Module 1: TRID Regulatory Framework and Timeline

For decades, the real estate settlement process confused consumers with a fragmented patchwork of disclosure documents. To address this, the Dodd-Frank Wall Street Reform and Consumer Protection Act demanded change. It directed the Consumer Financial Protection Bureau (CFPB) to integrate the disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

The result was the TILA-RESPA Integrated Disclosure (TRID) rule. Codified in Regulation Z, TRID replaced four existing documents with two streamlined forms designed to facilitate comparison shopping and prevent last-minute surprises at closing.

The Two Primary Disclosures

1. The Loan Estimate (LE)
This form replaces the Good Faith Estimate (GFE) and the initial Truth in Lending disclosure. It summarizes loan terms, projected payments, and closing costs. Creditors must deliver or mail the Loan Estimate within three business days of receiving the consumer’s application. This document establishes the baseline for tolerance categories, which limit how much final costs can deviate from initial estimates. We will examine this critical protection in Module 2.

2. The Closing Disclosure (CD)
This form replaces the HUD-1 Settlement Statement and the final Truth in Lending disclosure, providing the final transaction costs. Consumers must receive this document at least three business days before consummation.

Critical Definitions for Timing

Transaction timelines depend on precise definitions. Brokers must distinguish between colloquial terms and their specific legal meanings under Regulation Z:

Consummation: This is the moment the consumer becomes contractually obligated on the loan. In Washington, this occurs when the borrower signs the promissory note. This differs from the purchase and sale agreement’s definition of “closing,” which typically refers to recording the deed and disbursing funds.
Business Day: The definition shifts by context. For initial Loan Estimate delivery, a business day means any day the creditor’s offices are open to the public for substantially all business functions. For the Closing Disclosure’s three-day waiting period, however, a business day includes all calendar days except Sundays and legal public holidays. This distinction matters when counting deadlines.

Scope and Exemptions

TRID applies to most closed-end consumer credit transactions secured by real property. Specific loan types remain exempt:

HELOCs (Home Equity Lines of Credit): These open-end credit transactions follow separate disclosure requirements under Regulation Z.
Reverse Mortgages: These continue using the GFE and HUD-1 framework.
Mobile Homes: Exempt when the dwelling is not attached to real property (chattel loans).

WA Practice Note: Liability and the Closing Table

The creditor (lender) bears ultimate responsibility for ensuring the Closing Disclosure is accurate and delivered on time. Regulation Z permits settlement agents (escrow officers) to prepare and provide the CD, but the creditor remains liable for any errors or defects. This liability cannot be delegated.

This non-delegable liability has transformed traditional Washington workflows. Many lenders now retain strict control over Closing Disclosure preparation to manage compliance risk. The days of escrow officers independently generating the final settlement statement are largely gone. Real estate brokers must coordinate closely with lenders to ensure the CD is issued early enough to satisfy the three-day waiting period before the scheduled signing appointment.

Looking Ahead

With the regulatory framework and delivery timelines established, we will next examine the specific triggers that define a loan “application” and how the “Mailbox Rule” impacts your transaction schedule.

From GFE to TRID: The Regulatory Context

TRID replaced four documents with two, but this consolidation masks a more fundamental shift in how federal law protects borrowers during real estate transactions.

The Integration Mandate: Merging TILA and RESPA

You have already learned that the Dodd-Frank Act directed the CFPB to integrate TILA and RESPA disclosures. These were not just duplicate forms that needed to be combined. They were fundamentally different regulatory systems that often conflicted:

Truth in Lending Act (TILA): This law focuses on the cost of credit, specifically the Annual Percentage Rate (APR) and finance charges. Its goal is to help consumers compare loan terms. The Federal Reserve originally administered TILA, but the CFPB now manages it.
Real Estate Settlement Procedures Act (RESPA): This law focuses on the disclosure of settlement costs (such as title fees, escrow, and commissions) and prohibits kickbacks. HUD originally administered RESPA, but the CFPB now enforces it through Regulation X.

