More On Energy Conservation And New Regulations!
Conserve your energy on TRID until more policies and approaches are developed.
I’m on an earth day theme, but I think that it is really important to talk about TRID. The TILA-RESPA Integrated Disclosure, or TRID, is the pending regulation that goes into effect on most real estate sales transactions on and after August 1st.
Companies are still making their legal and compliant decisions on how they will approach certain aspects of the TRID regulation. Many of these regulations are open for interpretation and lenders need to determine their policies and procedures for these new rules.
TRID is a merger of the TIL and the GFE, the upfront disclosures that go to consumers once they have applied for a mortgage. These forms are being combined into one form called the Loan Estimate (LE) on the front end. In the back end, TRID merges the final TIL and the HUD into one form called the Closing Disclosure (CD).
- As with current disclosures, the new LE forms are required to be delivered within three business days of application
- CD Forms must be delivered three business days prior to closing
- If there is a change in APR, loan product or if a pre-payment penalty is added, the three business day clock re-sets and the closing will be delayed
- Any change in final numbers that do not impact the APR must be approved by lender before closing
The goal of this regulation is to ensure that consumers have enough time to understand the numbers in the mortgage transaction. Once a lender issues the LE, those numbers cannot adjust without a legitimate change of circumstance. At the closing, the numbers should match the initial LE, unless the consumer was notified of a legitimate change. Although the industry has changed a lot, there are still borrowers who voiced that the numbers at closing were not as expected. By the time they got to the table, there was nothing that could have been done so they closed. Now the consumer will have ample time to make sure they understand all the numbers and the lender will have to have everything in order to ensure an on-time closing.
Some TRID basics to help insure there are no closing delays:
You will be hearing more about this regulation as the implementation date of August 1st grows closer and companies firm up their interpretation and approach to TRID.
We all work together to get the buyer and seller to a happy closing table. Real estate agents can support this system by helping to educate buyers. Title agents and attorneys need to complete title orders up front, and consumers need to obtain homeowner\’s insurance early as well as transferring funds early in the process to get the loan clear to close. Nothing impacting the loan application and documentation can be left to the end of the process. Doing everything as early as possible will help ensure timely closings.
- Allow at least two weeks from mortgage commitment date to closing so all conditions can be cleared and the closing numbers can be produced, reviewed and accepted. This will ensure there will be no delay in the closing.
- Counsel buyers to respond to all lender requests with speed. Make sure they understand the consequences of any delay in getting the loan clear to close.
- Allow 3-4 weeks for mortgage commitments. Call your lender to gauge market conditions up front so that proper expectations can be established.
- Be sure to allow additional time for more complicated transactions. Staying in close communication with the lender will set a proper time frame for the specific transaction.
This is the time for all of us to step up and work together. We can get through this new approach and our consumers will be more educated and satisfied they are getting the loan they want.
TRID has new guidance to consumers on how to shop for a mortgage, which could impact the timing of the transaction. There are also new approaches to pre-qualifications that we will address in our next post. Stay tuned!
Regional Vice President
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