1. GFE AND HUD-1 WILL SOON BE HISTORY
On August 1, 2015, the new TILA-RESPA Integrated Loan
Disclosure (TRID) rule is set to take effect. The mortgage
industry will be affected, as the TRID rule calls for the
discontinuation of the HUD-1 settlement, Good Faith
Estimate (GFE), and Truth in Lending Act (TILA) forms.
New forms – the Closing Disclosure and the Loan Estimate –
are replacing the former standard disclosure forms.
The Consumer Financial Protection Bureau’s (CFPB) goal in
making these changes is to improve the settlement process
and increase transparency for consumers.1
HISTORY OF THE TRID RULE
This rule, which affects the HUD-1
settlement and GFE, was formed under
the Dodd-Frank Wall Street Reform Act,
and combines the TILA and Real Estate
Settlement Procedures Act (RESPA)
disclosure. Applicants receive these
disclosures shortly after they apply and
close on a mortgage.2
Finalized and rolled out in November 2013,
the TRID rule seeks to streamline the
use and language of the TILA and RESPA
forms that lenders have been providing
to mortgage loan applicants for more than
30 years. TRID integrates the GFE and
initial TILA disclosure into one form, the
Loan Estimate, which must be delivered
three days after receiving a consumer’s
application. The rule also combines the
HUD-1 and final TILA disclosure into another
form, the Closing Disclosure, which must
be provided to consumers at least three
business days before the consummation
of the loan.3
HOW YOU CAN PREPARE
The CFPB has openly admitted that the rule
cannot predict all of the specific practical
issues that may be created by the new forms
and deadlines. The bureau has pledged to
address the most frequently asked questions
in the first few months following the
effective date.4
Changes to the closing process are of most
concern. Last-minute changes to loans are no
longer able to be made, as changes must be
given to the consumer three days beforehand.
When planning to close a transaction, lenders
and clients should be ready seven business
days prior to closing.
Consumers have until August 1 to become
familiar with the new forms and learn
about the new closing procedures. Find
out more and review the new forms at
www.consumerfinance.gov/.
1
National Association of Realtors. “Understand the Aug. 1 Changes to HUD-1 Closing Process.” February 17, 2015.
2
ConsumerFinance.gov
3
Amy Swinderman. “CFPB director to real estate industry: Take August TILA-RESPA rule effective date seriously.”
Inman, March 9, 2015.
4
Ibid.
STAY UP-TO-DATE ON
REAL ESTATE TRENDS
Graebel works closely with its clients and
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Additionally, Graebel partners with three
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The information contained in this document represents the current research of Graebel Companies, Inc. on the issues discussed as of the date of publication. This document is for informational purposes only and does not serve
as an endorsement of products nor providers. Graebel cannot guarantee the accuracy of any information presented after the date of publication.
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