// Financial Institution Insights

The effectiveness of the Truth in Lending/ RESPA Integrated Disclosure (TRID) rule.

A 2017 survey indicates some homebuyers were caught off guard when presented with their final closing costs.

As those in the mortgage industry are aware, the purpose of the Truth in Lending/ RESPA Integrated Disclosure (TRID) rule is to simplify and clarify costs to a consumer prior to closing. A survey* in January of this year was conducted to shed light on the effectiveness of the TRID rule. Out of 1,000 surveyed (72% from millennial generation):

·         17% of individual borrowers were surprised they would incur any closing costs

·         35% said the fees were higher than they had expected

These percentages seem high, considering the TRID rule went into effect in October of 2015. I was surprised to see the number of borrowers who expected to have no closing costs at all. Although, the survey did indicate an overwhelming number (50%) of initial loan estimates were “off.” This might explain the discrepancy between the estimate and what is presented to the consumer at the time of closing.

It appears we have some work to do within the mortgage industry to ensure the TRID rule is followed. Improvement in the loan estimate process is needed to help prevent lenders from over- or under-estimating closing costs. Most importantly, lenders need to be educated on how to provide borrowers with a well-informed, seamless home-buying experience.

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*Survey commissioned by ClosingCorp and conducted by Wilson Perkins Allen Opinion Research

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