There is a big change coming for the real estate industry on August 1, 2015, and it is going to be a big change at the closing table for real estate agents and clients. The new TRID (TILA-RESPA Integrated Disclosure) forms replace the HUD-1 Settlement and Good Faith Estimate. The Consumer Financial Protection Bureau’s mission is to rebuild the mortgage banking landscape so that the industry will avoid the type of conditions that led to the Great Recession. The CFPB replaces the Department of Housing and Urban Development for oversight because HUD did not provide specific consumer protection.
Everyone agrees that increasing consumer protection is a desirable goal. Nevertheless, the unforeseen ripple effects from these changes could seriously disrupt how the closing process is conducted.
The most serious issues that will result from the new changes handed down by the CFPB: The new rules will require a new three-day waiting period when there are any changes in the TRID forms. The recommendation is to allow an extra 15 days to close your transactions. In other words, 30-day contracts will now require 45 days, and 60-day contracts will require 75 days.
A change of this magnitude is going to create unexpected ripple effects across the industry, not only for agents and clients, but for mortgage and title professionals, too. What can you do to be prepared?
First, make sure you attend a TRID training as soon as possible.
Second, if you’re a broker-owner, own a Mortgage Company, or Title Company, take steps to change your documentation to the new system as soon as it becomes available.
Third, associations and other companies that provide contracts to the industry must have the new forms ready to go well before Aug. 1, 2015. This also means that agents and brokers will have to be trained on these new forms, over and above what is required by TRID.
It could be a tough transition at first. What will be particularly thorny are transactions closing in late July. If they fail to close by Aug. 1, 2015, how will they be handled? Does entirely new documentation have to be drawn? How long will the delays be?
As we move closer to the August 1st date change, advise your clients that there will be unexpected delays in obtaining loan approval, potential changes in the documentation during the transaction, and a host of problems we probably can’t even begin to imagine. Start preparing now.
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**Courtesy of inman.com and Bernice Ross