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New Mortgage Rules Provide More Clarity to Borrowers

As you may already be aware, on October 3, 2015 the Consumer Financial Protection Bureau (CFPB) made effective the new rules for residential mortgage loans. The change directly impacted the documents we used in all residential real estate loan transactions including the Good Faith Estimate, the Truth In Lending Disclosure, and the HUD Settlement Statement. These documents have been an integral part of all residential mortgage loans since 1974. Under the new rules, all three of these disclosures are no longer allowed. Following the changes on October 3rd, the borrower will now be issued a new document called a Loan Estimate that replaces and combines the pertinent information from the Good Faith Estimate and Truth In Lending Disclosure into a single document. The Loan Estimate will be issued to the borrower within three business days of submitting their completed loan application to their lender. It will detail specific items that relate to the borrower’s loan request, including: loan amount, interest rate, projected payments, total closing costs, loan term, estimated cash to close, and whether or not the interest rate has been locked. To see a sample Loan Estimate, click here. The new rules also impacted the use of the HUD Settlement Statement which is widely known as the itemization of fees and services related to the transaction and details what dollar amount the borrower will either pay or receive at closing. Going forward, the HUD Settlement Statement will no longer be used; instead the borrower will be issued a new document called the Closing Disclosure. The Closing Disclosure will serve a similar purpose as the HUD Settlement Statement by detailing the related fees and services involved in the transaction and will still show the dollar amount the borrower will either pay or receive at closing. Something new with the Closing Disclosure is the timing by which it must be delivered to the borrower. Similar to how the Loan Estimate must be issued to the borrower within three business days from when the lender receives the loan application; the Closing Disclosure must be delivered to the borrower three business days prior to the closing date. This change will require a more speedy process in order to meet these new timing requirements, while at the same time giving the borrower more time to review the details of the transaction prior to signing the loan papers. To see a sample Closing Disclosure, click here. In the end, these changes will help the borrower more easily understand the loan transaction they are requesting as well as the associated closing fees and services. First Bank of Wyoming has invested a lot of time and resources necessary to upgrade our technology and procedures to comply with these new mortgage regulations while continuing to provide excellent service to our customers. For more information about TRID or mortgage loans, please visit with one of our Real Estate Lenders at First Bank of Wyoming. You can also learn more about TRID by visiting the Consumer Financial Protection Bureau’s website: www.consumerfinance.gov.