The CFPB merged these requirements into the TRID rule, but the underlying statutes remain distinct. TRID is codified as an amendment to Regulation Z (the regulation for TILA). This structural choice has important consequences. It means the strict liability standards of TILA now apply to settlement cost disclosures. Previously, these costs were governed by the less punitive RESPA regime. Now, potential refund requirements for errors apply here as well.

“Know Before You Owe”

The CFPB marketed these changes under the initiative "Know Before You Owe". The regulation prioritizes two specific consumer behaviors:

Comparison Shopping: The Loan Estimate allows borrowers to stack offers side-by-side to identify variances without having to decipher hidden fees.
Certainty of Terms: The rule shifts the burden of accuracy onto the lender. Unlike the old Good Faith Estimate, the Loan Estimate sets binding tolerances, which are specific limits on how much closing costs can increase. If final costs exceed these limits without a valid “changed circumstance,” the lender must absorb the difference.

Washington State Alignment

Washington has aligned its local mortgage regulations with this federal framework. The Mortgage Broker Practices Act generally follows federal disclosure standards to avoid legal conflicts.

The Department of Financial Institutions (DFI) clarified that compliance with TRID satisfies state-level disclosure requirements. Providing the Loan Estimate and Closing Disclosure in accordance with Regulation Z fulfills the disclosure obligations that state law imposes on mortgage brokers.

This alignment streamlines compliance. If you meet TRID timelines and content requirements, you have satisfied Washington’s initial fee and cost disclosure mandates. However, Washington imposes additional requirements beyond the federal forms. Mortgage brokers must still provide:

A separate written Mortgage Broker Agreement.
A compliant Rate Lock Agreement, when applicable.

The Audit Approach and Cure Provisions

TRID introduced the concept of dynamic disclosure where the Loan Estimate and Closing Disclosure function as linked data points. The final Closing Disclosure serves as an audit of the initial Loan Estimate.

When numbers in the final column deviate from the initial estimate beyond allowed tolerances, the lender faces specific obligations. Regulation Z allows a creditor to “cure” a tolerance violation by refunding the excess to the consumer within 60 days of consummation. This is not discretionary. The lender cannot simply apologize; they must write a check.

We now turn to the historical failures of the Good Faith Estimate to understand how specific past abuses shaped the design of the current Loan Estimate.

History and Purpose: From GFE to LE

The Good Faith Estimate failed consumers in several ways. While the previous section explained what TRID integrated, understanding why that integration was necessary requires looking at the specific abuses the old system allowed.

The “Good Faith” Gap

Before TRID, borrowers received two separate initial disclosures: the Good Faith Estimate required by RESPA and the Initial Truth in Lending Disclosure required by TILA. This dual-document system created significant confusion. The GFE focused on settlement services like title and escrow. The TIL disclosure focused on credit costs, specifically the APR. Different federal agencies wrote these forms with different goals, so the terminology often conflicted.

The deeper problem was enforcement. The “good faith” standard in the GFE was largely subjective until 2010. Lenders could issue estimates with attractive low fees to secure a borrower’s application, then allow those fees to increase drastically at closing. This "bait and switch" tactic was difficult to police because the final settlement statement did not look like the initial GFE.

The Apples-to-Oranges Problem

The most practical failure was the structural disconnect between the estimate and the final bill:

The GFE grouped costs into “blocks” (such as Block 1 for origination charges)
The HUD-1 Settlement Statement listed final costs using line numbers (such as Line 801 for origination charges)

No direct visual mapping existed between the two documents. A borrower attempting to compare their initial estimate against final charges had to perform complex cross-referencing. This often required a “conversion chart” just to determine if they were being overcharged. This lack of clarity allowed “fee creep” to go unnoticed until the borrower sat at the signing table. By then, it was often too late to walk away.

