TRID Made Simple: Loan Estimate and Closing Disclosure Timelines

TRID is the TILA-RESPA Integrated Disclosure rule. It replaced the Good Faith Estimate and the early Truth in Lending disclosure with the Loan Estimate, and it replaced the HUD-1 and the final Truth in Lending disclosure with the Closing Disclosure. The CFPB's small-entity guide is the cleanest place to learn the clocks. The SAFE MLO outline tests those clocks under both federal law and loan origination activities.

The rule covers most closed-end consumer mortgages secured by real property or a cooperative unit. It does not apply to home equity lines of credit, reverse mortgages, or mortgages secured only by a mobile home or by a dwelling, other than a cooperative, that is not attached to real property.

An application is six facts, not a finished file

For TRID, an application is the consumer's submission of six pieces of information: name, income, Social Security number to pull a credit report, property address, an estimate of the property's value, and the mortgage amount sought. Once the creditor has those six, the Loan Estimate clock starts.

The creditor cannot make the consumer hand over extra documents before it will issue a Loan Estimate. Verifying documents are not part of the six. A consumer may volunteer more information. The creditor cannot condition the disclosure on it. If the consumer is only asking for a pre-approval and withholds one of the six, such as the property address, a Loan Estimate is not yet required. The day the sixth item arrives, the clock starts.

Two meanings of "business day"

This is the detail that makes otherwise simple counts wrong.

For issuing the Loan Estimate, a business day is a day the creditor's offices are open to the public for substantially all of their business. A creditor that is closed on Saturday does not count Saturday.

For the Closing Disclosure waiting period, and for several other waiting periods before consummation, a business day is every calendar day except Sundays and the legal public holidays listed in 5 U.S.C. 6103(a). Saturday counts. Sunday does not.

If a practice question does not tell you which definition it is using, look at the task. "When must the Loan Estimate go out?" uses the office-open definition. "When may the loan consummate?" uses the all-days-except-Sundays-and-holidays definition.

The Loan Estimate clocks

The creditor, or the mortgage broker if the broker received the application, must deliver the Loan Estimate or place it in the mail no later than the third business day after the application. The creditor remains responsible if the broker sends it. If the application is denied or withdrawn inside those three business days, the disclosure is not required. If the creditor skips it and later closes on the original terms, that is a violation.

There is a second, separate rule. The creditor must also deliver the Loan Estimate or place it in the mail no later than the seventh business day before consummation. That seven-day count starts when the disclosure is delivered or mailed, not when the consumer is deemed to receive it. A timeshare plan described in the Bankruptcy Code is excused from this seven-day rule.

If the Loan Estimate is not handed to the consumer in person, the consumer is considered to have received it three business days after it is delivered or placed in the mail. The creditor may rely on evidence of earlier receipt, such as a signed overnight delivery. Email follows the same three-day presumption, and electronic delivery also has to satisfy the E-Sign Act.

Before the consumer has received the Loan Estimate and indicated an intent to proceed, the only fee that may be imposed is a bona fide and reasonable credit-report fee. Silence is not intent to proceed. The consumer can signal intent in any way the creditor has not restricted, including orally, as long as the creditor documents it.

A consumer with a bona fide personal financial emergency may waive the seven-business-day wait after receiving the Loan Estimate, using a dated written statement that describes the emergency and is signed by everyone primarily liable. Printed waiver forms are not allowed. The CFPB's example of that emergency is a foreclosure sale that will go forward unless the loan funds during the waiting period.

The Closing Disclosure clocks

The consumer must receive the Closing Disclosure no later than three business days before consummation. For most later changes, a corrected Closing Disclosure can be received at or before consummation, with no new three-day wait.

Three changes do restart the three-business-day wait under 12 CFR 1026.19(f)(2)(ii):

The annual percentage rate becomes inaccurate.
The loan product disclosed under TRID becomes inaccurate.
A prepayment penalty is added.

A lower rate is the trap. If the APR on the Closing Disclosure was overstated, and that overstatement is still "accurate" under Regulation Z because it comes from an overstated finance charge, the creditor corrects the disclosure but does not owe a new three-day wait. If the disclosed APR is inaccurate under Regulation Z, the new wait applies. The CFPB's TRID FAQ says a decrease caused by a lower interest rate does not, by itself, require the new wait, because an overstated finance charge keeps the APR inside the accuracy rule.

The three tolerance buckets

Good faith is measured by comparing the charge on the Loan Estimate with what the consumer actually pays. Charging less than the estimate is fine. Charging more is not, unless a tolerance or a permitted revision applies. Discovering a math error later is not a free pass.

