Many of you have probably heard about the rather extensive regulatory changes to the mortgage disclosure process, starting August 1st. (update: new CFPB proposed deadline is October 1st) While many details still need to be worked out, here is some basic information to help you see how this may affect your buyers.
What is it?
It is the integration of disclosures of the Truth in Lending Act & the Real Estate Settlement Procedures Act.
When will it be effective?
An application with a date on or after August 1, 2015 (updated: October 1, 2015) will be subject to TRID rules. Applications dated prior to that date will close under the current rules.
What will change?
The “up front” Good Faith Estimate and Truth in Lending disclosures will be replaced with a single Loan Estimate (LE) disclosure. The final HUD-1 and Truth in Lending disclosure will be replaced with an integrated Closing Disclosure (CD).
Timing is everything!
The lender must provide the LE within 3 business days of the application. The CD must be provided 3 days before the closing. Changes can be made after the CD is provided, but some changes will trigger an additional 3 day waiting period.
What to expect.
Since the lender is responsible for preparing the LE and CD, TRID potentially changes the way lenders and title companies interact. As with any change, you may see some modifications during the first month or two as all parties involved work to streamline processes. At Summit Mortgage we have already begun working on our new processes to make sure we will be well prepared for this change, minimizing any delays.
How will this affect my buyers?
This change puts even more value on companies that have solid processes and highly experienced people in place, as it requires knowledgeable professionals and spot on timing to ensure loans close on time. At Summit, our team approach, ability to respond quickly to changes and expert staff make this a positive reform. Your buyers will benefit from information that is easier to understand and you can stay confident knowing their loans will continue to close on time with Summit.
Why is this necessary?
Separately, the current TILA and RESPA disclosures are difficult to administer and not very helpful to borrowers. The new integrated disclosures provide better information to the borrower. (I think our regulators got this one right!)
If you have any questions regarding these new regulations or how they may affect the buying process, please don’t hesitate to your Summit Mortgage Loan Officer. We look forward to sharing a successful 2015 with you!