The Loan Estimate Solution

The Loan Estimate eliminates these flaws by merging the GFE and Initial TIL into a single dynamic document. It is designed for shoppability and accountability:

Unified Structure: The Loan Estimate and Closing Disclosure now mirror each other exactly. A fee in “Section A” of the LE appears in “Section A” of the CD. Line-by-line comparison becomes instant.
TILA-RESPA Fusion: By combining interest rate information with closing cost details, the LE prevents lenders from manipulating one set of figures to hide costs in another. For example, they can no longer lower the interest rate while inflating origination fees to hide the true cost.

WA Practice Note: The End of the “Junk Fee” Era

In Washington, the LE fundamentally changed how brokers discuss costs. Under the old GFE system, “junk fees” and vague administrative charges were common. The LE’s strict formatting requirements force lenders to alphabetize and clearly label services. This makes vague fees stand out immediately.

While the 2010 RESPA Reform attempted to introduce tolerance buckets to the GFE, TRID fully codified these protections under Regulation Z. The Loan Estimate converts what was once a loose “estimate” into a binding offer of terms. It is subject to specific tolerance limits with mandatory cure obligations when final costs exceed allowed variances. We will explore these tolerance categories and their strict standards in the next section of the framework.

Delivery Timelines and The 3-Day Rule

The strict liability standards you learned earlier make the Loan Estimate a binding offer of terms. However, those protections rely entirely on timing. Disclosures that arrive too late do not protect the consumer. Regulation Z prevents a surprise at the closing table by organizing the mortgage lifecycle around a mandatory three-business-day pulse.

The Three-Day Cadence

TRID anchors the transaction with two hard deadlines that frame the mortgage process:

The Starting Line (Loan Estimate): The creditor must deliver or place in the mail the Loan Estimate no later than three business days after receiving the consumer’s application.
The Finish Line (Closing Disclosure): The consumer must receive the Closing Disclosure no later than three business days before consummation.

These rules function differently. The Loan Estimate deadline focuses on when the lender sends the document. The Closing Disclosure deadline focuses on when the borrower gets it. This distinction between dispatch and receipt is critical for calculating your closing dates.

Phase 1: Initial Delivery and Fee Restrictions

The clock starts ticking the moment a lender receives a valid application. Once triggered, the lender has three business days to issue the Loan Estimate. Simply mailing the form is not enough to open the financial gates.

Regulation Z imposes a strict Fee Restriction. Creditors cannot charge application fees or appraisal deposits until the consumer has received the Loan Estimate and indicated an intent to proceed. The only exception is a bona fide and reasonable fee for obtaining the consumer’s credit report.

A borrower’s Intent to Proceed can be communicated orally or in writing, but silence is not consent. This is a federal lending requirement under Regulation Z rather than a provision of Washington real estate licensing law.

The Mandatory 7-Day Waiting Period

TRID also imposes a minimum transaction length. Consummation cannot occur less than seven business days after the creditor provides the Loan Estimate. This creates a mandatory “cooling-off” period. Even in a rush scenario, a borrower has at least a week to consider the loan terms before signing the note.

Consumers may waive this seven-day waiting period only for a ‘bona fide personal financial emergency’ such as an imminent foreclosure sale. These waivers are legally risky and rarely granted. As a separate Washington-specific note, for Distressed Property Conveyances under RCW 61.34, the 5-day right to cancel expressly cannot be waived.

Phase 2: The Closing Disclosure Waiting Period

As the transaction nears the finish line, the timeline shifts from delivery to receipt. The Closing Disclosure (CD) must be in the consumer’s hands three business days before they sign the promissory note.

The “3+3” Calculation

Lenders often rely on the “Mailbox Rule” for delivery. If the CD is mailed, Regulation Z presumes it is received three business days after it is placed in the mail. This creates a functional six-business-day timeline for mailed disclosures: 3 days for mail delivery plus the mandatory 3-day waiting period. Lenders can shorten this only if they have evidence of earlier receipt, such as a confirmed e-signature.

