A Quick Update on TRID and the Three Day Rule

In this video (in 5 minutes or less!) we discuss some truths and rumors coming on October 3, 2015 with the new TRID rule. Primarily, this video serves to dispel some bad information floating around the real estate and mortgage industries about the “three day rule.” The CFPB itself has published some information related to the same on their website under the heading of “Know Before You Owe.” Take a look at the following information directly issued by the CFPB:

 

No other changes require a new three-day review

There has been much misinformation and mistaken commentary around this point. Any other changes in the days leading up to closing do not require a new three-day review, although the lender will still have to provide an updated disclosure.

For example, the following circumstances do not require a new three-day review:

  • Unexpected discoveries on a walk-through such as a broken refrigerator or a missing stove, even if they require seller credits to the buyer.
  • Most changes to payments made at closing, including the amount of the real estate commission, taxes and utilities proration, and the amount paid into escrow.
  • Typos found at the closing table.

Only three changes require a new three-day review

  1. The APR (annual percentage rate) increases by more than 1/8 of a percent for regular loans (most fixed-rate loans) or 1/4 of a percent for irregular loans (most adjustable loans). A decrease in APR will not require a new three-day review if it is based on changes to the interest rate or other fees. Lenders have been required to provide a three-day review for these changes in APR since 2009.
  2. A prepayment penalty is added, making it expensive to refinance or sell.
  3. The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.

Source: https://www.consumerfinance.gov/know-before-you-owe/real-estate-professionals/three-day-reviews-unlikely/

So as you can see, there are basically three important items which if they involve a change – there is a new three day period. Otherwise, stay informed and always work with your mortgage and settlement service providers to do what is necessary to keep your deal alive and serve the consumer the right way!

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