Much has been made about the new TRID procedures for Settlement (now officially called Closing). The TRID, which went into effect October 3, 2015, combined the procedures required of lenders under the Truth in Lending Act (TILA) with those required for real estate agents and settlement companies by the Real Estate Settlement Procedures Act (RESPA). The new TRID is a two-step process in which the purchaser receives a Loan Estimate (LE) and the purchaser and seller receive their respective versions of the Closing Disclosure (CD). However, the TRID only applies to those transactions that are regulated by TILA and RESPA. That includes any lender-financed purchase for a private residence. The TRID does NOT apply to the following:
* Cash sales
* Seller financed purchases
* Loan assumptions that do not require lender approval
* Residential properties with more than four dwelling units.
If your transaction falls under one or more of the four categories listed above, then the TRID does not apply. So what can you expect to receive at closing?
Answer: The Uniform Settlement Statement, popularly known as the HUD-1. This name derives from the fact that RESPA is under the administration and enforcement authority of the U.S. Department of Housing and Urban Development (HUD). The HUD-1 is the document that you received at or before closing if you purchased your home before October 3, 2015. This document is still in use, although for residential purchases that are financed by a recognized lender, the HUD-1 has been replaced by the two-step system of Loan Estimates (LE) and Closing Disclosures (CD). Of course, the TRID covers the vast majority of real estate transactions, but not all.