Q: Is it true that the new disclosure laws for residential mortgage loan transactions will require real estate brokerage companies and real estate agents to disclose their licensing information on the disclosure form that will be delivered at the mortgage closing?
A: Yes, the new mortgage disclosure law, known as TRID, will require real estate brokerage companies and real estate agents to disclose their licensing information on the disclosure form that will be delivered at the closing of the mortgage transaction.
TRID stands for TILA-RESPA Integrated Disclosures and becomes effective on October 3, 2015. It is a federal law which requires mortgage lenders to provide consumers with certain disclosures during the residential mortgage loan application and closing process. These disclosures summarize the terms of the loan, such as the interest rate, and the costs associated with obtaining the loan. The two new consumer disclosure forms required by TRID are the Loan Estimate and the Closing Disclosure.
The Closing Disclosure (the "CD") replaces the current mortgage disclosure form known as the HUD-1 Settlement Statement. In addition to summarizing the purchaser’s mortgage terms, as well as the closing costs incurred by the purchaser and seller, the CD must include the license numbers for the real estate brokerage companies and the real estate agents.
Page 5 of the CD contains a "Contact Information Table." A sample of this table appears below:
The Contact Information Table requires information for each of the following parties: Lender, Mortgage Broker, Settlement Agent, and the Buyer’s and Seller’s Real Estate Brokerage Company. Columns should be left blank if no corresponding party participates in the transaction. Conversely, columns should be added if multiple parties participate in the transaction in the same role.
With regard to real estate brokers, the Closing Information Table requires the brokerage company’s name, address, and state license number. Additionally, the name, license number, email address, and phone number of the real estate agent serving as the borrower’s/buyer’s and seller’s primary contact must also be included on the Closing Information Table. If a locality or regulatory body other than a state is responsible for issuing licenses, this other license ID number should be included in place of the State License ID. The Postal Code abbreviation of the State or other jurisdiction that issued the license should be included in the corresponding row’s label before the word "License" (i.e. "NY License ID").
To assist real estate professionals in understanding what TRID is and how it will affect the residential closing and mortgage loan process, we have created a "Top Ten List" of things to know about TRID, which can be found by clicking here.
Important Tip: The CD must be delivered to and received by the borrower at least three business days prior to "consummation" of the transaction (usually the closing of the transaction). The three business day period can be referred to as the "Waiting Period" and a closing cannot occur until the conclusion of the Waiting Period. Real estate professionals must be prepared to provide the data found in the Contact Information Table (as well as the commissions being charged) so that the CD can be prepared, delivered to the borrower and the Waiting Period can begin.
The Legal Line Question by:
Neil B. Garfinkel
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP