Thought I'd share this interesting post with all of you.
With the TILA-Respa Integrated Disclosure (TRID, that famous acronym for an acronym) right around the corner, I'm anxious to get started with the new way of doing business. I'm looking forward to the implementation of TRID because for one, it's a "finally, we're getting this over with" moment since the implementation has been so long in the making, and already delayed once. Also, I know TRID is going to be an opportunity to build a ton of new relationships because many lenders, title agents, attorney offices, and other important players in a purchase transaction are going to be dropping the ball in the coming months.
Just last week I saw more than one person either provide false information when it comes to TRID, or openly ask "Has anyone looked into this TRID thing? Will it be a big deal?". Um....YES. It's very much a game changer. Along the way, I've run into a lot of questions, and have been through several TRID training classes. Here are some of the most common TRID-related questions I've seen come up, and their answers.
Do my deals (already in process) need to close prior to 10/3 to avoid TRID?
No, they do not. TRID goes into effect for loan applications received on or after 10/3. This means any loan application received or submitted (all loans in process prior to 10/3) will be playing by the old rules and still subject to the GFE/TIL/HUD-1 we've been accustomed to for the past several years.
Where this can get sticky is when a borrower starts an application somewhere prior to 10/3, needs to withdraw (or has their loan declined), and needs to change lenders AFTER 10/3. Even if on the same purchase contract and the transaction is the same, the new application post-10/3 means you'll be playing by the TRID rules.
Will TRID affect escrow/closing periods?
This one is a great big YES. What will seem like delays as everyone begins playing by the TRID rules will quickly become the normal course of business as everyone realizes that TRID will in fact cause transactions to take at least a few days longer to get done.
One thing I LOVE about TRID is that it's going to give the true professionals in the industry the chance to shine, and those who half-ass everything are going to be called on it and have a light shone on their shoddy business practices. Basically, in most cases, delays will be caused by a lender, Realtor, or title/escrow company that isn't on top of their game. A lack of attention to detail on HOA docs, not knowing the difference between a condo and townhouse, not thoroughly reviewing a contract, and plenty of other details that could be brushed over in the past can now cause some major delays.
The good news, though, is that when consumers are working with professionals on top of their game, delays should be rare, and minimal. In the real estate industry, there are always bound to be surprises that come up along the way, but thankfully, only these one-in-a-million type surprises should cause delays. Most other delays can be avoided by doing the job right from the start.
Will TRID make things more confusing?
Yes and no. The time lines, disclosure rules, delivery options, disclosure receipt acknowledgements, and other things will certainly take some getting used to. On the other end of the spectrum though, the new Loan Estimate (LE) and Closing Disclosure (CD) will make things far less confusing for consumers. This is another area where TRID gets it right - the disclosures leave very little room for confusion compared to the current monster we have in the GFE-TIL combination.
How can we avoid delays?
I brushed on this above, but there are 2 areas that will make or break a closing time line under TRID - one is on the consumers. It is IMPERATIVE that buyers and borrowers are communicating with their lender and returning all requested documents immediately. Under the current system, we have a small window where it's not a huge deal if borrowers aren't extremely responsive (or in less kind terms, slacking). Under TRID, that window is all but gone. If you're getting a loan as a consumer, you'd better be ready to get your lender what they need, when they need it.
The other area where delays can be avoided is going to be on the lender, the Realtor, and on title/escrow. Things that used to be done "along the way" or "closer to settlement" are going to be need to be done up front (the way they should be). HOA docs, condo information, all costs and fees (even potential ones) need to be known up front. Things like capital contributions, inspection costs, potential re-inspection fees - all of these things are going to need to be addressed up front.
Can We Still Close in 30 Days or Less?
In short, yes. In reality, it's going to be a smart move to start moving contract periods out to 45 days as the standard. 30 days is doable, but things will need to go perfectly, and any small hold up along the way is going to push things past that 30 day period.
In the case of a rush or an absolute necessity to get things done faster, we can turn on the afterburners and things can get done in 30 days, but you'll be doing yourself, your clients, and your business partners all a favor by giving a week or 2 longer on purchase agreements from contract execution to closing.
Once TRID is understood and processes are gradually made more efficient, the process should be smooth sailing. I'm glad to be at a company that is ahead of the curve with extensive training and man hours going toward making sure we're ready for 10/3. For those not ready, or those who don't completely understand the rules or have a process in place to handle the changes, I feel sorry for them - there are going to be a lot of damaged relationships, angry buyers and sellers, and professionals left looking less than professional.
If you're ready for TRID, congratulations, it's your time to shine. If you're not ready, give me a call at 484.680.4852 or send me your questions, I'll be happy to help get you TRID ready.
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