A lender is preparing a loan for a borrower and must comply with the TILA-RESPA Integrated Disclosure (TRID) Rule. Which of the following scenarios would necessitate a new 3-day waiting period for the Closing Disclosure (CD)?
- AA decrease in the annual percentage rate (APR) by 0.125%.
- BAn increase in the annual percentage rate (APR) by 0.15%.
- CA change in the lender's contact information.
- DA change in the property's address due to a clerical error.
Show answer & explanationAnswer & explanation
Correct answer: B. An increase in the annual percentage rate (APR) by 0.15%.
TRID requires a new 3-day waiting period for the Closing Disclosure if there is a significant change to the loan terms. A significant change includes an increase in the Annual Percentage Rate (APR) by more than 0.125% for a fixed-rate loan or 0.25% for an adjustable-rate loan. An increase of 0.15% exceeds the 0.125% threshold for a fixed-rate loan (implied here, as no other type is specified) or the general threshold for significant change, thus triggering a new waiting period.
Why the other options are wrong
- A. A decrease in the APR benefits the borrower and does not trigger a new 3-day waiting period, though a corrected CD should be issued.
- C. Changes in lender contact information are minor and do not trigger a new 3-day waiting period.
- D. A clerical error in the address does not typically trigger a new 3-day waiting period for the CD.
TRID Re-Disclosure Triggers
Specific changes to a loan's terms that require a new Closing Disclosure to be issued, restarting the 3-day waiting period before closing.
- An increase in the APR by more than 0.125% (fixed) or 0.25% (adjustable).
- Addition of a prepayment penalty.
- Change in the loan product (e.g., from fixed to adjustable).
Memory trick: Don't rush closing if the APR jumps, or a big penalty looms.