WA Practice Note: The 30-Day Escrow Myth

For Washington brokers, these federally mandated timelines make the traditional “30-day close” tighter than it appears. The definition of “Business Day” changes depending on the phase. For the initial Loan Estimate, it means days the lender is open. For the Closing Disclosure waiting period, it means all calendar days except Sundays and legal public holidays.

When you subtract weekends, the 7-day cooling-off period, and the CD waiting period, a 30-day contract leaves little room for error. If NWMLS Form 22A (Financing Addendum) is attached to the Purchase and Sale Agreement, the Closing Date is automatically extended (typically up to 4 days) when the lender must issue corrected disclosures and restart the waiting period. Federal law prohibits closing during the mandatory waiting period but does not automatically extend the contract date absent this specific addendum.

With these timelines established, we must identify exactly what starts the clock. A casual conversation can inadvertently trigger these federal deadlines if six specific pieces of information are shared. We call this the ALIENS trigger.

The ALIENS Trigger: Defining ‘Application’

Federal law distinguishes between a consumer casually shopping for rates and one who has formally applied for credit. To eliminate ambiguity, Regulation Z defines an “application” with mathematical precision. It consists of six specific pieces of information that trigger mandatory disclosure timelines.

The real estate industry uses the acronym ALIENS to memorize these triggers:

Address of the subject property
Loan amount sought
Income of the borrower (gross monthly)
Estimated value of the property
Name of the borrower
Social Security Number (to obtain a credit report)

Once a lender possesses all six items, the three-business-day clock starts. This applies whether the information is submitted verbally, in writing, or through an online portal. The lender must issue the Loan Estimate within that window. They cannot delay by claiming the file is incomplete or unapproved.

The “Seventh Item” Prohibition

Before current regulations took effect, lenders often delayed issuing disclosures by demanding verification documents first. They would ask for tax returns, bank statements, or signed purchase contracts and claim the application was “incomplete” without them.

Regulation Z specifically prohibits this stalling tactic. A creditor cannot require additional information (a “seventh item") as a condition for providing the Loan Estimate. The moment they receive the ALIENS data, the disclosure obligation triggers. This is true even if they do not yet have a copy of the purchase contract.

WA Practice Note: The Pre-Approval Distinction

This definition creates a specific compliance trigger during the transition from pre-approval to mutual acceptance.

Most buyers seeking pre-approval provide five of the six items: Name, Income, SSN, Loan Amount, and Estimated Value. The missing piece is the Property Address. Without the address, a pre-approval letter does not constitute an “application” under federal law. Consequently, it does not trigger the Loan Estimate requirement.

The circuit completes the moment you or your buyer forwards a specific property address to the lender. If the other five items are already on file, the lender cannot tell you they will issue a Loan Estimate once you are “under contract.” They must issue it immediately. If the address remains “TBD” or “Unknown,” the requirement stays dormant.

Strategic Implications: The Friday Afternoon Contract

Understanding this trigger prevents friction with lender partners. A routine email can activate federal deadlines.

Consider this scenario: You email a signed Purchase and Sale Agreement to the lender on a Friday afternoon. That contract contains the property address, which is the final ALIENS piece. If your lender is open for business on Saturday, Saturday counts as Day 1. Monday is Day 2. Tuesday is the deadline.

Failure to meet this window violates Regulation Z. This explains why competent lenders prioritize new contract intake immediately. You have triggered a federal countdown, and they must respond.

With the clock now ticking, we will examine exactly how those days are counted once the document leaves the lender’s hands.

The Mailbox Rule and Business Day Definitions

You know when the clock starts. Now you need to know how to count the days. A “business day” under TRID has two completely different meanings depending on which disclosure is being timed. If you mix them up, you will miscalculate closing dates.

The Two Definitions of “Business Day”

Regulation Z employs two distinct definitions of a business day depending on the phase of the transaction. You must know which definition applies to each step of the loan process.

1. The “General” Definition (The Lender’s Calendar)

Applies to: The initial 3-day deadline to deliver the Loan Estimate.

