Here we are, the beginning of October, and it feels like April fool’s. The government decided — just as the real estate market starts to pick up — they need to implement some new rules and regulations.
Whether you like it or not, TRID or Truth In Lending- RESPA Integrated Disclosure is here to stay, at least for now. So once again, it’s our job to educate ourselves and our customers on how these changes are going to affect them.
I sat down with Steve Fingerman, president of E-Loans Mortgage and an industry veteran for the past 15 years, and with his help, we broke down the new rules.
1. Double, double TRID and trouble?
Timing is going to be the biggest bubble. This is probably the most crucial change that will affect everyone in the transaction — a change to the closing dates. No longer will it be quick to close a loan.
Even our favorite type of loan — conventional, which closes typically in 30 days — is going to (gasp) take possibly closer to 45 days.
“Make sure everyone in the transaction is aware upfront of the changes in timeline,” Fingerman said.
And that goes especially for sellers. They need to be made aware that this has nothing to do with the borrower’s ability to secure the loan, but the government’s guidelines to make sure everyone is on the same page: the customers, the lender and the title company.
“Figure about 15 days added to the closing date, and depending on the interpretation from the lender, it could be even longer,” Fingerman said.
2. Who’s under that mask?
Lenders, like anyone, are going to be interpreting their own way of reading the new guidelines with regards to implementing their new procedures. So it will be important for your buyer and yourself to interview the lender and ask them how they are handling these changes.
For example, Fingerman said his office will be sending out the new Closing Disclosure roughly a week or two prior to the closing date with hopes this practice will help expedite the process.
Other mortgage companies and big-box lenders, probably won’t be taking that route. So it’s critical to ask the lender their procedure to get you and your customer to the closing table.
3. Beware! Caution!
OK, so the paperwork isn’t that scary, but that is the idea behind it. It’s supposed to help the consumers become more educated about the paperwork they are signing and to have time to ask questions ahead of the closing.
So you can say goodbye to the Good Faith Estimate and welcome in the new Loan Estimate, which Fingerman said is easier to understand and an all-around better document than what we’ve had in the past.
The next document being tossed out like leftover candy corn: the HUD-1. It’s been replaced by the Closing Disclosure, and it’s mandated that it’s in the buyer’s hands to review at least three days prior to closing. Fingerman said this could lead to a nightmare if your customers are not tech-savvy.
4. Still using a broom to get around?
If your customers don’t use the Internet or email, then you need to know the closing is going to take a little bit longer.
The closing document sent by old-fashioned snail mail is going to take the three-day review we talked about earlier up to seven days. Holy ghosts and goblins! So we might have to become experts in getting our customers signed up for Gmail if they want to close sooner.
5. You can’t have all your candy and eat it, too.
At least, probably not when you are wanting to do back-to-back closings on more than one home. When a customer is attempting to close two real estate transactions in one day — selling a home and then purchasing another — they are doing it because the owner is depending on the cash from closing to purchase the second home.
Under TRID, this more complex situation is likely going to be harder to coordinate because of the disclosure timing requirements.
In these cases, Fingerman said, “It may behoove both the buyer and seller to obtain their mortgage from the same lender so that coordination is more seamless in this regard.”
Got a belly ache yet from all that heavy information? Hopefully, this helped takes the nightmare out of the new changes for you.
Remember: We’ve changed before, and we will change again. When you are knowledgeable about the situation, it’s not nearly as scary as you think.
But that doesn’t mean it’s not going to be a headache. I hope someone puts some Advil in my trick-or-treat bag.