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Know Before You Owe

New TRID rule to take effect on October 3, 2015

Say good-bye to complicated home loan and closing documents. New mortgage disclosure requirements from the Consumer Financial Protection Bureau (CFPB) will soon change the way mortgage and settlement companies do business with their clients. These regulations, which are a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, are designed to simplify the settlement process for consumers, making it more transparent and easy to understand.

What’s occurring?

Beginning on October 3, 2015, you will no longer receive multiple disclosure forms and statements when you apply for or get ready to close on a home loan. The Good Faith Estimate (GFE) and Truth in Lending (TIL) disclosure, which are currently provided when you apply for a home loan, will be replaced by the Loan Estimate. The consolidated Loan Estimate clearly outlines the terms and features of your loan, as well as what can (and cannot) change. It’s a streamlined form that, according to the CFPB, will help you “know before you owe.”

Similarly, your standard closing documents—the final TIL disclosure and HUD-1 settlement statement—will be replaced by the Closing Disclosure. Like the Loan Estimate, the Closing Disclosure is a streamlined summary of the loan terms, projected payments and closing costs. Additionally, it is designed so you can easily compare the Closing Disclosure with your Loan Estimate to ensure the loan on which you close is the same as the loan you chose and for which you were approved.

Click here for a side by side comparison of the old and new forms.

With the new forms also come new deadlines that mortgage and settlement companies have to meet. For example, once you apply for a home loan with a mortgage lender, that company is required to deliver or place in the mail to you the Loan Estimate no later three business days after receiving your application. Additionally, the Closing Disclosure must be delivered to you no later than three business days before closing. What’s important to note is that if any changes are made to the Closing Disclosure, a new document must be reissued, and in certain cases, this resets the clock on that three-day period.

Could these regulations affect a home closing?

It’s all about deadlines, especially with the Closing Disclosures. A loan cannot close if consumers do not receive their Closing Disclosure in the three business-day time period. So if one of the below changes occurs after they received the initial Closing Disclosure, the clock will be reset, a new form will have to be issued and the closing pushed out three days.

  • Change to the loan’s Annual Percentage Rate (APR)
  • Modification of the loan product
  • Addition of a pre-payment penalty fee

How can you ensure a seamless real estate settlement in the new regulatory world?

While the key changes, from a consumer perspective, occur in forms and deadlines, there are numerous other requirements that mortgage and settlement companies have to implement. To ensure that your real estate transaction occurs on time and as expected, you should not only educate yourself on what’s occurring before the new regulations go into effect, but also make sure you’re working with a company that’s prepared for the new rules. The teams at FM Lending Services and Guaranty Title, for example, have been preparing for the changes over the past two years and are ready to handle them with ease.


Questions about the new disclosures? Contact your local mortgage consultant today!


All first mortgage products are provided by Prosperity Home Mortgage, LLC dba FM Lending Services. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance. Licensed by the Delaware State Bank Commissioner. Also licensed in District of Columbia, Georgia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.
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©2015 Prosperity Home Mortgage, LLC dba FM Lending Services. All Rights Reserved.

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