Zero tolerance, in the CFPB guide's shorthand, means the consumer cannot be charged more than the disclosed amount unless a valid revision resets the figure. This bucket includes:

Fees paid to the creditor, the mortgage broker, or an affiliate of either, unless the fee is one of the charges allowed to vary.
Fees paid to an unaffiliated third party when the consumer was not allowed to shop for that service.
Transfer taxes.

A 10 percent cumulative tolerance covers recording fees, and third-party services where the charge is not paid to the creditor or an affiliate and the consumer was allowed to shop and picked a provider on the creditor's written list. The 10 percent test is on the sum, not on each fee. One fee in the group may rise by more than 10 percent if the group as a whole does not.

Some charges may change without a tolerance cap, but only if the original figure was based on the best information reasonably available and the charge is bona fide. The guide lists prepaid interest, property insurance premiums, and amounts put into escrow or a similar account. It also lists a required service when the consumer shops and chooses a provider who is not on the written list, and property taxes or other charges for services the creditor did not require. Optional owner's title insurance is the usual example of that last group, if it is disclosed as optional.

If the creditor lets the consumer shop, it must give a written list, separate from the Loan Estimate, on the same three-business-day schedule. The list needs at least one available provider for each shoppable service and a statement that the consumer may pick someone else. Limiting the consumer to the creditor's list means the consumer was not allowed to shop. Choosing someone off the list takes that charge out of the 10 percent group.

Lender credits are treated as a negative charge. The total credit actually given is compared with the lender credits in Total Closing Costs on the Loan Estimate. A smaller credit is an increased charge to the consumer. Credits may go up. They may go down only when a changed circumstance or other triggering event allows a revised estimate.

When a revised Loan Estimate is allowed

The creditor is generally stuck with the figures it issued. It may reset tolerances only in specific cases under 12 CFR 1026.19(e)(3)(iv):

A changed circumstance increases a charge by more than the applicable tolerance. A changed circumstance is an extraordinary event beyond anyone's control, information the creditor relied on that was wrong or later changed, or new information specific to the consumer or transaction.
A changed circumstance affects creditworthiness or the value of the property and makes the consumer ineligible for a term that was disclosed.
The consumer asks for a change that increases a charge.
The rate was not locked, and locking it changes points, credits, or other rate-dependent charges.
The consumer indicates intent to proceed more than 10 business days after the Loan Estimate was delivered or mailed, unless the creditor extended that date. Count those 10 days with the office-open definition, from mailing or delivery, not from deemed receipt.
The loan finances new construction, settlement is expected more than 60 calendar days after the original Loan Estimate, and that Loan Estimate clearly said a revision could be issued any time up to 60 days before consummation.

A revised Loan Estimate used to reset tolerances must be delivered or placed in the mail within three business days after the creditor has enough information to know the revision is allowed. The consumer must receive it no later than four business days before consummation. It cannot be provided on or after the day the Closing Disclosure is provided. If the creditor mails it and relies on the three-business-day mailbox rule, the guide says it must be placed in the mail no later than seven business days before consummation.

An informational update that is not tied to one of those events does not reset the tolerance. The creditor still has to use the best information it has, but the old figure remains the one that counts for good faith.

Curing a tolerance miss

If the consumer pays more than the tolerance allows, the creditor must refund the excess and provide a corrected Closing Disclosure no later than 60 calendar days after consummation. For a zero-tolerance charge, the refund is every dollar over the disclosed amount. For the 10 percent group, the refund is the amount by which the group exceeded the 10 percent cap. The cure does not have to be cash. The guide also allows a principal reduction or a lender credit.

A compact timeline to memorize

Six items arrive: Loan Estimate goes out within 3 business days (offices-open definition).
No fee except a real credit-report fee until the consumer has the Loan Estimate and says they want to proceed.
Consummation is at least 7 business days after the Loan Estimate is delivered or mailed.
The estimate generally holds for 10 business days unless the creditor extends it.
A valid revision goes out within 3 business days and must be received at least 4 business days before consummation, and never on or after the Closing Disclosure date.
The consumer receives the Closing Disclosure at least 3 business days before consummation.
Only an inaccurate APR, a changed loan product, or a new prepayment penalty restarts that 3-day wait.
A tolerance cure is due within 60 calendar days after consummation.

Practice this on MLO Pass

Timeline and tolerance items are easier after you sort them into the three buckets and the two business-day definitions. Drill those item types until the wrong clock looks obvious. Start studying

Track your readiness. When your mock average is consistently above 75%, you are ready to book.

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