TRID APPLICABILITY AND TIMELINE

By Dennis Doss

  1. Is your borrower a bona fide business entity? If yes, TRID does not apply to loans to business entities and you may stop here.
  2. 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.
  1. 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.