5 Months from TRID launch -
Where Are We Now Last October, the TILA RESPA Integrated Disclosure rule (TRID) replaced the old TIL-GFE. Paperwork for the homebuyer was reduced, fees were itemized, and the forms were made easier to read so consumers could have a better understanding of the costs of buying a new home.
Great news for homebuyers, we thought. Then there were a couple of provisions of the new form that seemed specifically designed to stress out real estate agents and their mortgage lender partners: namely, the new three-day review periods.
The homebuyer must receive the new Loan Estimate form three days after the loan application date, and the new Closing Disclosure must be delivered three days before closing, rather than at the closing table.
So what have the impacts of Know Before You Owe been so far? According to the National Association of Realtors (NAR), on average, closings now take about 45 days, instead of the 30 they previously took.
While there are some exceptions, this seems to be the experience of the majority of agents. This has made “rent backs” more common. It also may be requiring more 45-day rate locks, adding a couple hundred dollars to the buyer’s costs. Some buyers are also running into trouble when they request a pre-approval letter to match the time frame of the longer rate lock.
An NAR survey indicates the issue stems from some confusion over the new definition of an application versus a pre-approval, and the new ban on requiring detailed financial information in order to issue a pre-approval. It’s assumed that this will become less of a problem as the industry acclimatizes to the new requirements. NAR has discovered that some agents are no longer receiving the new closing disclosures from their lenders as they did the HUD-1. There appears to be some concern over privacy regulations that are not clear when it comes to the relationship between the agent, lender, and buyer. Many agents are currently receiving copies of the closing disclosure from their buyers rather than their lending partners while the details are being sorted out.
A report from NAR also indicates that a drop in existing home sales at the end of 2015 may be blamed on TRID, most likely due to the change in closing dates necessitated by the new disclosures. The low numbers for November are likely to show that transactions begun in late October or early November closed in December.
A survey conducted by NAR in November 2015, however, indicates that in general, the new process is going smoothly and agents and buyers are transitioning well to the new forms and requirements. The long build-up period and the delay of implementation surely helped agents by allowing them time to study up and receive proper training on the new process.
It’s still too early to tell what the long-term impacts of the new Know What You Owe initiative will be, but all signs indicate that business will go on as usual as we get more used to the process and that real estate agents’ business will not be adversely impacted. If you would like to discuss how you’re handling the challenges TRID is presenting you or learn more about the new process, I’d be happy to get together and share information. I look forward to working with you as we both adjust and continue to grow and strengthen our business!