markus41 TRID Disclosure Workflow Design
Design the Loan Estimate and Closing Disclosure workflow to ensure full TRID (TILA-RESPA Integrated Disclosure) compliance. TRID violations are among the most commonly cited mortgage regulatory deficiencies — this specification covers timing, tolerance buckets, changed circumstance procedures, and recordkeeping requirements.
TRID Overview and Applicability
TRID (implemented under Reg Z § 1026.37-38 and Reg X § 1024.7) applies to:
- Most closed-end consumer mortgage loans secured by real property
- Excludes: HELOCs, reverse mortgages, mobile home loans not secured by real property, loans made by a creditor who made fewer than 5 mortgages in the prior year
Consists of two required disclosures:
- Loan Estimate (LE) — Replaces Good Faith Estimate (GFE) and initial TIL
- Closing Disclosure (CD) — Replaces HUD-1 and final TIL
Section 1: Loan Estimate Workflow
1a: Application Definition (6-Piece Trigger)
The LE clock starts when the borrower provides these 6 pieces of information:
- Borrower's name
- Borrower's income
- Borrower's Social Security number
- Property address
- Estimated value of the property
- Mortgage loan amount sought
Important: The creditor cannot require additional information beyond these 6 before providing a Loan Estimate. Pre-qualification worksheets or additional documentation can be requested in parallel, but the 6-piece receipt date is the application date.
System requirement: Log the exact date and time each of the 6 fields is captured. When all 6 are present, set application_received_date. This is the date the LE clock starts.
1b: LE Delivery Timing
- LE must be delivered: within 3 business days of application receipt
- Business day for LE delivery: any day the creditor's offices are open for business (includes Saturdays if office is open; excludes federal public holidays)
- Delivery methods and constructive delivery:
- Hand delivery: received on day delivered
- U.S. mail: assumed received 3 business days after mailing (so add 3 days to the 3-business-day LE window = effective 6 days from application if mailing)
- Email: received on day sent (if consumer has agreed to electronic communications under E-SIGN Act)
- Cannot collect fees before LE delivery except bona fide credit report fee (typically $15–50)
LE deadline calculator:
application_received_date = first date all 6 triggers are present
le_due_date = application_received_date + 3 business days
(Count: skip Sundays and federal public holidays; include Saturdays if office open)
If mailing:
le_mail_by_date = application_received_date + 3 business days
le_constructive_receipt = le_mail_by_date + 3 more business days
1c: Fee Tolerance Buckets
TRID limits how much certain fees can change between the LE and the CD.
Zero tolerance (cannot increase):
- Creditor fees (origination charges, points, application fees)
- Transfer taxes
- Fees for required third-party services where borrower is NOT permitted to shop
- Examples: appraisal, flood determination, credit report, upfront MIP/PMI
- Recording fees (at CD, cannot exceed LE by more than $10)
10% tolerance (aggregate tolerance — total increase cannot exceed 10% of LE total):
- Title services — if borrower selects from creditor-provided list
- Settlement services — if borrower selects from creditor-provided list
- Pest inspection — if required by state law or program
- Recording fees (aggregate with others in the bucket)
No tolerance (can change without limit):
- Prepaid interest
- Property insurance premium
- Amounts placed into escrow (initial escrow payment at closing)
- Third-party services where borrower shopped and selected their own provider
- Third-party fees for services not required by creditor
Tolerance cure process: If at CD, any zero-tolerance or 10%-bucket fee exceeds tolerance:
- Creditor must provide a cure (refund) at or before consummation, or within 3 calendar days after consummation
- Cure amount = amount of the overcharge
- Cure is paid to the borrower; document cure in CD or separate documentation
1d: Changed Circumstance Events
A valid changed circumstance allows re-disclosure of a revised LE and resets the tolerance comparison baseline.
