October 3rd, D-Day for those of us in the housing industry. The day the dreaded TRID is to take effect. After sitting through a number of TRID training courses I've come away with the feeling that people are a little more nervous about it than they need to be. There will be an adjustment period of course but I've heard things such as, "closings will take 60 days now" and the likes. Here are some points about the changes that will hopefully put to rest some of your concerns:
- If your lender is perpared for the changes you'll hardly notice them- The forms will look a little different. But really the loan estimate (LE) is the GFE + TIL. What's important is that the lender is accurate with their figures up front because changes in fees from the initial estimate can cause delays.
- The closing estimate can be sent ahead of time-It will take lenders some time to get a handle on when exactly is the best time to send the closing disclosures. Some of the larger banks have already determined that they won't send it without full underwriting approval. This is due to the fact that there are fewer fees that have a tolerance, meaning they can no longer be 10% higher than the GFE (or LE as it will be). Ideally the loans will be cleared by underwriting with plenty of time to meet the waiting periods but that won't always be the case. In cases where the CD is sent earlier than underwriting approval the biggest issue I can forsee is if their is a need for an appraisal review, etc.
- Advising your buyers to Electronic Consent (and responding quickly) will cut down the waiting periods- The waiting period clocks start from the time it can be verified the borrower has received the disclosures. If the borrower does not verify receipt or consent to electronic disclosures than the mailbox rule takes effect. This assumes that the borrower receives the disclosure on the fourth day from delivery, yeah 4 days.
- Title and escrow companies that get the fees to the lender quickly will earn more business- One thing we lenders will be required to do to make the transaction go as smoothly as possible is disclose the fees accurately. With many of the title fees moving out of the categories that allow for a variance we don't want to disclose incorrectly. The thing is we only have three days to get the LE sent out from the time we have received a complete application. We will need those fees immediately in order to avoid issues going forward.
Once the CD review process is completed (3 specific days of review after receipt), subsequent CD(s) to Borrower will not require another review period unless:
• APR increases by 1/8th on Fixed and 1/4thon ARMs
• Loan Amortization changes (fixed to ARM, ARM to Fixed, 10/1 to 5/1, etc)
• Prepayment Penalty is added
- Things will change long after October 3rd- There are still elements to the new rules that even the CFPB acknkowledges are goofy. The only constant in this business is change.
Obviously the best case scenario is for the loan to achieve a clear to close from underwriting in plenty of time to meet all the closing disclosure guidelines. However, there are steps that loan officers and processors can taket to ensure that the disclosure goes out in time even if the loan hasn't reached that milestone. It does come with a little risk, but hey, we're in a risky business.
As with any sweeping changes made by the government there will be some growing pains. We have had plenty of time to prepare for the changes and will adjust as more come our way.