For this specific deadline, a business day means any day the creditor’s offices are open to the public for substantially all business functions. This is an operational test rather than a calendar test. It depends entirely on how the specific lender operates.

If a lender is fully open on Saturday for loan applications and document processing, Saturday counts as a business day.
If they are only open for limited inquiries or basic customer service, Saturday does not count.

Example: You trigger an application on Friday. If your lender is fully open on Saturdays, the Loan Estimate is due Tuesday. The count is Friday plus Saturday plus Monday, which equals 3 days. If they are closed on weekends, the Loan Estimate is due Wednesday.

2. The “Specific” Definition (The Borrower’s Calendar)

Applies to: The Closing Disclosure waiting period, the 7-day waiting period, and the Right of Rescission.

Once we move to waiting periods designed to protect the consumer, the definition tightens to a strict calendar standard. In this context, a business day means all calendar days except Sundays and legal public holidays.

Saturdays ALWAYS count, regardless of whether the lender is open.
Federal legal public holidays are the only other exclusions.

This distinction matters significantly. Even if the lender’s office is closed on Saturday, Saturday still counts toward the three-day waiting period for the borrower to review their Closing Disclosure. The law assumes the borrower can review documents at home regardless of the bank’s hours.

The Mailbox Rule: Presumption of Delivery

Lenders cannot always prove exactly when a borrower checks their email or opens their mail. To provide certainty for everyone involved, Regulation Z establishes a presumption. If disclosures are not delivered in person, the consumer is considered to have received them three business days after they are delivered or placed in the mail. This rule applies to both the Loan Estimate and the Closing Disclosure.

This creates a functional six-business-day timeline for any disclosures sent by mail:

Mail Transit (3 Days): The time presumed for delivery.
Mandatory Review (3 Days): The required waiting period before signing.

Timeline Example:
If a lender mails the Closing Disclosure (CD) on Thursday:

Friday: Mail Day 1
Saturday: Mail Day 2
Sunday: Excluded (not a business day)
Monday: Mail Day 3 → PRESUMED RECEIVED
Tuesday: Review Day 1
Wednesday: Review Day 2
Thursday: Review Day 3 → Earliest Consummation

Electronic Delivery and E-Sign

The lender can bypass the 3-day mail presumption by obtaining evidence of earlier receipt through a compliant E-Sign system. If the system logs that the borrower viewed the document on Monday, Monday becomes the official receipt date. The three-day waiting period begins the next day (Tuesday), which makes Friday the earliest consummation date. This is why many lenders prefer electronic delivery; it significantly shortens the timeline.

The Holiday Complication

Legal public holidays are excluded from the “Specific” business day definition. For federal TRID purposes, Regulation Z follows the strict calendar date of the holiday, not the day the government observes it. This is a subtle but critical detail.

When a fixed-date holiday like July 4 falls on a Saturday, Saturday is not a business day for TRID calculations because the actual holiday date governs. The federal rule looks at the specific date on the calendar.

Washington Contract Law Differs:
Washington real estate contracts use state law to define legal holidays. Under state law, if a holiday falls on Saturday, the preceding Friday is the legal holiday for contract deadline purposes. This means for calculating the Closing Date in NWMLS Form 21, you exclude Friday (the observed holiday) and Saturday (the weekend). However, these dates follow state contract law, not federal TRID rules.

The practical impact is that you may need to count business days differently depending on whether you are calculating a federal TRID deadline (when the CD must be received) or a state contract deadline (when the Closing Date occurs per Form 21). You are effectively managing two different calendars simultaneously.

WA Practice Note: Managing the Timeline

For Washington brokers, this math directly impacts the Closing Date in NWMLS Form 21. If a transaction requires a mailed Closing Disclosure because the borrower lacks E-Sign consent, a standard 30-day closing period leaves zero margin for error.

