The new lending guidelines are upon us and we now enter the sixth week under these new regulations and boy are we feeling the pain!
TRID originated from the Know Before You Owe mortgage disclosure rule. According to the Consumer Financial Protection Bureau, “lenders must give you new, easier-to-use disclosures about your loan three business days before closing. This gives you more time to review the terms of the deal before you get to the closing table. Many things can change in the days leading up to closing. Most changes will not require your lender to give you three more business days to review the new terms before closing. the new rule allows for ordinary changes that do not alter the basic terms of the deal.”
These instances would require a new 3 day review:
- Your APR increases by more than 1/8 of a percent
- A prepayment penalty is added
- The basic loan product changes
What we have learned so far:
- The days of having the transaction close in 30 days is over. Yes, some of our lenders have told us otherwise, but in our professional opinion, the 30 day escrows will be few and far between if you are obtaining a loan. If you are a buyer writing an offer or a seller accepting an offer, expect that a closing in 35-45 days is more likely.
- Different lenders have different interpretations of these rules so make sure you understand exactly what your lender requires. Hopefully in the coming months things will calm and we will have a better grasp on how to work under TRID guidelines.
- Open lines of communication help prevent needless confusion and delays.
- Make sure your clients have detailed information they can share with their lender about property taxes, homeowner’s association fees, condominium association fees, and the estimated cost for homeowners insurance. Although the lender likely needs to verify these costs later, accurate numbers now can prevent revised Loan Estimates later.
- If anything about the transaction changes, communicate those changes promptly to everyone involved and confirm the information has been received. The lender determines whether the change requires a revised Loan Estimate. Your best strategy is to communicate any changes to your client and to confirm that the lender has received the information as well.
- Confirm the lender and the closing company have the buyer’s and the seller’s real estate broker information. Because this information appears on the Closing Disclosure, they both need correct and complete information. Source: CFPB – consumerfinance.gov
Welcome to life with TRID my friends!