People didn’t know what the new TILA-RESPA Integrated Disclosure (TRID) regulatory changes would do to consumers – possibly hold up their applications, slow down closings or other problems?
After more than two weeks since the new rules came into place Oct. 3, some mortgage experts say consumers aren’t seeing much of a change but lenders had problems with getting software changed over to what they needed.
“Remember when they talked about the Y2K? They kept talking about ‘get ready, get ready, get ready,’ ” says Dianne Payne, president of the Tennessee Mortgage Bankers Association. She also is the Tennessee area manager for Cunningham & Company Mortgage Bankers.
“Well, nothing happened then either. So to the consumer, this is about the same thing,” she adds. “It is kind of on the outside of the consumer. It’s the title company people and lenders who are having to do all the work and changes. To the borrower, they might be saying, “Why can’t we close now?” she explains.
New Waiting Periods
One of the changes in the regulations is that the borrower gets the closing documents at least three business days before the closing.
“It might feel constrictive at first. But lenders should be setting those expectations to the consumers,” she said.
The reason for the delay is that the new rules are there to slow down the process. Even after sweeping changes just a few years ago in the lending world, the government was still getting complaints from borrowers that they didn’t like finally seeing the closing statement at the closing table when they were expected to sign everything.
“They now get the closing statement prior to the closing so they can ask any questions and feel confident that what they are doing is right for them,” Payne says.
However, the lenders, appraisers, closing attorneys and others in the mortgage industry have had to go through a lot of training sessions and webinars. Plus, there has had to be rewriting of software programs.
“But the consumer doesn’t know anything about all that stuff. We just closed a TRID loan, one that was taken after Oct. 3. It all went smooth. There was no blood shed,” she says humorously.
Cautious Mortgage Applicants Applied Prior to the Change
Before the rules went into place, the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey showed a 25.5 percent increase from the week before. People were trying to get ahead of the new rules in fear that things would be slowed up in the processes.
“But these new rules have the most impact on the title companies and the closing attorneys. They had to meet certification standards that they have never had to do before,” Payne says. “It cost them a lot of dollars to get up to this certification level with their software and following all the procedures that they’ve never had to be held to before.”
Overall, she adds that the new rules and forms provide a lot more transparency to borrowing money for mortgages. Plus, all the papers are done alphabetically, and the forms are more dynamic, making it more easily understandable, she says.
“They want to ensure that the homeowner is a confident homeowner and very much educated on this decision,” Payne says.
Delays are Possible as Lenders Learn New Systems…
There might be some delays for borrowers for a while since many lenders are dealing with two sets of forms right now on their software – running the before TRID and after TRID applications.
“I used to say that this isn’t rocket science, but now it is,” she explains. “You really have to think about which computer screen to put this information on. We are juggling a lot of balls up there. Everybody knew about this for a long time. But these are sweeping changes.”
Eventually, she says, that all these changes will cost the consumer.
“All of this isn’t happening without a cost. Who those costs will be placed on remains to be seen. The consumer will ultimately have to pay more,” she says.
Consumer Financial Protection Bureau Director (CFPB) Richard Cordray told the Mortgage Bankers Association members at the recent annual convention that he was “disturbed by reports I have been hearing about the vendors on whom so many of you rely.”
Apparently, some vendors performed poorly in getting their work done ahead of time and putting many of the mortgage lenders on the spot with changes at the last minute or even after the deadline of Oct. 3. The CFPB announced the TRID rule about two years ago.
…But You Can Speed Up the Process
The MBA came up with the brand, “Know Before You Owe” to describe the TILA RESPA. On the MBA website, there is a Consumer Alert that explains ways a borrower can help speed the new mortgage process.
Some of those tips include:
- Read the Loan Estimate document carefully so any questions can be resolved early in the process.
- Avoid last minute changes to the loan to avoid delay and prevent an additional three business day wait.
- Work with your real estate agent and the seller’s agent to conduct home inspections and clear any contingencies as early in the process as possible.
- Schedule your final work through the house well before the Closing Disclosure is issued.
- Tell your lender as soon as possible about any changes to the transaction that you think might impact the loan or the closing.