How TRID has affected closing on a home
Are you a Buyer? Seller? Realtor? Lender? In the title and/or escrow profession?
Maybe you’re mingling at Whispering Vine and overhear an intense conversation on something called TRID?
Does the term TRID mean anything to you? Well, if you are involved in any area of real estate, you have heard of this four-letter word. On October 1, 2015, TRID, or “TILA-RESPA Integrated Disclosure” was put into effect by the Consumer Financial Protection Bureau (CFPB) to help consumers in obtaining a home loan more transparent and easier to understand (unlike the name).
And, after almost eight months since its induction, this is probably true. The old forms are out, and the “closing disclosure” is in. The closing disclosure combines the “old” Truth in Lending statement and the “now forgotten” HUD-1 settlement statement into a shorter form that is meant to be easier for the consumer to understand and provides a detailed account of the entire real estate transaction, including terms of the loan, fees and closing costs.
This disclosure, hopefully, transforms the closing table from a nightmare experience with piles of documents to review for the first time into a more manageable review of the information ahead of time.
Okay, sounds great, but these disclosures now must be provided within a specific time frame – or else there are ramifications. Lenders must provide the Loan Estimate form to consumers within three business days of applying for a loan – the Closing Disclosure form must be provided at least three business days before loan consummation (the time the consumer becomes contractually obligated to the loan, which is typically the signing of the loan documents or closing). Any significant changes to the loan terms and/or charges will restart a new three-business-day waiting period.
Sure, that’s no problem, unless you have entered into a purchase agreement to close your real estate transaction within 45 days, and some snafu arises. Almost 9 out of 10 lenders surveyed agreed that TRID has affected the time it takes for a loan to close, on average adding seven days to the loan closing time. Yes, the 30-day escrow may just be a thing of the past unless you as a buyer are paying all cash.
What has TRID meant for title professionals? It’s a rapid adjustment to a new landscape. It sounds pretty, but it’s not. At least not yet. The new disclosure rules require title agencies, or your escrow professional, to provide increased transparency and accuracy in all research and recommendations they provide to clients, stat. Much of this “information” of course comes from not only the lenders, but must come from the Realtors involved as well. Basically, we as the escrow holder must disclose every fee imaginable to the lender on the “draft” Closing Disclosure.
If a title agent (or escrow professional) presents “figures” or “research” that is found to be incomplete or incorrect, it could affect the final dollar amount of the loan estimate and may necessitate a re-disclosure process. Lenders state that communication with all key players, such as the title company, real estate agent, buyer and seller are a big challenge to receiving the needed information to the lender in a timely fashion. It definitely makes my job more challenging!
Actually, I really do love my job. But as of October 1, 2015, in certain respects, my role as an escrow officer has become that of a computer input person. The demand to get fees out to lenders is greater and quicker than ever. Escrow professionals spend exorbitant amounts of time in front of the computer going back and forth with lenders to “balance” figures, so to push loan documents out for borrower’s signatures frequently happens the same day as closing. If you’re having a little trouble reaching your escrow officer, this may be a reason.
So, the question is, will the CFPB TRID changes heal the mortgage market pain? The experts aren’t so sure. The Consumer Financial Protection Bureau TRID rule is up for revisions after industry cries for changes and clarifications. Stay tuned.
Suzanne Abbott Silverman from Capital Title brings more than three decades of experience to her clients in northern Nevada.
The new owner of The Crossing at Tahoe Valley is Second Bay Holding Tahoe, LLC, based in Redwood City, Calif. The 46,041-square-foot center was originally constructed in 1973.