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Effective October 3, 2015, a significant regulatory change reshaped the real estate industry—the implementation of the TILA-RESPA Integrated Disclosure (TRID) rule by the Consumer Financial Protection Bureau (CFPB). Commonly known as the “Know Before You Owe” rule, TRID represents one of the most substantial regulatory updates in over 30 years, aimed at improving transparency and consumer understanding in mortgage transactions.

Key Changes Under TRID

The TRID rule consolidates and replaces existing disclosures to streamline the loan process. Previously, homebuyers encountered multiple documents that often led to confusion. TRID simplifies this by introducing two primary disclosures:

1. Loan Estimate (LE): Replaces the Good Faith Estimate (GFE) and the initial Truth-in-Lending (TIL) disclosure. This document provides borrowers with a clear breakdown of their estimated loan costs.

2. The Three-Day Waiting Period

One of the most critical components of TRID is the mandatory three-day waiting period, which applies when:

• A new loan application is submitted.
• Significant changes occur in the loan transaction, such as an adjustment to the Annual Percentage Rate (APR) by 0.125% or more, a change in loan product, or the addition of a prepayment penalty.

For example, a pre-approval letter can only be issued three days after a complete loan application is received. A complete application includes the following six elements:

1. Borrower’s name
2. Income details
3. Social Security Number (to obtain a credit report)
4. Property address
5. Estimated property value
6. Loan amount requested
   
   

Once a complete application is submitted, lenders have three business days to provide the Loan Estimate (LE) and request additional supporting documents, such as income statements, bank statements, and asset documentation. Business days include Monday through Friday, excluding federal holidays (Saturdays are considered business days only for certain disclosures, including the Closing Disclosure).

Closing Disclosure (CD) Timeline & Potential Delays

The Closing Disclosure (CD) must be delivered to borrowers at least three business days before closing. If any material loan terms change, the three-day waiting period resets, potentially causing delays. Common triggers for this waiting period reset include:

• A change in the APR exceeding 0.125%.
• A modification to the loan product.
• The addition of a prepayment penalty.
• Last-minute adjustments to seller concessions or contract addendums.

Since real estate transactions are fast-paced, last-minute changes can significantly impact closing timelines. According to the National Association of Realtors (NAR), during the second quarter of 2015:

• 63% of purchase contracts closed on time.
• 29% experienced delays.
• 7% fell through entirely.

The most common reasons for closing delays included:

• Financing conditions (39%)
• Appraisal disputes (16%)
• Title and deed issues (11%)
• Home inspection concerns (9%)
• Contract contingencies (8%)
  

Best Practices for a Smoother Closing

To help streamline the closing process and minimize potential delays, consider the following:

1. Opt for Electronic Delivery of the Closing Disclosure:

• Borrowers who e-consent to electronic delivery receive the CD immediately, reducing wait times.
• Preferred delivery methods: e-signature or hand delivery (reducing the waiting period to just four days).

1.  Provide Fees & Credits Early:  Ensure that all fees (excluding escrow/title fees), seller concessions, addendums, and homebuyer credits are disclosed accurately upfront to prevent last-minute adjustments.
2.  Timely Communication with Escrow & Lenders:
   
   Escrow teams should prepare a Master/Closing Statement as comprehensively as possible.
   
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   • Any fee or interest rate changes require coordination between the escrow company and the lender to update the CD—this is a common cause of last-minute delays.

Final Thoughts

Since TRID’s implementation, the mortgage industry has gradually adapted, and most transactions can now be completed within 30 days or less. However, proactive communication remains essential. To ensure a smooth closing process, please notify us immediately upon receiving a signed Purchase and Sale Agreement (PSA) so we can address potential issues early.

For additional guidance, refer to the Consumer Financial Protection Bureau’s (CFPB) official resources.

Pointers: 

1. Please provide us with your client's email address early during the process to save sometime. The 3-day cooling off period starts immediately upon receipt of CD email delivery from the lender. 

 
Preferred CD delivery methods: e-consent or hand delivery. With e-sign or hand delivery - the waiting period to close is reduced to 4 days.

Least preferred way:

2. Please provide us with all fees (other than escrow and title fees) and any seller concessions, addendums, and any credit to homebuyer up-front and 100% accurate. 
3. Escrow - please prepare a Master/Closing Statement as completely as possible.