RC_RIN_TILA-RESPA

What TILA-RESPA Changes Mean for Real Estate Professionals

By: Dearborn Real Estate Education

TILA-RESPA Integrated Disclosure Rules

On October 3, 2015, the TILA-RESPA Integrated Disclosure (TRID) Rule consolidated the number of required disclosure forms from four to two. Under the original Truth in Lending Act (TILA) and Real Estate Procedure Act (RESPA), consumers received four different disclosure forms that were federally required and had overlapping information. The multiple forms led to more confusion for consumers, which missed the original intent of making the information more understandable. These two new disclosure forms are mandatory and will reduce paperwork, as well as eliminate confusion for the consumer. The two new forms are the Loan Estimate form and Closing Disclosure form.

Loan Estimate Form

The Loan Estimate form replaces the Good Faith Estimate and initial Truth-in Lending form. The new form will guide consumers by highlighting information most important to them. Noticeably visible on the first page of the form are the interest rate, monthly payment, and total closing costs. This information allows for an easy comparison of mortgage loans, so consumers can select the best loan for their situation.

TILA-RESPA Integrated Disclosure rule

The Closing Disclosure form replaces the HUD 1 Settlement Statement and the final Truth-in Lending form. The new form outlines the costs of taxes and insurance, provides information about changes that can occur to the interest rate and payments, and includes warnings to consumers about prepayment penalties and other things they may wish to avoid. This information can assist potential home buyers in deciding how much they can afford to spend on a new home.

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