Major changes are in store for consumers as they deal with mortgage companies and title companies in real estate transactions beginning August 1, 2015. The Consumer Financial Protection Bureau (CFPB), created to protect and inform the consumer, has restructured the process of applying for a home loan through the closing of the loan. The Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) are becoming the TILA RESPA Integrated Disclosures (TRID).

The goal of the CFPB is to help consumers by making all forms look similar, guard against hikes in charges at closing and help consumers understand future obligations. These goals are accomplished by:

1. Changing and combining the Good Faith Estimate and Initial Truth in Lending forms into a new form called the Loan Estimate (LE). There are limits on the amount of variance of fees once the LE has been provided to the consumer.
2. Changing and combining the HUD-1 Settlement Statement and Final Truth in Lending forms into a new form called the Closing Disclosure (CD).
3. The LE and CD are very similar in format and information provided and can be easily compared to make sure that the fees that are disclosed at the beginning of the transaction are the same at the closing of the loan.
4. There are specific timeframes for the delivery of the LE and CD to allow the borrower to review the forms prior to any action on the loan. The most significant timeframe requirement is a three-day waiting period after the receipt of the CD before the closing can take place which assures the borrower adequate time to review and prepare for closing.

The new requirements contain many good measures to ensure the consumer increased time to review the documentation and provide a more easily understood process. However, the changes are not insignificant for mortgage companies and title companies to incorporate into their business processes and there are some duties and responsibilities that have been shifted between the two industries.

Initially, through August and September, mortgage and title companies will have loans closing under the pre-TRID and TRID forms which may lead to some confusion. Also, with the increased requirements for delivery of the LE and CD, homebuyers and real estate agents can expect a longer loan and closing process. The goal of the changes is to provide a better experience for the consumer purchasing a new home – which may come at the price of a slower process.