compiled a brief FAQ regarding the changes.
For a list of frequently used terms within the FAQ below, click here.
Overview
What is "Know Before You Owe"?
Know Before You Owe, also referred to as the TILA RESPA Integrated Disclosure (TRID) Rule, requires mortgage lenders and settlement agents to combine and simplify the disclosure forms used in the home loan process. The goal of the rule is to make the loan process more streamlined, transparent, and easier to understand.
When does the rule go into effect?
All mortgage lenders have to implement the new forms on October 3 2015. Therefore, if you are applying for a home loan on October 3rd or later, you will receive the new forms.
Does the rule apply to all types of mortgages?
All of the loan options that Highland HomeLoans provides will require that the new forms be used. However, not all loan options available within the industry will be required to use the forms. Your Highland HomeLoans Loan Officer can provide more information on the types of loans not covered under the rule.
Loan Estimate
What is a loan estimate?
The loan estimate combines and replaces the Good Faith Estimate (GFE) and initial Truth in Lending (TIL) disclosures. It is designed to provide disclosures that will be helpful in understanding the key features, costs, and risks of the mortgage loan. Most of the information previously provided in the GFE and TIL are in the form, however additional information not previously provided will now be featured in the form such as the estimated cash to close.
What are the key loan estimate dates I should know?
3-7-10 is the shorthand version of the key timeframes within which you must receive loan estimate documents.
- You must receive an initial loan estimate 3 business days after applying for a loan
- A final loan estimate must be issued 7 business days before closing on the loan
- You have 10 business days after receiving the loan estimate to decide whether to proceed with the loan
Closing Disclosure
What is a closing disclosure?
The closing disclosure is the form that combines and replaces the Final TIL, Itemization of Amount Financed, and HUD Settlement Statement. The purpose of the closing disclosure is to provide clarity in understanding all of the costs of the transaction.
When should I receive a closing disclosure?
A closing disclosure must be provided at least 3 business days before closing. Last minute changes may cause a delay in closing because some changes require an additional 3 business day waiting period before you can close (i.e. deciding to change the type of loan you would like to use for your home purchase). Your Highland HomeLoans Loan Officer can provide additional information regarding the changes that will trigger an additional waiting period.
Important Customer Responsibilities
What do I need to do to make the loan process easier?
Communication is key! Be responsive to all communications from your loan officer and settlement agent. Make sure that you provide all documentation when requested, and keep your loan officer informed of any changes that might affect your ability to qualify for the loan (i.e. opening additional credit lines, changing jobs, make large deposits in the bank, etc.).