TILA-RESPA integrated disclosures: the Loan Estimate and the Closing Disclosure

Two disclosures, two decisions

The TILA-RESPA Integrated Disclosure system, or TRID, combines mortgage credit and settlement-cost information. The Loan Estimate helps a consumer compare financing early; the Closing Disclosure helps the consumer review final terms and costs before becoming obligated. Federal statutes authorize integrated, understandable disclosures (15 U.S.C. § 1604; 12 U.S.C. § 2603). The detailed timing and tolerance rules below are standard regulatory treatment; the supplied statutory excerpts do not contain them.

From application to commitment

For most closed-end consumer mortgages secured by real property, the lender must deliver or mail a Loan Estimate within three business days after receiving an application. For this trigger, an application consists of the consumer's name, income, Social Security number to obtain a credit report, property address, estimated property value, and mortgage loan amount sought. Supporting documents are not a seventh required element. For this initial deadline, a business day is one on which the creditor's offices are open to the public for substantially all business functions.

The Loan Estimate presents estimated loan terms, projected payments, closing costs, and cash to close. It is neither loan approval nor a promise that an unlocked interest rate will remain available. It must also be delivered or mailed at least seven business days before consummation, using the specific business-day definition: every calendar day except Sundays and federal legal public holidays.

The consumer must receive the Closing Disclosure at least three business days before consummation. This waiting period also uses the specific business-day definition, so Saturdays generally count. Consummation is when the consumer becomes contractually obligated on the credit transaction under applicable state law; it is not necessarily recording or funding. Receipt matters: mailing the disclosure three days before consummation is not enough by itself.

Compare changes, not just totals

Compare the Loan Estimate with the Closing Disclosure for loan amount, rate, projected payments, fees, credits, and cash to close. Cash to close differs from closing costs because it also reflects such items as the down payment, deposit, and credits.

Without a valid basis for revision, zero-tolerance charges, such as creditor origination charges and transfer taxes, cannot increase. Recording fees and certain unaffiliated third-party services selected from the creditor's written provider list fall in a ten-percent aggregate tolerance category. That limit applies to the category total, not each fee. Other charges, such as prepaid interest and property insurance premiums, may change without a numerical tolerance cap, subject to good-faith requirements. A revised estimate requires a permitted reason; it is not a cure for an underestimated fee by itself.

Before consummation, a corrected Closing Disclosure starts a new three-business-day wait if the annual percentage rate becomes inaccurate under the applicable rules, the loan product changes, or a prepayment penalty is added. An ordinary correction to a recording fee generally requires corrected disclosure without restarting that wait.