Sales of existing homes jumped 14.7 percent in December compared to November, according to the National Association of Realtors. The nearly 11 percent monthly drop in home sales in November was not due to a pull back in demand for housing but rather, that drop in November had all to do with something in the mortgage market called "TRID."
TRID is an acronym for TILA-RESPA Integrated Disclosure. It's a new set of rules from federal regulators, deemed "Know Before You Owe," designed to protect borrowers from hidden fees and costs in a home loan. It requires lenders to present borrowers with a simple disclosure form listing all facets of the loan three business days prior to closing. This is so borrowers can ask educated questions if they need to.
"(Friday's) data just confirms that the November drop was due to delays in closings that were pushed to December," said Lawrence Yun, chief economist for the NAR.
"November was the first month of getting a sense of some impact. We saw a softer November in terms of closings and saw much of that activity push into December. December is going to look a little stronger relative to seasonality," said Jonathan Corr, president and CEO of Ellie Mae, a mortgage software company, which saw an average delay of three days due to the new rules.
Closings are in December took a week longer than in December 2014, according to Ellie Mae, but that may be due to factors outside of TRID. Lenders began downsizing as mortgage rates rose, expecting fewer refinance applications, but rates stayed low longer than expected, after the Federal Reserve delayed increasing its lending rate until December. That prompted more refinances.
"Things were creeping out throughout the year, and as that refi picked up, and there was more demand, they tried to accomplish it with the same labor force," Corr said.
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