TRID APPLICABILITY AND TIMELINE
By Dennis Doss
- Is your borrower a bona fide business entity? If yes, TRID does not apply to loans to business entities and you may stop here.
- Is the primary purpose of the loan personal, family or household? If no, TRID does not apply to business purpose loans and you can stop here. If yes, TRID applies.
- Is the consumer loan secured by any kind of real property? If yes, you must follow TRID’s disclosure regime, including the Loan Estimate and Closing Disclosure:
- A Loan Estimate must be sent within 3 business days of a loan application. If the loan is high-cost (Section 32) a HOEPA disclosure is also due. Other disclosures are typically given at this time as well, such a fair lending, state disclosure, appraisal disclosure, credit score disclosure.
- Unless the borrower waives the early cooling off period to meet a bona fide personal financing emergency, you cannot close and record your loan until 7 business days after providing your Loan Estimate.
- A final Closing Disclosure must be provided at least 3 business days before the signing of your final loan documents and closing.
- If your consumer loan is secured by 1-4 owner-occupied real property, you must also comply with the law regarding higher-priced and high-cost loans, depending upon the APR and fees. A 3 day right to cancel must be given. If your loan is high-cost (Section 32) a HUD counseling certificate is required before closing and you cannot finance soft fees.
4. Is your consumer loan secured by a 1-4 family dwelling, owner-occupied or not? If so, the Ability to Repay Rule applies. You must document and verify ability to repay which will mandate a fully amortized loan. See my broadcast on YouTube on High Cost Lending for an in-depth analysis of ability to repay.
5. If the consumer loan is secured by a 1-4 dwelling (owner occupied or or not), you must have an NMLS endorsement to your real estate or CFL license.