On October 3rd, the Consumer Financial Protection Bureau enacted the new TRID rules (TILA-RESPA Integrated Disclosure), which combines four different, previously required but overlapping disclosures into an easier to understand Loan Estimate at the start of the loan process and a Closing Statement just before closing.
The new documents are designed to help consumers better understand key features, risks and costs of the mortgage loan they are applying for and changes the timing of some activities in the mortgage process to best serve and protect the borrower. Because of these new disclosure requirements, it’s critically important that buyers and real estate agents are aware of how any issues can potentially delay the closing, which could affect agreements made in the contract of sale, interest rate locks and more.
The TRID rules require new disclosures be generated if the APR moves by more than .125%, a Pre-Payment penalty is added to the loan or if the borrowers change their loan product before closing. Once any new disclosures are generated, the waiting period is 3 days if emailed and 7 days if sent through the Postal service, which can possibly result in unhappy buyers and sellers.
Previously, lenders have been very accommodating to last minute closing requests, whether it’s to avoid a buyer's rate lock expiration or a seller that suddenly needs to accommodate a change in their next home purchase. Borrowers and their Realtors can no longer decide on a Monday that they want to close on Wednesday – no matter who it’s going to affect!
The key to avoiding any issues is detail and communication. The buyers should be aware that any loan changes or corrections, title issues or late paperwork could potentially postpone the closing as new disclosures would possibly have to be sent and documented. It’s more important than ever that the Realtor, attorneys and loan officer communicate throughout the mortgage process and set the proper expectations in order to ensure and smooth and happy closing.
Please contact your Contour representative for any questions or more information on this new mortgage lending process.
