In October of 2015, the TILA-RESPA Integrated Disclosure (TRID) rule will became effective nationwide, changing the closing process for mortgage lenders and real estate brokerages.
The changes will merge the HUD-1 Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form into two new closing forms: a Loan Estimate (LE) and a Closing Disclosure (CD). Consumers must be supplied the LE three days after they apply for a loan, while the CD is due to the consumer three days before closing. The implemented changes will provide consumers with longer time to review the total costs of their mortgage prior to closing. Any last minute changes made to the agreement of the loan, such as switching the type of interest rate, will result in a three-day delay. As such, industry experts recommend borrowers lock in their mortgage rates 45 or 60 days out rather than the typical 30.
In an effort to educate and prepare real estate professionals, the Consumer Financial Protection Bureau (CFPB) has launched a “Know Before You Owe” campaign. Georgia REALTORS® are strongly encouraged to explore the site, as it contains a published guide detailing the changes, the new loan documents, sections on how to ensure on-time closings, as well as information to share with clients.
According to a NAR® survey, about 56% of REALTORS® reported that they plan to change their purchase agreements to allow for a longer timeline for the closing process and 31% reported that they would add contingencies to the contract. Sharing contracts and amendments sooner with lenders, title insurers, and closing agents will be a best practice going forward to reduce the likelihood of a delayed closing. To review the full survey, click here.
The changes going into effect on October 3 will require REALTORS® to make adjustments to how business is conducted. To ensure a more seamless transition, it’s imperative that members take proactive steps to acclimate themselves with the altered process. Failing to do so could result in delayed closings and penalties incurred. To make certain you’re prepared, visit www.realtor.org/respa to view a webcast, as well as the CFPB’s Know Before You Owe initiative.