2. Loans Covered by TRID Disclosures

by Local Title

TRID (TILA-RESPA Integrated Disclosure) rules play a crucial role in ensuring transparency and clarity in consumer credit transactions secured by real property. These regulations provide guidelines for the disclosure of key loan terms and costs to borrowers. Let’s explore the kinds of loans that TRID disclosures cover:

Covered Transactions

TRID rules apply to MOST consumer credit transactions secured by real property. This includes various types of loans commonly used in real estate transactions, such as:

  • Mortgages: TRID disclosures cover traditional mortgage loans used to finance the purchase of real estate property.
  • Refinancing: Whether it’s refinancing an existing mortgage or obtaining a new loan to replace an old one, TRID rules apply to refinancing transactions.
  • Construction-Only Loans: Loans specifically for financing the construction of a property are subject to TRID disclosures.
  • Closed-End Home-Equity Loans: Borrowing against the equity in your home through a closed-end loan falls under TRID regulations.
  • Loans Secured by Vacant Land or 25 or More Acres: Any loan secured by vacant land or large parcels of real property falls within the scope of TRID disclosures.
  • Exemptions

However, there are certain types of loans and transactions that are exempt from TRID rules:

  • Home Equity Line of Credit (HELOC) Transactions: TRID disclosures do not apply to HELOC transactions, which involve a revolving line of credit secured by the borrower’s home.
  • Reverse Mortgages: Loans where homeowners receive funds based on the equity in their home, typically utilized by seniors, are exempt from TRID regulations.
  • Mortgages Secured by Mobile Homes or Dwellings Not Attached to Real Property: Loans secured by mobile homes or other dwellings not permanently affixed to real property are not covered by TRID disclosures.
  • Limited Volume Lenders: TRID rules do not apply to loans made by individuals or businesses that make five or fewer mortgages in a calendar year. This exemption applies to small-scale lenders with minimal loan activity.

Understanding which loans are covered by TRID disclosures is essential for borrowers and lenders alike. These regulations aim to provide borrowers with clear and comprehensive information about the terms and costs associated with their loans, promoting transparency and consumer protection in real estate transactions. By knowing which transactions fall under TRID rules, borrowers can ensure they receive the necessary disclosures and information when obtaining financing for their real property purchases.