TRID rules: the Loan Estimate, the Closing Disclosure and the 3-day clocks

TRID puts every mortgage offer on the same three-page form, then locks most lender fees to what was quoted — and refunds you when they rise beyond the tolerance.

“TRID” is shorthand for the TILA-RESPA Integrated Disclosure rule, the CFPB regulation that took effect on October 3, 2015 and replaced four older forms (the Good Faith Estimate, the early Truth in Lending statement, the HUD-1 and the final TIL) with two: the Loan Estimate and the Closing Disclosure. It is not a separate statute. It lives inside Regulation Z at sections 1026.19(e) and (f), 1026.37 and 1026.38, and draws its authority from both TILA and RESPA. For a borrower it is the most practical of all the federal mortgage rules, because it controls what you are shown, when, and how much the numbers may change.

Which loans get the forms

TRID covers most closed-end consumer credit secured by real property (or by a cooperative unit): purchases, refinances, home equity loans, construction-to-permanent loans and loans on vacant land intended for a dwelling. It does not cover home equity lines of credit, reverse mortgages, or loans secured by a mobile home that is not attached to land; those use older TILA disclosures. Creditors that make five or fewer mortgages a year are not “creditors” under Regulation Z and are not bound by it, and business-purpose loans fall outside as they do for all of Regulation Z. Investment-property loans to an individual borrower who occupies nothing in the property are therefore typically closed without TRID forms.

The Loan Estimate: 3 business days after application

An application exists under TRID when the lender has six pieces of information: your name, income, Social Security number (to pull credit), the property address, an estimate of the property’s value and the loan amount you want. Once it has those six, the lender has three business days to deliver or mail the Loan Estimate, and may not charge any fee other than a reasonable credit report fee until you have received it and told the lender you intend to proceed. It cannot require documents — tax returns, bank statements — as a condition of issuing the form. The Loan Estimate must also be received at least seven business days before consummation, a waiting period that cannot be shortened except for a documented personal financial emergency.

Note the definition of “business day” for the three-day delivery rule: any day the lender is open for business. For the waiting periods before closing, a stricter definition applies: all calendar days except Sundays and federal holidays. Where a form is mailed, it is presumed received three business days after mailing.

Tolerances: what may change, and by how much

The Loan Estimate is a quote, but a quote with legal weight. At closing, each fee is compared with the estimate under three buckets:

Zero tolerance. The lender’s own charges (origination fee, points, underwriting), fees for a required service from an affiliate or from a provider you were not allowed to shop for, and transfer taxes may not increase at all.
10% aggregate tolerance. Recording fees and charges for third-party services from the lender’s written provider list, when you chose a provider on that list, may rise together by no more than 10% of the sum originally estimated.
No tolerance limit — but the estimate must be made in good faith — for prepaid interest, homeowner’s insurance premiums, escrow deposits, and services you shopped for with a provider not on the lender’s list.

A lender may reissue a Loan Estimate with higher figures only for a changed circumstance (new information about you or the property, an event beyond anyone’s control, a change you requested, a rate lock, an expired estimate after 10 business days) and must do so within three business days of learning of it. Otherwise, any amount above the tolerance must be refunded to you within 60 days of consummation.

The Closing Disclosure: 3 business days before you sign

You must receive the five-page Closing Disclosure at least three business days (Sundays and federal holidays excluded) before consummation. A new three-day period is triggered if, after delivery, the APR becomes inaccurate beyond the TILA tolerance (one-eighth point on a regular loan), the loan product changes (for example fixed to adjustable), or a prepayment penalty is added. Smaller changes are corrected on a revised form at closing. After closing, the lender has 30 calendar days to issue a corrected Closing Disclosure for events that change the amounts paid, and 60 days to correct non-numeric clerical errors. The seller receives a separate version showing the seller’s side.

What TRID does not guarantee

TRID does not hold the interest rate; only a rate lock does, and the lock terms are stated on page one of the form. It does not cap closing costs in total, only the changes in specific lines. It does not verify that the fees charged are reasonable in the market, and it does not apply to HELOCs or to the loans excluded above. A missed three-day period makes the closing unlawful to proceed, but it does not by itself void the loan.

Reading the forms like a borrower

Compare Loan Estimates on the same day, with the same lock status, using the “Comparisons” block on page three: the total you will have paid in five years, the APR and the total interest percentage. Before closing, line up the Closing Disclosure next to the last Loan Estimate and check each lender fee and transfer tax for any increase at all, and the Section B and C totals for a rise over 10%. Ask in writing for the reason behind any increase and whether a revised Loan Estimate was ever issued; if the answer is no, you are owed a refund. If the Closing Disclosure arrives the day before signing, you are entitled to wait, and a closing agent cannot shorten that period. Our closing costs guide walks through each section, and the pre-approval guide explains what a lender may ask for before the six-item application exists. Complaints about TRID violations go to the CFPB, which also publishes annotated sample forms.

Key points

Effective October 3, 2015; part of Regulation Z (1026.19, 1026.37, 1026.38), authority from TILA and RESPA.
Applies to closed-end consumer loans secured by real property; HELOCs, reverse mortgages and business-purpose loans are excluded.
Six items create an application: name, income, SSN, property address, estimated value, loan amount; Loan Estimate due within 3 business days.
No fee except a credit report fee until you receive the Loan Estimate and say you intend to proceed.
Loan Estimate at least 7 business days before consummation; Closing Disclosure received at least 3 business days before (Sundays and federal holidays excluded).
Tolerances: 0% on lender fees, non-shoppable required services and transfer taxes; 10% aggregate on recording fees and list providers; no limit on prepaids, insurance and providers you chose.
Excess over tolerance must be refunded within 60 days of consummation; revised estimates require a documented changed circumstance.
A new 3-day wait is triggered by an APR change beyond tolerance, a product change, or an added prepayment penalty.

How TRID disclosures applies to you

Frequently asked questions

Can a lender require my tax returns before sending a Loan Estimate?

No. Once a lender has the six items that make an application under TRID, it must issue the Loan Estimate within three business days and may not condition the form on receiving verification documents. It may, and usually will, ask for documents at the same time to move underwriting forward, but it cannot delay the estimate until they arrive.

Which closing costs are allowed to increase after the Loan Estimate?

Lender fees, transfer taxes and charges for required services from providers you could not shop for may not increase at all. Recording fees and third-party services from the lender’s list may rise together by up to 10%. Prepaid interest, insurance premiums, escrow deposits and services you shopped for with your own provider have no fixed limit, but the original estimate must have been made in good faith.

Do the three business days before closing include Saturdays?

Yes. For the waiting periods before consummation, TRID counts every calendar day except Sundays and the federal legal holidays. A Closing Disclosure handed to you on Wednesday allows a Saturday closing; one mailed rather than delivered in person is presumed received three business days after it was sent unless you confirm earlier receipt.

What can I do if fees at closing exceed the tolerance?

The lender must cure the excess, by crediting it at closing or refunding it within 60 days after consummation, together with a corrected Closing Disclosure. Ask in writing for the refund and the reason for the change; a lender may justify an increase only with a valid changed circumstance documented on a timely revised Loan Estimate. Unresolved disputes can be filed with the CFPB.