Mortgage

Get to higher ground before the disclosure tsunami rolls in

Get educated and start a dialogue early

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The new disclosures rules collectively known as TRID (TILA-RESPA Integrated Disclosures) are comparable to a tsunami — right now, the waves have retreated; after Aug. 1, the big wave will hit. But only those who did not see it coming might drown in the TRID wave.

A tsunami can create a lot of devastation if you are not aware that it is happening. Because we are aware of what is coming, we can take proactive steps and move to higher ground to stay safe and dry.

On Aug. 1, 2015, TRID becomes active. Fortunately for all, Aug. 1 is a Saturday, so probably nothing will happen that day. So, what is going to happen on Monday, Aug. 3? Hopefully, you are already working toward a solution by partnering and communicating with your business partners.

If you are not, now is a great time to start. Inman contributor Bernice Ross wrote in a recent article: “A change of this magnitude is going to create unexpected ripple effects across the industry, not only for agents and clients, but for mortgage and title professionals, too.”

It is important to remember that everyone will be affected by the new TRID rule.

There is no doubt that the process will be different from what we are used to. However, if we take a proactive stance, start learning about what affects the TRID rule will have on each business line and start discussing solutions with our business partners, we will be prepared to deal with the changes after Aug. 1. And we will be ready for the challenges it will bring.

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We will all have to learn a new way to process our transactions, and it starts with communicating with each other about how the TRID rule will impact our world. This will be a significant step toward higher ground.

One of the misconceptions is that any transaction after Aug. 1, 2015, will have the Loan Estimate and Closing Disclosure requirement. Nothing will change for transactions already in process on Aug. 1, 2015, provided the loan application was taken by the lender before Aug. 1. Those transactions will be processed with the Good Faith Estimate and HUD-1.

For loan applications taken on or after Aug. 1, 2015, on most residential transactions the Good Faith Estimate, Truth in Lending and HUD-1 forms will be replaced by the Loan Estimate and Closing Disclosure. Some of the obvious changes will be:

1. Accurate disclosures of fees required upfront.

2. Closing Disclosure must be delivered three business days prior to consummation, and an additional three business days are added for the mailbox delivery rule.

3. Closings might be delayed if there are last-minute changes.

4. Lenders are working on technology integration with settlement agents to ensure accurate data exchange for transactions.

One of the solutions that are currently presented is for real estate agents to add an extra 15 days to close a transaction, but the appropriate solution for real estate agents should be: Go talk to your lender and see how quickly they can close a transaction. Then go talk to your settlement provider and make sure they are aware of the TRID rule, so all parties will adequately communicate and collaborate.

The three-business-day waiting period applies prior to consummation, which most lenders deem as the day the borrower signs the loan documents on the transaction. This means the lenders have to get their Closing Disclosure prepared earlier in the process and does not necessarily mean the transaction is delayed for three days.

There might be an additional three-business-day waiting period if there are any last-minute changes in the Closing Disclosure. But if all parties in the transaction are working together and educating sellers and buyers, then there might not be any last-minute changes.

The most important thing you can do for yourself is to become educated and to start the dialogue with all your business partners to prepare for the tsunami.

So, if you know this information, you can move to higher ground in time and watch the tsunami happen from a distance while you stay dry.

Mickey Vandenberg is the senior vice president/national escrow manager for WFG National Title Insurance Company. She began her title career in customer service, but soon caught the escrow bug, working her way up through those ranks to escrow officer. During a career spanning more than two decades, Mickey has closed residential and commercial transactions of all kinds, ranging from mobile homes to complex commercial deals involving multiple properties. Focusing on the commercial side, she ran a successful national commercial desk for several years. Mickey is now spending much of her time on the regulatory compliance challenges posed by the TILA-RESPA Integrated Disclosure (TRID) rules.

Email Mickey Vandenberg.