November 4th, 2015 2:25 PM by Robin Bain
TRID, the "TILA-RESPA Integrated Disclosure" reforms mandated by the Consumer Finance Protection Bureau, affects mortgages originated after October 2, 2015. There are numerous differences between "pre-TRID" and "TRID" loans, and lenders/title companies/realtors have spent countless hours preparing for the change. The Truth in Lending, Good Faith Estimate, and Settlement Statement have been combined into two new forms: the Loan Estimate (LE) and the Closing Disclosure (CD). Among the many significant TRID requirements, the biggest may be that lenders must prove borrowers receive their Loan Estimate within 3 business days of application, and the Closing Disclosure 3 business days prior to closing.
The easiest way for lenders to prove disclosures were received in the required time frames is to send them via electronic delivery. Once borrowers consent to e-delivery, the lender can track when the LE and CD are opened, proving they complied with the mandated deadlines. Assuming borrowers have email and check it, e-docs are the most efficient way to deliver and track loan disclosures. DocMagic is the most frequently used platform used for e-docs.
For buyers without email addresses, however, the process is more involved. Lenders must mail the disclosures out, adding multiple days to the delivery process. Appraisals can't be ordered until all borrowers have signed and returned a form called the "Intent To Proceed", potentially delaying their closing.
Once loans are clear to close (or at least close to being clear), all parties on the TITLE or DEED (not just the loan) must receive the CD 3 business days prior to closing (unlike "pre-TRID" loans, which did not have this requirement). For example, a loan in a husband's name, with his wife just on title, requires proving both parties received the CD individually, 3 business days prior to closing. However, DocMagic does not have the means to include non-borrowers in the electronic disclosure process. What's the impact of this seemingly minor complication? Lenders now have to default to delivering CDs via mail or in person, and mail deliveries require adding 5 additional days to the waiting period between sending the CD and closing the loan!
Perhaps over time (years?), all parties involved will master complying with TRID mandates. There's little question though that, at least initially, closings will be delayed, buyers and sellers inconvenienced, and loan locks extended (usually at a cost), due to TRID's requirements. Let's hope there's not too many!