disclosure-generator

What this skill does

# 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:

1. Borrower's name
2. Borrower's income
3. Borrower's Social Security number
4. Property address
5. Estimated value of the property
6. 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 Da