If a lender discovers a tolerance violation requiring a corrected Closing Disclosure and a new waiting period, the original closing date may be impossible to meet. NWMLS Form 22A (Financing Addendum) provides critical protection for your client. Paragraph 8 states that if the lender must issue a corrected disclosure under Regulation Z that delays closing, the Closing Date automatically extends for up to 4 days. Without Form 22A attached to your Purchase and Sale Agreement, a TRID delay puts your buyer in breach of contract.

These timing mechanics control the entire transaction calendar. Next, we examine the terminology that governs cost changes and rate commitments, starting with the borrower’s “Intent to Proceed.”

Key Terminology and Process Management

You have mastered the timing mechanics in the previous section. Now we will examine the terminology that governs what happens immediately after the Loan Estimate arrives. The delivery of this disclosure activates strict baselines, regulatory gates, and rigid cost controls that every real estate professional must understand.

Intent to Proceed and the Fee Restriction

The prior section mentioned a critical milestone known as the borrower’s Intent to Proceed. This term is not merely procedural; it controls exactly when the loan file can advance.

Federal law imposes a strict rule known as the Fee Restriction. A creditor may not impose any fee on a consumer until the consumer has received the Loan Estimate and indicated an intent to proceed with the transaction. There is only one exception to this rule: a bona fide and reasonable fee for obtaining a credit report.

This rule creates a potentially dangerous “black hole” in your timeline. Consider this scenario: If your buyer applies on Monday and receives the Loan Estimate on Wednesday, the file effectively stops. If the buyer waits until the following Tuesday to tell the lender “I want to move forward,” the appraisal order is delayed by nearly a week. The lender is legally prohibited from collecting the appraisal fee until that signal is given. Effective process management requires you to ensure your buyer actively communicates this intent immediately upon reviewing the disclosures.

The Loan Estimate as a Binding Baseline

Once the Intent to Proceed is given, the loan file advances. However, the numbers on the Loan Estimate become “sticky.” The Loan Estimate is not a rough draft. Under TRID rules, it functions as a binding offer of terms. When the lender issues the Loan Estimate, they establish a mathematical baseline for transaction costs. This baseline is the standard against which the final Closing Disclosure will be audited.

Regulation Z redefines “good faith” from a subjective moral standard to an objective mathematical one. An estimate is considered to be made in good faith if the charge paid by the consumer does not exceed the amount originally disclosed by more than the specific tolerance limits. The lender cannot simply fix a mistake by issuing a corrected Loan Estimate. They must often live with the error and pay the difference from their own funds at closing to cure the violation. This strict liability principle explains why lenders are often inflexible regarding last-minute contract changes.

WA Practice Note: Broker Duties and Form 22A

While the lender manages federal compliance, the real estate broker manages the contractual timeline. Under state law regarding broker duties, you owe a duty to exercise reasonable skill and care. In the TRID context, this means monitoring the milestones that allow the file to progress.

NWMLS Form 22A (Financing Addendum) ties the contract timeline directly to these regulatory triggers. The “Loan Application” section requires the buyer to apply for a specific loan type, such as Conventional, FHA, or VA. If the data on the Loan Estimate, such as the loan program or down payment amount, does not match the terms agreed to in Form 22A, the buyer may be in breach of contract.

Because the Loan Estimate is a binding baseline, TRID creates a high barrier for revisions. Costs subject to tolerance limits (often called Zero or 10% buckets) are only allowed to rise if they pass through specific regulatory gateways known as ‘Changed Circumstances’ or other triggering events, such as borrower-requested changes. Costs with unlimited tolerance (such as prepaid interest and homeowners insurance) may increase without a Changed Circumstance, provided the initial estimate was made in good faith.

Two specific milestones control this process: the borrower’s Intent to Proceed, which lifts the fee restriction and allows the file to advance, and the Rate Lock, which freezes the interest rate and establishes cost baselines subject to tolerance limits. We will examine these critical terms in detail next.

Decoding the Loan Estimate: A Comparative Analysis

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