Have questions? Mike Brown with Security 1st Title will be at the KAR Mid-year Conference in Manhattan on Wednesday June 17th at 10:15 for an hour long session titled:
TRID (It is not just a form that is changing.)
This class will cover the basics about the upcoming TILA-RESPA Integrated Disclosure rule starting on August 1st. Learn what to expect from your mortgage lenders and settlement providers and how you should prepare for it.
By: Mike Brown, SVP, Security 1st Title
By now many of you have heard about, learned about, or researched the upcoming changes to the closing process and forms. These new rules will start with Loan Applications processed on and after August 1, 2015. If you have not, I suggest you get informed right away. At the very least get your basics covered.
The new integrated disclosure rule brings a big change in the way lenders and settlement companies will process a mortgage loan and a real estate closing. The HUD 1 Settlement Statement will be replaced by a Closing Disclosure Form on the majority of mortgage credit transactions (Exemptions apply for commercial, cash, and HELOCs).
The new Loan Estimate and Closing Disclosure forms are excellent tools for a borrower to use to understand their loan terms and settlement expenses. I am excited to see the CFPB take actions that will benefit the homeowner in such a big way. This is a good step towards more transparency in closing costs and loan terms.
As good as this is for consumers, it will present some challenges for the mortgage lenders and settlement providers. For the mortgage lenders, there are zero-tolerances on fees that are shown on the Loan Estimate and hard deadlines to disclose information to the borrower. For the settlement providers, the new forms do not contain adequate language and authorization to use the new Closing Disclosure for funding and disbursement. Therefore the American Land Title Association (ALTA) has drafted a series of Settlement Statements to be used by settlement providers.
It is difficult to describe the amount of effort the mortgage lenders and settlement providers are utilizing at this time as they make preparations. They are hard at work implementing new software, new integrations, new forms, new workflows, and staff training. Much of the training will be provided to the staff during the month of July, one of the busier times of the year for closings. My advice to Realtors is to stay informed, stay positive, and be proactive with the task management of your contracts.
TOP TEN THINGS EVERY REALTOR SHOULD KNOW ABOUT THE NEW RULES:
1. The Closing Disclosure Form must be received by the borrower no later than 3 days prior to the closing.
2. Between the date of receipt and the settlement date, any change to the form will require a corrected form to be distributed, but may not require additional notification days.
3. If either A) The APR changes more than 1/8%, B) there is a change in the Loan Product, or C) a prepayment penalty is added, you will not be able to close until 3 days after the updated Closing Disclosure has been received by the borrower.
4. Lenders may interpret and implement the rules in slightly different ways.
5. Some lenders may use e-sign verification to distribute the disclosure to the borrower. Some lenders may snail mail the disclosure 7-10 days prior to closing.
6. At closing, you may be presented with a Settlement Statement along with the Closing Disclosure.
7. Once the lender and settlement agent finalize the figures, the lender will commonly distribute the form to the borrower and the settlement agent will distribute to the Realtors.
8. The CFPB has recently stated they will show sensitivity while enforcing after August 1, but the deadline is not changing for now.
9. Get all fees and charges associated to the closing delivered to the closer as soon as you can. Failure to do so may result in a delayed closing. Remember the deadlines have moved up.
10. Industry experts are asking Realtors to add 15 days to the closing cycle on their contracts starting on August 1. They are all hopeful that the number of days required will go down as the processes improve.
