Real estate law is very familiar with governmental regulation. This past month, new regulations and forms were implemented nationwide that affect all parties to a real estate transaction. These changes and forms are often called TRID by those familiar with the market, but what does TRID mean and why does it matter?
TRID stands for TILA/RESPA Integrated Disclosure. For individuals familiar with real estate over the last 5 years, they will recognize TILA and RESPA. TILA stands for the Truth In Lending Act, an act created by Congress to regulate lending practices in real estate transactions. RESPA stands for Real Estate Settlement Procedures Act. RESPA also governs real estate practice and the closing process. Both laws are extensive and still applicable.
After the market collapse of 2007, legislators searched for the cause of the real estate market collapse and its resulting aftermath. After assessing the issue, Congress determined that the lending practices of banks directly aided in the creation of the collapse. Congress enacted the Dodd-Frank Act in an effort to provide greater regulation to lending practices. The legislation of the Dodd-Frank Act provided for the creation of a new governmental bureau to regulate banking practices. The bureau is called the Consumer Financial Protection Bureau or CFPB.
The CFPB reviewed ways to improve the market for the protection of consumers and created TRID. The acronym TRID does not provide great insight into the meaning of the changes; however, reviewing the full name of the regulation clarifies its purpose and gives insight into its meaning.
As mentioned above, TRID stands for TILA/RESPA Integrated Disclosures. Please recognize that TILA and RESPA still apply to real estate regulation. The penalties, regulations, and law disseminated through TILA and RESPA, for the most part, remained untouched. The major changes under TRID are in the form of Integrated Disclosures. New disclosure documents and forms have been created to replace those used under TILA and RESPA. The purpose of the integrated disclosures is to provide information in a more concise manner, easier for the consumer to understand the contents of complicated lending documents. At minimum, its purpose is to make lenders more accountable and consumers more aware of the agreement they enter into. TRID also provides time tables for when the TRID documents can be executed. The time tables for the disclosures are the greatest change for lenders and real estate agents.
Having an understanding of the purpose of the CFPB and TRID provides insight into why the new disclosure regulations have been promulgated. When you understand what TRID actually stands for, it gives great insight into the purpose of the new regulations.
At Clemmons Law Firm, we understand that the recent changes may seem cumbersome, but we also see the bigger picture. Embracing the TRID changes is imperative to effectively prepare for your real estate closing. We are willing and able to provide instruction and insights into the new TRID changes for you and your business. Please reach out to us if you would like additional information and training on the new TRID regulations.
As always, your closing is our first priority. If you want confidence in your closing, contact Clemmons Law Firm.