The Home Buyer's Korner

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October 14th, 2015

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TILA-RESPA Integrated Disclosure

TRID change aheadIt’s here!  The TILA-RESPA Integrated Disclosure rule after being delayed in August went into effect on October 3th and home buyer, sellers and real estate agents need to know what to expect. It’s going to impact real estate and mortgage finance at almost every point along the pipeline, so if your real estate closing is scheduled in October you have the misfortune of being the first to work through the changes with your lenders and title companies.

TRID, or TILA-RESPA Integrated Disclosure, which is also known as the “Know Before You Owe” rule will change the mortgage process by altering some standard loan forms and practices.

The rules were slated to go into effect August 1, 2015, but the Consumer Financial Protection Bureau (CFPB) that oversees TRID actually took effect on October 3, 2015.

On Wednesday, October 7, 2015, the House of Representatives approved HR 3192, “The Homebuyers Assistance Act”, which would provide a safe harbor for lenders who act in good faith to comply with the new TRID mortgage disclosure requirements. The bill will still need to be passed by the US Senate and signed by the President in order to become law.

Home buyers will now receive two new forms under TRID, the Loan Estimate and the Closing Disclosure. The form layout is better. The formulas used and the visual layout is much easier to understand. Everything fits on the form in a better-looking way than before. At a glance, it’s going to be easier to see the estimated closing costs and cash to close figures.

The information that is included makes more sense! The current Good Faith Estimate does not show the total monthly payment or the total amount of cash needed to close and home buyers will get information on down payment, closing costs, prepaid costs, prepayment penalty, increased mortgage balances if applicable, etc.

The newly included items are broken down. The new form clearly states what each total is comprised of to ensure that the numbers all add up to match what the total cost should be.

The new rule is basically an attempt to correct the existing faults with the current regulations. The forms are also designed to work in combination with each other, which wasn’t happening with the previous forms.

The Loan Estimate document is due to the buyer three days after applying for the loan, but what’s really important is the Closing Disclosure must be presented three days before closing without exception!

Home buyer securing a home with a mortgage will now be able to easily compare their loan products because they have a better view of the transaction for purchases.

The biggest change is that the Closing Disclosure will be due to consumers three days prior to closing. With this rule, homeowner using a mortgage to purchase a home has the opportunity to thoroughly check the Closing Disclosure form before they get to the settlement table. This way, they have the chance to ask questions, address changes and generally become more familiar with the what to expect at closing before they reach the settlement table.

Often times, home buyers feel intimidated about asking questions, which can lead to rushed and not so well thought out decisions. TRID benefits home buyers because they now have the opportunity to understand the transaction and feel more confident about the terms being offered by the lender.

Because everyone has more time to review the forms prior to closing, we should see a decrease in mistakes.

The lender, not the title company, will now be responsible for the Closing Disclosure. Before, the title company would prepare the HUD-1 after going back and forth with the lender on fees. When they were done, they would then send it to the lender for a final HUD-1 for its blessings.

In the long run it will make settlements go smoother, but it puts more responsibility on the lender to prepare the documents, software has to be integrated into existing systems and the closing staff has to be trained to not only comply with the new regulations, but learn new software.

It’s a big change for lenders, so real estate agents need to stay informed and insure disclosure deadlines are being met, so no surprises come up. If anyone has any back-to-back closings schedule this month, all I can say is good luck and remain diligent!

The lenders will have to create  more time in their internal process and time simply isn’t an asset lenders have when preparing closing documents for closing, meeting lock expiration dates and schedule closing date outlined in the purchase agreement.

If you’d like to learn more about the CFPB rules on TRID a special guide for real estate professionals has been created by the agency.


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