TRID Closing Disclosure: Estimated Taxes, Insurance & Assessments
The Estimated Taxes, Insurance and Assessments section within the Projected Payments Table on the Closing Disclosure is often a cause of confusion. Not only do you need to come up with the correct amount to disclose, you need to tell the borrower what all is included in that amount. You also need to answer the “In Escrow?” field with either “yes”, “no” or “some”.
Jerod explains more in the video and walks you through an example.
When it comes to itemizing charges on the Loan Estimate, the TRID Guidelines indicate there is a difference in how you disclose charges that are absorbed by the bank versus charges that are offset by the bank. Your bank may even do both depending on the circumstances. You will want to know the difference between “absorbed” and “offset” charges because some are not required to be disclosed on the Loan Estimate.
The TRID Guidelines are often a big player when it comes to the life cycle of a mortgage loan. There are timing requirements to meet, disclosures to complete, and so much more. One of the main purposes of TRID is to get accurate “shopping disclosures” into an applicant’s hands quickly.
A Chronological Journey Through The Life Cycle of A Mortgage Loan:
Pre-Qualifications / Pre-Approvals
Pre-Closing / Closing / Post-Closing
Prohibitions & Much, Much More!
Designed forconsumer real estate loan officers, loan processors, compliance, and audit personnel.
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TRID Guidelines: Shopping Disclosure Video Transcript
This is session two of the mortgage loan life cycle. We’re going to pick up where we’ve left off last week. On page 141, we’re talking about the shopping disclosures phase of our mortgage loan life cycle. It is one of the larger chapters that we’ll be covering. We’re just about a third of the way through that here, maybe a little more than that. Page 141 is the loan estimate introduction. As far as the document goes, we’re going to start with the delivery and timing of that loan estimate document. a1, small letter a, you’ve got to provide that loan estimate within three days of that sixth item for TRID. We talked about that back in session one. That’s a milestone date that we need to make certain that we’re documenting in our loan file documentation.
There’s another timeframe that goes along with this one. Letter b, there’s a seven-day minimum timeframe that has to be covered between when you deliver the loan estimate and when you can actually close that loan. My item with letter b is going to be this. It’s usually not a problem. But if you have lenders that dabble in TRID, you got that lender that may mostly do commercial loans, but they’re going to do a consumer loan to help out this or that borrower. And they take a piece of bare ground or rental property or something, and they think they can close that right now. They can’t because they have to satisfy this seven-day minimum.
Some of you’re looking further on this page and you’re going, “Oh, there’s a waiver for this that you can waive that seven-day requirement.” Well, that waiver works much like some of the other delay timeframes that we’re going to talk, in this mortgage life cycle, about. For example, we’re going to do the right of rescission later on in the sessions. We’ll also cover high-cost mortgage loans, and there’s a timeframe tied to that requirement as well.
So yeah, these timeframes can be waived, but it’s got to be a bonafide personal financial emergency. And that’s going to be defined as the tornado just went through, the floodwaters are coming, the furnace is out in the middle of the winter, funeral expenses, things like that. And at the end of the day, the consumer has to put it in their own words. You can’t have pre-printed forms to take care of this. They got to handwrite them or type them up and submit them to you. And then you’re going to be the one that makes the call. It’s a judgment call as to whether or not it meets that bonafide personal financial emergency definition. And then each delay timeframe has to be independently waived.
My recommendation is this. If you have someone trying to mess around with these delay timeframes, be it the one that’s right in front of us here, the seven days, the right of rescission, or the high-cost mortgage loan. Get a compliance person involved, an expert involved, to make sure that the Is gets dotted and the Ts get crossed because there’s a domino effect here of bad things that can occur as a result of a botched waiver in the truth in the lending environment.
If you are new to mortgage lending and the TRID requirements, there is a lot to learn. It can feel quite overwhelming at times. Our TRID for Beginners webinar meets you where you are at with plain English explanations and guidance. Here is the top question newbies generally have when it comes to TRID Guidelines: “What’s a Changed Circumstance?”
When the TRID guidelines took effect in 2015, they included a strange new way to disclose title insurance when there is a simultaneous purchase of lender and owner policies. This transition was a painful process for some and, based on the CFPB’s findings in the Summer 2021 Supervisory Highlights, there are still institutions out there disclosing this incorrectly. The Highlights stated:
Where there is simultaneous purchase of lender and owner title insurance policies, Regulation Z requires creditors to disclose the lender’s title insurance based on the amount of the premium, without any discount that might be available for the simultaneous purchase of an owner’s title insurance policy. Creditors are required to disclose the premium for the owner’s policy showing the impact of the simultaneous purchase discount. The intent of this rule is to provide consumers with information on the incremental additional cost associated with obtaining an owner’s title insurance policy, and the cost they would be required to pay for the lender’s policy if they did not purchase an owner’s policy. Examiners found that some creditors violated Regulation Z by disclosing the lender’s title insurance premium at the discounted rate and the owner’s title insurance at the full premium on the Loan Estimate. Supervision requested that the creditors revise their policies and procedures to ensure correct disclosure of title insurance premiums where there is a simultaneous issuance rate for lender’s and owner’s title policies.
Be sure to JOIN US for our webinar, “Auditing TRID”, where we will look at TRID from an auditor’s perspective. Learn the hot spot areas and other things to look for and ensure your mortgage loan files are compliant.