In October of 2015, new requirements put in place by the federal Consumer Financial Protection Bureau (CFPB) went into effect that dramatically changed the nature and timeline of many real estate closings. The CFPB maintained that previous mortgage disclosure forms were often inconsistent and misleading for potential mortgage applicants and, therefore, it enacted the TILA-RESPA Integrated Disclosure (TRID) Rules aiming to streamline disclosures and ensure real estate purchasers are properly informed. While the intention behind the TRID Rules was to protect mortgage borrowers, many closings may be complicated or delayed as real estate professionals adjust to the changes.
New Disclosure Forms
Under TRID, several past forms have been integrated into two new forms—the Loan Estimate form and the Closing Disclosure form. The Loan Estimate form must be delivered shortly following a mortgage application submission and informs consumers about risks, costs, and features of a particular mortgage loan.
The form that will most affect real estate closing procedures is the Closing Disclosure form, which essentially combines the previous HUD-1 and Truth-in-Lending (TIL) disclosures. This disclosure must inform the purchaser of all actual mortgage costs.
3 Day Rule
Perhaps the most important change brought by TRID is the 3 Day Rule, which requires that the Closing Disclosures are received by purchasers at least 3 business days prior to closing. In the past, it was not uncommon for HUD and TIL forms to be issued on the day of the closing or even during the closing process. While this was less than preferable for consumers to have to review the information at the closing, it was often necessary for closings to proceed on schedule. Now, if the Closing Disclosure is not prepared on time and received within the required 3 days, closings may be delayed by 7 days or more. However, it is important to comply with the new TRID rules regardless of potential delays.
Call a New Jersey Real Estate Attorney for a Consultation Today
Real estate laws and regulations are ever-changing on both the federal and state level and it is critical that all rules are properly followed to ensure your closing goes smoothly and that your rights are protected. Whether you are selling or purchasing real estate in New Jersey, you need an attorney representing you who fully understands the new TRID Rules and who can help to facilitate a smooth and timely closing and can ensure all required closing disclosures are issued. Please contact The Law Office of John L. Schettino for a consultation today at 201-498-9768.