What is TRID?
The short answer is that TRID stands for TILA-RESPA Integrated Disclosure Rule.
TILA is the Truth in Lending Act.
RESPA is the Real Estate Settlement Procedures Act.
This rule is also known as the Know Before You Owe mortgage disclosure rule
Implemented in 2015, TRID is designed to make sure all mortgage lenders’ disclosures are clear, correct, and easy for buyers to understand. TRID is the new mortgage standard, as it is mandated by the Consumer Financial Protection Bureau (CFPB.) The Know Before You Owe mortgage disclosure rule replaces four disclosure forms with two new ones, the Loan Estimate and the Closing Disclosure. The rule also requires that you get three business days to review your Closing Disclosure and ask questions before you close on a mortgage.
The HUD Settlement Statement, commonly used for many years at closings, has been replaced by the Closing Disclosure Statement (CD). Because of what needs to be put into the CD, banks now have a three-day time period prior to the closing by which to deliver the final closing statement to borrowers. If something changes in that three-day period, i.e., there is a new adjustment which was not previously disclosed to the bank, the bank needs to prepare a new Closing Disclosure Statement. This starts the three-day process all over again. To protect buyers’ deposits from being taken if the buyer is not ready to close due to this type of delay, attorneys in our marketplace are now typically including a TRID addendum in the purchase and sale agreement addressing this matter. This means that the closing can be automatically extended if the buyer’s lender needs to create a new disclosure statement.
Practically speaking, what does this mean for me as a buyer?
If you are planning to get a loan to purchase a property,
be sure that your written offer includes some version of the following statement:
The parties will include
a mutually agreeable TRID Addendum
in the Purchase and Sale Agreement.
If a buyer does not include this language in the offer itself, will the buyer’s attorney still seek to include a TRID addendum in the purchase and sale? In all likelihood. That being said, don't put yourself at a disadvantage. Include the language noted above in your offer. (It's worth noting here that some buyer agents attach a TRID form to their offer instead of employing the simple language noted above. Either solution is fine. Just be sure your buyer's agent addresses this matter one way or the other in your written offer.)
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