In today’s Agent Insights, Jason Gordon – a Senior Mortgage Loan Officer in San Diego, California – explains how TRID impacts Real Estate Agents and what they need to know to be ‘street smart’.
A few years ago, the Real Estate Community was blind-sighted by the implementation of the Mortgage Disclosure Information Act (MDIA). Amidst the chaos of the Housing Crisis, the MDIA was yet another unwelcomed change that wreaked havoc on countless escrows due to the lack of professional communication within the Real Estate & Mortgage industries. In 2015, we now have TRID.
What is TRID?
TRID stands for “Truth in Lending Act (TILA) – Real Estate Settlement Protections Act (RESPA) Integrated Disclosures”. In the modern environment where the Consumer Financial Protection Bureau (CFPB) has been levying significant fines to Lenders across the country, you can expect zero tolerance from Lenders with respect to deviating from TRID guidelines. That said, it is important for Real Estate Agents to have some “street smarts” about TRID.
What Does TRID change?
- Initial Truth in Lending (TIL) and Good Faith Estimate (GFE) have been replaced by the Loan Estimate (LE), so don’t encourage your Buyers to request a GFE...the GFE is gone!
- Final Truth in Lending (TIL) and HUD-1 forms have been replaced by the Closing Disclosure (CD) form.
- Increased timelines for Closing Escrow.
- Decreased ability for “Changed Circumstances” to reset fee tolerances once they are disclosed.
When is TRID Effective? Does it Apply to All Loans?
- Effective for all applications dated on or after 10/3/15.
- TRID does NOT apply to Reverse Mortgages or Home Equity Lines of Credit (HELOC’s).
What Changes Should Real Estate Agents Be Aware of?
- The Closing Disclosure (CD) is required to be provided by the Borrower at least 3 business days prior to signing the final Loan Documents (i.e. Loan Docs). There are no exceptions to this requirement… it’s a TRID requirement!
- In special circumstances, the CD will be required to be re-issued (thereby resetting a mandatory 3 business day waiting period). These circumstances are currently as follows:
- APR changes of more than 0.125% (fixed mortgages) or 0.250% (adjustable rate
- Loan product change from fixed rate to ARM (or vice versa)
- Subsequent implementation of a Pre-Payment Penalty (PPP) after initially mortgages) disclosing no PPP
What are the TRID “Best Practices” for Real Estate Agents to Implement?
- Encourage the Borrower/Buyer to be responsive to Lender requests such as documents, signatures and acknowledgements.
- Proactively communicate with the Lender regarding any “in escrow” changes, such as seller credits and repairs, early in the process.
- If you make the practice of encouraging your Buyer to “shop” Lenders, it would be advisable to do so before the Borrower is actually in escrow.
- Respond quickly to the Lender when “final numbers” are requested in preparation for Lender issuing the Closing Disclosure (CD) to the Borrower.
- Take leadership in helping your Buyer choose a reputable and accountable Lender.
- Insist on a high quality Escrow Company. They are critical in maintaining the most efficient timelines.
- Learn and understand the TRID mandatory timelines.
What is the likely “long term impact” of TRID?
The general consensus of TRID is that it will help the Consumer make more informed decisions about the selection of specific Mortgage Companies and mortgage programs/terms. While we expect a few “growing pains” early on, we believe TRID will be a great way to further “clean up” the mortgage industry moving forward.
See the full post by visiting Jason's blog.