TRID was the most significant operational change to mortgage origination in the post-2008 regulatory cycle. It consolidated four pre-existing disclosure forms into two new ones with specific timing and accuracy requirements.
The two TRID forms
- Loan Estimate (LE) — replaces the old Good Faith Estimate (GFE) and initial TILA disclosure. Delivered within 3 business days of application. Provides estimated rate, monthly payment, closing costs, and loan terms
- Closing Disclosure (CD) — replaces the HUD-1 and final TILA disclosure. Delivered at least 3 business days before closing. Provides final rate, closing costs, and all transaction details
TRID tolerance categories
One of TRID’s most important features is the tolerance system: how much fees can change between the LE and CD. Three tolerance categories:
- Zero tolerance — no increase allowed (lender’s own fees, transfer taxes, items the borrower cannot shop for)
- 10% tolerance — total of certain third-party services can’t increase more than 10% (recording fees, services from preferred providers)
- Unlimited tolerance — items the borrower could shop for and chose not to (homeowner’s insurance, title services if not from lender’s preferred provider)
3-day waiting period
The Closing Disclosure must be received by the borrower at least 3 business days before closing. Material changes after the CD has been delivered (rate change, APR increase exceeding 1/8%, prepayment penalty added, loan product change) require a new 3-day waiting period before closing can occur.
