Overhaul of Real Estate & Mortgage Documents

by Wayne E. Phelps, Laguna Sierra Mortgage

If you are buying, selling or refinancing  real estate this year, you will longer receive a HUD-1 Settlement Statement. What’s your tax accountant to do?  Not to worry!  In October, the TILA-RESPA Integrated Disclosure Rule (TRID) took effect, replacing the HUD-1 and Good Faith Estimate with new documents which may help you better understand the loan and escrow closing processes! 

The Closing Disclosure (CD) has replaced the HUD-1 Settlement Statement.  Maybe less exciting than a bank’s “certificate of deposit”, this CD accompanies your Escrow Settlement Statement.   Together with TRID’s other new disclosure, the Loan Estimate (LE), the CD makes it easier to understand loan terms and costs.  The Loan Estimate (LE) replaced the Good Faith Estimate (and Truth in Lending disclosure) you received when applying for a loan. 

The Consumer Financial Protection Board, a regulator of the mortgage industry, created the nearly-2000 page Rule impacting all businesses touching a residential mortgage.

 Are the Docs Better?

Borrower results have been mixed as lenders and settlement agents interpret and comply with TRID. 

The Rule, part of the Know Before You Owe initiative, intends to help borrowers understand the full cost of a mortgage including fees and interest, to comparison shop and to simplify reconciliation of anticipated costs to actual costs at closing. 

Does it help?  The new forms are a step toward providing concise, easy-to-follow and useful data.  Only bona fide fee changes are allowable.  Abundant detailed data is presented in one place.  Meant to reduce redundancy, though, borrowers may sometimes be deluged with more documents, many repetitive, under TRID than before.  Even when satisfied with your costs, TRID imposes new waiting times after you see disclosures, occasionally delaying closing your transaction.

Bottom Line

TRID should give you better clarity on the path to the bottom line of the Settlement Statement.  For confidence, the bottom line is to navigate the process with your trusted mortgage adviser for closing a seamless transaction.

If you are looking for a great local mortgage lender, contact Wayne at Laguna Sierra Mortgage at 949-481-3800.