If there is one thing that Realtors, mortgage brokers, buyers and sellers all have in common, it’s that everyone wants a successful, timely closing for the transaction. There is a widespread understanding that delays bring additional costs and effectively throw a wrench into a particularly emotional process, especially for buyers.
When the final implementation of the TILA-RESPA Integrated Disclosures (TRID) go into effect in August, it will be much harder for anyone to receive a seamless, hassle-free transaction. TRID was created as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is being directed by the Consumer Financial Protection Bureau (CFPB).
In keeping with its stated objectives, the CFPB inserted a number of waiting periods into TRID that were designed to protect the consumer. The purpose of the delay periods is to give the consumer ample time to thoroughly review any change to the transaction and the closing statements that follow.
With the new rules, any type of change that occurs in a transaction that results in the APR being changed by as little as an eighth of a point will make it necessary to generate a new closing disclosure, as well as a new waiting period for the consumer to review that disclosure.
Considering that seller credits and many other fees are often negotiated during the course of an average transaction, and delays are typically not in anyone’s best interest, the new TRID rules are incredibly significant.
“Expect a one- to two-week delay in closings,” said Ken Trepeta, director of real estate services of the government affairs branch for the National Association of Realtors, when describing the impact of TRID.
This is especially disconcerting since new fees are usually generated when transactions go beyond the date of closing. If the new fees increase the APR, a new disclosure has to be created, along with a new waiting period. This could be a vicious, expensive cycle!
Isn’t it ironic? The new integrated disclosure rules are certainly well-intended; however, the impact on the consumer and everyone else in the real estate industry will be far from positive. That is why many consumer groups, and Realtor and mortgage broker associations are asking for a delayed implementation of the rules to see how everything will play out in the real world.
One of the likely impacts from TRID is that any changes that occur in a transaction will need to be communicated one to two weeks in advance, to avoid delays.
The bottom line for Realtors is to find a mortgage broker with a complex understanding of the new rules and a commitment to build the relationship as a partnership. A mortgage broker who believes in the importance of continuing education and focuses on providing consistent, timely communications will help to ensure the client receives maximum value, and that is what it’s all about.
If you have questions about the new rules and what they will mean for you, please contact me.
Patrick Stoy has 16 years of mortgage lending experience. Patrick is CEO of Wilmington-based Market Consulting Mortgage, which he started in 2005 with a mission to build lifelong customer relationships by providing real value. To learn more about Marketing Consulting Mortgage, visit www.macmtg.com. Patrick can be reached at [email protected] or 910-509-7105.
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