Early this month, the Truth in Lending Act – RESPA Integrated Disclosure – better known as TRID – went into effect nationwide. It adds a new wrinkle to the home-buying process, according to lenders.

Pat Polson, senior vice president and central division manager for SunTrust Mortgage, spoke to members of the Brunswick County Association of Realtors in late September, telling them what changes TRID would bring.

The local Realtors group invited Polson to speak because some members had voiced concern about the advent of the new disclosure process, said BCAR’s Dawn Anderson.

Polson said he believes the TRID, which comes from the federal Consumer Financial Protection Bureau, is more consumer friendly and transparent than the document it replaces, the HUD-1 Settlement Statement.

And, unlike the HUD-1, which a homebuyer receives at the closing table, the TRID Closing Disclosure must be delivered to the buyer at least three days before closing, Polson said.

He said he likes TRID’s new closing disclosure because, while it contains many elements of the HUD-1 document, it provides more explanation to the buyer and thus it “empowers them to make a more informed decision.”

Some lenders have expressed concern about a provision of the TRID that requires if there are corrections needed to the closing document, it can trigger another three-day review process, delaying the closing.

Polson said that there were only three conditions that require another three-day review:
• if the APR changes by more than 0.125 percent;
• if a prepayment penalty is added to the loan conditions after the loan is committed;
• and if the loan term – fixed versus adjustable, or the number of years – is changed.

Mark Vernon, a loan originator with PrimeLending, said he believes that the next couple of months will be “very costly, as all in this industry will learn how to adjust to these new processes.”

He said he is concerned that transactions will not close on time, costs to close normal transactions will probably increase by $500 to $700 and “anxiety will prevail.”

“Certainly any measures to educate and protect consumers are welcomed by any professional,” Vernon said in an email. “It will be an education process for all, especially with real estate professionals that do not take heed to the new procedural constraints lenders have to follow.”

“As with the adjustments made after the implosion of the sub-prime market and subsequent tightening of lending guidelines, these too will take time to understand and embrace.”