The real estate and mortgage industries are up in arms about the upcoming launch of the TILA RESPA Integrated Disclosures (TRID), a new combined mortgage disclosure regulation that impacts real estate transactions from the way consumers shop for a mortgage up front, to the way mortgage loans are closed on the back end. It is important to understand the “why” of this regulation.
A real estate purchase is generally the largest financial transaction of our lives. Rushing into and through the process can leave consumers with little understanding of their obligations under the contracts and mortgage paperwork.
With consumer-driven fraud on the rise, regulators want lenders to take more time evaluating prospective borrowers. It can be easy for a consumer with a blemished financial history to maintain a financial profile for 30 days, but if that time is lengthened, issues may come to light. Longer transaction times may help lenders uncover potential roadblocks in a loan file.
The CFPB interviewed thousands of consumers, and the new regulations are a result of those survey findings. TRID has an impact on how we do business together and the timing of transactions.
On the Back End – What’s All the Fuss?
Upon closing the transaction, the HUD and Final Truth in Lending (TIL) documents will be replaced by the Closing Disclosure or CD. TRID requires that the consumer receive this disclosure three business days prior to the closing or consummation of the loan. The loan must be re-disclosed and the closing date pushed out if any material changes are made to the mortgage that alter the Annual Percentage Rate (APR), the mortgage program changes, or a pre-payment penalty is added. A re-disclosure will re-set the three-business-day clock. Additionally, if the Closing Disclosure numbers change due to seller side credits or other issues, the lender must approve the changes prior to closing even if the three-business-day clock is running on time.
All we can do in response to TRID is tell the truth, keep our levels of communication and education high, make sure that all engaged in the transaction understand the “why” of these regulations, and work together as a team to get the transaction closed on time with no surprises.
As companies establish their policies, more will be learned about this regulation. In the meantime, embrace the change as a way to improve the transactions for the consumers we serve.
We will get through these changes if we all work together to make the purchase of real estate a happy transaction.
A 25-year veteran of real estate, Amy Tierce (NMLS# 15695) is the regional vice president for Wintrust Mortgage in New England; a division of Wintrust Financial Corporation (a $20-plus billion financial services company based in Chicago), Wintrust offers a full product menu of programs, and Tierce is excited to grow the Wintrust footprint in the Greater Boston area while exploring new talent, recruiting new individuals and creating a team of dedicated individuals. Before joining Wintrust, Amy built Fairway Mortgage into one of Massachusetts’ top lenders.
Wintrust Mortgage is a division of Barrington Bank & Trust Company, N.A., a Wintrust Community Bank NMLS #449042, an equal housing lender.