The mortgage industry operates in a heavily regulated environment, where compliance is crucial to protect both businesses and consumers. If you’re a mortgage broker, you’ve likely encountered the term “TRID.” But what exactly is TRID, why is it important, and how can you comply with its requirements? At SCP, we specialize in compliance and licensing for mortgage brokers, so let’s break it down for you.
What is TRID?
TRID stands for TILA-RESPA Integrated Disclosure. It’s a set of regulations created by the Consumer Financial Protection Bureau (CFPB) to streamline and simplify the disclosure process in mortgage transactions. TRID combines elements of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).
When TRID was implemented in 2015, it replaced the existing disclosure forms with two streamlined forms designed to make understanding the costs associated with obtaining a mortgage easier for borrowers. The two primary documents required under TRID are:
- The Loan Estimate (LE): Provided within three business days of receiving a mortgage application, this form details loan terms, projected payments, and closing costs.
- The Closing Disclosure (CD): Delivered no later than three business days before closing, this document outlines the final terms and costs of the loan.
Why is TRID Important?
TRID ensures transparency, giving borrowers a clear picture of the financial commitment they are entering into. It’s designed to prevent surprises like hidden fees or last-minute changes in terms.
For mortgage brokers, TRID compliance is not just about following the law—it’s about maintaining trust with borrowers, avoiding regulatory penalties, and ensuring seamless transactions. Non-compliance with TRID can result in hefty fines, damaged reputations, and operational risks, so understanding its importance can’t be overstated.
TRID Compliance Requirements for Mortgage Brokers
Staying TRID-compliant requires a thorough understanding of the requirements and disciplined processes to implement them correctly. Here’s how you can meet TRID requirements as a mortgage broker:
1. Provide Accurate and Timely Disclosures
- Ensure that Loan Estimates and Closing Disclosures are distributed within the required timeframes.
- Pay close attention to the accuracy of the data provided in these forms. Any discrepancies can lead to delays or penalties.
- The only fee the customer may pay for or incur a charge for, prior to the intent to proceed, is a reasonable charge for a credit report.
2. Be Aware of the “Three-Day Rule”
- Loan Estimates must be delivered within three business days of receiving an application.This means the broker must submit the TRID application to the lender within 24 hours of receiving a TRID application to ensure the Loan Estimate is delivered timely.
- Similarly, Closing Disclosures need to be provided at least three business days before the loan is finalized. Borrowers must have time to review the terms.
3. Communicate Clearly with Borrowers
Walk your clients through both the Loan Estimate and Closing Disclosure to ensure they fully understand the terms and costs of their mortgage. This builds trust and reduces the chances of disputes or confusion.
4. Monitor the “Good Faith” Requirement
TRID mandates that fees estimated in the Loan Estimate closely match what’s actually charged in the Closing Disclosure. Any significant variances without explanation can trigger non-compliance issues.
5. Implement Reliable Processes and Technology
Establish robust systems—including software solutions—for tracking timelines, generating accurate disclosures, and maintaining proper documentation of all communication and transactions.
6. Stay Educated on Regulation Updates
TRID is not static; periodic updates can change processes or requirements. Make ongoing training a priority for your team to ensure you remain compliant.
7. Partner with Compliance Experts
Compliance isn’t an occasional requirement—it’s an integral part of what you do. Working with a trusted partner like SCP ensures you’re not only meeting TRID requirements but also staying prepared for audits or regulatory inquiries.
How SCP Can Help with TRID Compliance
Navigating TRID requirements can feel overwhelming, but the good news is that you don’t have to do it alone. SCP specializes in guiding mortgage brokers through the complexities of compliance and licensing.
From ensuring your disclosures are accurate to helping you implement the right processes, we can provide tailored solutions to keep your business both compliant and competitive. Our team understands the intricacies of TRID regulations and can help you avoid common compliance pitfalls.
Need Help? Call SCP Today!
Whether you have questions about TRID or want to take the next step toward safeguarding your business, our experts are here to help. Call us at 301.578.6015 and talk to a member of our team about your compliance and licensing needs. Together, we can build a foundation of trust, transparency, and success.