Unless you've been under a rock, you know that we passed a huge milestone on October 3, 2015. Yep, the TILA-RESPA Integrated Disclosure rules have arrived. And it's changing life in Real Estate as we know it.
TRID stands for:
T - TILA: Truth in Lending Act
(Designed to protect borrowers by ensuring that they are aware of the terms and costs of credit so they can act knowledgeably when it comes to a mortgage loan.)
R - RESPA: Real Estate Settlement Procedures Act
(Requires mortgage lenders to provide simple yet complete amounts of info to help aspiring home owners make smart financial decisions.)
I - INTEGRATED
D - DISCLOSURE
But what does this change mean for us?
First, it means we no longer have HUD closing forms. Now we have a Closing Disclosure form prepared by (Hang onto your underwear here folks) the lender. GASP? Can they do that? Can we trust them? Won't they cheat?
Not unless they have a MILLION DOLLARS to pay the cheating fine. Yep, that's up to $1,000,000.00 in fines that can be levied against any lender who knowingly cheats. For example, if they suppress information from a borrower, they can be fined. And if the lender gets dragged in by the Real Estate Police for not doing something right, guess who else is getting dragged in with them? Yep. You and me!
And that brings us to our second important change which shouldn't be a change at all. You'd better keep your ducks in a row. What that means is document, document, document. Our paperwork has got to be in order (shouldn't it have been anyway?). Need a document signed? You'd better make sure the actual, real buyer or seller is doing the signing and that you're not just jotting down their intials for them real quick. But surely we weren't doing silly, irresponsible things like that before, right? Little things matter folks.
That brings me to the third change. Lenders now must have ALL documents pertaining to the transaction. That's ALL documents folks. Got an inspection report? Yep, you'd better make darn sure the lender has that bad boy. And the Repair Supplemental too if you do that in your part of the world. And guess what? The lender can require repairs now too if they determine something needs to be in compliance. Yep, that's gonna be a barrel of fun right there!
The fourth change to be aware of is the Closing Disclosure. The Closing Disclosure (formerly HUD statement) must be provided to the borrower now at least 3 business days prior to closing and cannot be issued on the same day as the last loan estimate. After the Closing Disclosure has been issued there can be no further loan estimates issued. What this means for us is that if you and I forget to include that Home Warranty and then need to add it after the Closing Disclosure has gone out...yep, we just bought everyone at least 3 more days of waiting AFTER a new Loan Disclosure goes out AFTER taking however much time is required to prepare a new one. Talking about some mad people! Better not pull that one folks!
There are other changes and I could spend all day discussing how TRID is going change the world of Real Estate. But let me share with you a couple of quick changes and then we'll wrap up:
No longer will buyers and sellers close together. And we won't even be allowed to attend closings unless the buyer gives signed permission for us to be in the room. Welcome to privacy laws folks.
Better get used to 45-60 day closings. So long 30 day closings. We're gonna miss you!
Finally, we need to get picky about who we do business with. Got an inspector who just cannot get their report in within the inspection time frame? Yep, that can cause big problems now. Got a title company that isn't sure what's going on with this stuff? Run for you life. And you'd better watch what the other agent on the other side of the transaction is doing too. Nobody can afford to be sloppy now. The stakes are just way too high.
In closing, my first opinion of the new TRID guidelines was not positive. However, after talking to some of our local lenders who are very much on top of the changes, I'm changing my mind. The new disclosures are easier to read and understand. And the changes are going to make sure everyone is doing what they should have been doing all along anyway.
In short, TRID may just clean up our industry a bit.
And remember too...cash is still king 'cause there ain't no TRID nothin for cash buyers!