A Brief History of TRID

By now most of you have heard of the upcoming changes in the title and settlement industry. Terms like CFPB and TRID most likely have come across your screens in emails and on websites. Vendors working to implement some of these changes may have been hawking their wares to you as well. You may be unclear about TRID, how it affects you and what you should do about it.

Luckily, you have a relationship with Riverside Abstract. While every day brings us closer to implementation and the world seems to be in chaos trying to stay informed, we at Riverside have done all the work for you. We have been at the forefront of implementing the changes and learning, in a clear and precise way exactly what is expected of us and by extension of you, as you represent your clients.

We will lay the groundwork for a series of articles in which we arm you with the tools you need to comply with these new regulations.

Market Overview.

After the financial meltdown of 2008 the government decide that irresponsible and predatory practices by banks were the reason for the crisis. They passed the “Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010” (commonly referred to as Dodd-Frank) which in turn created a new government agency called the Consumer Financial Protection Bureau (CFPB), commonly referred to in the industry as “the Bureau”. The Bureau holds unprecedented enforcement powers to regulate any financial institutions and their affiliates in their stated goal of protecting the consumer.  They can regulate, investigate and penalize financial institutions or any business or individual that they deem harmful in any way to the consumer.

Out with the old

In the past financial institutions where required to comply with  TILA or Truth In Lending rules, which disclosed their loan pertinent data including some loan related costs, and terms. The other primary requirement was RESPA which was a Good Faith Estimate (GFE) outlining all the fees, and other costs associated with their loan, followed by the Hud-1 Settlement Statement at closing. The consumer would never be required to pay more than the amount disclosed. If a bank wished to raise the fees or charge more for the loan they could re-issue new disclosures and still be in compliance. Essentially the GFE and TIL, estimated the costs to the consumer and the HUD-1, documents that the costs of the loan were actually as estimated.

Effective on all new loan applications taken after August 1st 2015 (now changing to October 1st, 2015) these forms are no longer allowed.

In with the new

TRID,  which stands for TILA RESPA Integrated Disclosure, is the culmination of several years of discussions between CFPB and members of the banking and title industries. TRID consolidates the existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms: a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.

First, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate. Similar to those forms, the new Loan Estimate form is designed to provide disclosures that will be helpful to consumers in  understanding the key features, costs, and risks of the mortgage loan for which they are  applying, and must be provided to consumers no later than the third business day after they submit a loan application. Second, the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) have been combined into another new form, the Closing Disclosure, which is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction.

BEST PRACTICES:

Besides for the above changes which come down from CFPB, the American Land Title Association has issued a new standardized self-regulation procedure for those of us the title, escrow and settlement industry. Most of these have to do with internal operation and do not affect you as our client, Riverside Abstract was actually way ahead of the industry in implementing what has become known as the “7 Pillar of Best Practices”  for Title Insurance Companies. Since its inception several years ago, Riverside Abstract has created and maintained a rigorous system in which the best interest of our clients are guarded and protected with fierce devotion. This includes making sure our licensing, escrow practices, settlement procedures and policy production are done better than anyone in the industry. These practices have made us the industry leader in customer satisfaction. This is and always will remain our primary purpose.

The areas of change which you will likely to see will be in the area of protecting Non-Public Information. The way we send emails and store sensitive information is in the process of being upgraded and new encryption systems are being installed. In a world where protecting this crucial information has made the headlines in the news time and time again, we at Riverside Abstract will continue to be an industry leader.

Stay tuned for detailed updates to the items we discussed above. These are exciting times are filled with opportunity for you to grow your business and improve your Real Estate practices. We look forward to calmly leading you in a very smooth transition.

Look out for our announcements about upcoming educational TRID events in New York and New Jersey.

For more information call 718.252.4200 or email us info@rsabstract.com