The RESPA-TILA Integrated Disclosure (TRID) rule, enforced by the Consumer Financial Protection Bureau (CFPB) since 2015, standardizes mortgage disclosures to make loan terms easier to understand and compare. It replaced four older forms—required under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA)—with two user-friendly documents:
- The Loan Estimate (LE)
- The Closing Disclosure (CD)
Why TRID Was Implemented
Before TRID, homebuyers received multiple overlapping forms such as the Good Faith Estimate and HUD-1 Settlement Statement. These documents often caused confusion, making it difficult to compare loan offers or anticipate final closing costs.
How TRID Works
Under TRID, lenders must provide a Loan Estimate within three business days after receiving a mortgage application. This three-page form outlines estimated interest rates, monthly payments, closing costs, loan terms (fixed or adjustable), and any special features like prepayment penalties.
Before closing, borrowers receive the Closing Disclosure at least three business days in advance. This five-page document shows the finalized loan terms and exact costs, allowing time to review and address discrepancies. A mandatory waiting period ensures borrowers have time to understand the final terms before signing.
Key TRID Documents
Loan Estimate: Think of this as a standardized mortgage quote to compare offers clearly. You can review multiple Loan Estimates from different lenders side by side.
Closing Disclosure: This document finalizes your loan details with actual figures. It serves as a final verification tool to ensure there are no surprises at closing.
Cost Change Limits (Tolerances)
TRID restricts how much certain fees can change between the Loan Estimate and Closing Disclosure:
| Fee Category | Tolerance | Example Fees |
|---|---|---|
| Zero Tolerance | No increase allowed | Lender fees, mortgage broker fees, transfer taxes |
| 10% Cumulative Tolerance | Up to 10% increase allowed | Recording fees, certain third-party service fees chosen from lender’s list |
| No Limit | Fees can vary | Prepaid interest, property taxes, insurance, services selected by borrower |
Who Must Follow TRID?
TRID applies to most closed-end consumer mortgage loans for one- to four-unit properties, including purchase, refinance, and construction loans. It generally does not apply to home equity lines of credit (HELOCs), reverse mortgages, or mortgage loans for mobile homes.
What if Terms Change Significantly?
Significant changes after the Closing Disclosure—such as a change in loan product, APR increase over 0.125%, or added prepayment penalty—require the lender to issue a revised Closing Disclosure and restart the three-day review period.
Additional Resources
For more details, review our articles on Loan Estimate and Closing Disclosure. Also, see our Mortgage Disclosures overview.
References
- Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule (TRID)
- Investopedia, TRID: TILA-RESPA Integrated Disclosure Definition
This rule empowers borrowers to compare mortgage offers side by side and review final terms carefully, reducing the likelihood of surprise costs at closing.