1. The Loan Estimate or LE is to be provided by the lender to the borrower within three business days after application. Lenders have always been required to document fees, interest rate, type of loan, annual percentage rate (APR) after application within the magical three days. The LE replaces the convoluted 2010 Good Faith Estimate and Truth in Lending, which no one understood. Sad, we never got to thank the person who developed the forms.
2. Receipt is a big deal. Documenting the receipt of the LE and CD (Closing Document) is imperative. If your client lives in a cave or in Sun City and does not use e-mail or electronic devises, they will be making trips to their lenders office to sign the acceptance disclosure or there could be the mandatory delays.
3. The Closing Document or CD will replace The HUD-1 and is required to be sent out three business days before the client can sign the loan documents (not calendar, Saturday’s are included, Sunday’s and holidays are not). Proof of receipt is mandatory. The purpose of the new CD is to allow the borrower three days to seriously think about the costs before signing the final loan documents.
4. Penalties will be accessed against lenders for improper execution of the TRID. This probably has absolutely nothing to do with the CFPB renovating a building in Washington DC that was appraised for $150 million and is costing the taxpayers $250 million to renovate. Quote: Melissa Heist, the associate Inspector General of the Federal Reserve System, reported on July 31st, the CFPB renovation will officially cost taxpayers $285.32 per square foot, a price tag reserved for only the most luxurious “Class A” commercial office buildings. In order to maintain a building of this stature the following penalties will be imposed on lenders if they do not implement the LE and CD to the letter of the law:
“Knowing” violations—$1,000,000 per day
“Reckless” violations—$25,000 per day
“Other” violations—$5,000 per day
5. Except: The Consumer Financial Protection Bureau did not offer a blue print on the exact format for the new LE and CD, leaving the lenders to their own interpretation. Jerry Seinfeld and Howard Stern both practice transcendental meditation twice a day. Maybe they could share some thoughtful insight on how we should explain delays to our clients. Somehow I don’t think they will find it funny.