Valid changed circumstance categories:
| Category | Examples | Documentation Required |
|---|---|---|
| Extraordinary event | Natural disaster affecting property; market disruption | News documentation, loss adjuster report |
| Information relied upon changes | Appraisal comes in different from estimate; title search reveals lien; income different from stated | Revised information + explanation of how it changed the fee |
| New information on borrower or property | Borrower adds or removes co-borrower; property use differs from disclosed | Written explanation |
| Interest rate locked | Fees tied to rate lock that changes when rate is locked | Lock confirmation |
| Borrower-requested change | Program change, loan amount change, property address change | Written or documented borrower request |
| Expiration of original LE | Borrower does not express intent to proceed within 10 business days | Log of LE delivery date and non-response |
Changed circumstance documentation requirement:
- Date of event or discovery
- Description of the changed circumstance (specific, not generic)
- Which fees changed as a result and why
- How the new fee amount was calculated
- Stored in loan file; must be available for examination
Revised LE timing after changed circumstance:
- Must be delivered within 3 business days of receiving information sufficient to establish the changed circumstance
- New comparison baseline = fees on the revised LE (replacing the original LE)
- Cannot use a revised LE to cure tolerances if issued less than 4 business days before consummation
1e: Intent to Proceed
- Borrower must express intent to proceed before creditor may collect any fees beyond credit report
- "Intent to proceed" can be: verbal, written, or e-signed acknowledgment
- System should capture: date, time, method, and staff member who received intent (for verbal)
- Loan file must document that no fees were collected before intent to proceed
Section 2: Closing Disclosure Workflow
2a: CD Delivery Timing
- CD must be received: at least 3 business days before consummation
- Business day for CD: ALL calendar days except Sundays and federal public holidays (broader definition than LE business day)
- If using mail: add 3 business days for constructive receipt → effective 6 calendar days before closing
CD delivery compliance checklist:
- CD issued to all borrowers who are primarily liable on the loan
- If purchase: separate CD issued to seller (seller's page only required)
- Date of CD receipt documented (e-sign confirmation or delivery confirmation)
- 3-business-day waiting period begins day after receipt
- Closing date confirmed to be after waiting period expires
CD receipt date matrix:
| Delivery Method | Assumed Receipt | 3-Business-Day Clock Starts |
|---|---|---|
| In person or electronic (with E-SIGN consent) | Day of delivery | Day after delivery |
| U.S. mail | 3 business days after mailing | Day after assumed receipt (6 days total) |
Example:
- Closing on Tuesday
- CD must be received no later than Thursday of the prior week (assuming Monday = day 1, Tuesday = day 2, Wednesday = day 3, Thursday = day 4 — no, count differently)
- Correct: for Tuesday closing → received by Thursday of prior week (Friday would also work if Friday, Saturday, Monday before Tuesday all count as business days)
Actual calculation: Count back from consummation date. Day 1 = business day before consummation, Day 2 = business day before Day 1, Day 3 = business day before Day 2. CD must be received on or before Day 3.
2b: CD Triggers for Re-Disclosure (3-Day Reset)
If the CD is reissued with certain changes after delivery, the 3-business-day waiting period resets.
| Change | New 3-Day Wait Required? |
|---|---|
| APR increases by more than 1/8 of 1% (1/4% for irregulars) | Yes |
| Loan product changes (e.g., fixed to ARM) | Yes |
| Prepayment penalty added | Yes |
| Decrease in APR | No (borrower benefit — no re-wait required) |
| Non-triggering fee changes (e.g., increased cash to close not due to above) | No |
Practical implication for workflow:
- Any change to the CD within 4 business days of closing that could trigger an APR change needs immediate underwriter/compliance review
- Establish a "CD change freeze" period: no substantive changes to fees after CD is issued without compliance sign-off
2c: CD vs. LE Comparison and Tolerance Cure
At CD stage, compare each fee against the LE baseline:
| Step | Action |
|---|---|
| 1 | Pull all fees from the final LE (or latest revised LE for each fee category) |
| 2 | Compare each fee on the CD to the LE |
| 3 | Apply tolerance bucket rules (zero / 10% / no tolerance) |
| 4 | Calculate aggregate 10% bucket variance |
| 5 | Identify any tolerance violations |
| 6 | Calculate cure amount for each violation |
| 7 | Document cure in CD (or confirm separate cure payment timing) |
Cure documentation:
- Record the cure amount, date paid, and method (applied to closing costs or check to borrower)
- Retain in loan file — regulators look for cures as evidence of original tolerance violation
2d: Post-Consummation CD Requirements
In certain cases, a corrected CD must be provided after closing:
- Non-numerical clerical errors on CD: corrected CD delivered within 60 calendar days of consummation
- Numerical errors (changes that affect APR, loan terms, or amounts): corrected CD within 3 business days of discovery
- Remediation: if post-consummation CD reflects borrower paid more than permitted, refund within 3 business days of discovery
Section 3: Record-Keeping Requirements
| Document | Retention Period | Required Content |
|---|---|---|
| Initial Loan Estimate | 3 years from consummation | LE as delivered; evidence of delivery; application date |
| All revised LEs | 3 years from consummation | Revised LE; changed circumstance documentation |
| Intent to proceed | 3 years from consummation | Date, method, staff member (if verbal) |
| Closing Disclosure | 5 years from consummation | CD as delivered; evidence of 3-day receipt |
| All revised CDs | 5 years from consummation | Revised CD; reason for revision; delivery evidence |
| Tolerance cure documentation | 3 years | Amount, date, method |
| Changed circumstance file | 3 years | Date of event, description, fees affected |
Delivery confirmation requirements:
- E-sign: system-generated timestamp of when borrower opened/signed; retain in loan file
- Mail: retain copy of mailing + calculated constructive receipt date
- In-person: retain signed acknowledgment of receipt
Output Format
Deliver two artifacts:
TRID Disclosure Workflow Specification — Process flows for LE issuance, changed circumstance handling, CD issuance, and post-consummation corrections; with decision trees for tolerance analysis and re-disclosure triggers
Tolerance Matrix — Complete fee tolerance table with examples for each bucket; changed circumstance documentation template; CD vs. LE comparison checklist