TRID's 3-day rule makes for non-negotiable closings; are you ready?

by Rachel.Norvell11 Mar 2015
The new integrated disclosure rule is set to take effect in August 1 and is something the mortgage industry has been warned about again and again. However, while many are aware of the rule, they are unaware of it's key changes, according to an industry panel at the 32nd Annual of MBAs in Atlantic City.
"The reality is that this is going to be expensive and cumbersome, and it's going to be difficult, but in the end, the biggest challenge is how you are going to cope with it," Stanley Middleman, president and CEO of Freedom Mortgage, said during the panel. "Companies need to dedicate tens of thousands of man hours to prepare for this, because as an industry, I'm still not certain we are prepared."
The new TILA-RESPA Integrated Disclosure (TRID) rule establishes new forms, which are replacing the standard disclosure forms known as the Good Faith Estimate, Truth in Lending and HUD-1.
The new Closing Disclosure, in particular, must be provided to the consumer three days before closing.
"To a great extent, it's a game changer, because the way we have disclosed loans in the past has changed dramatically," Peter Norden, CEO of HomeBridge Financial Services, said. "I would say the biggest issues are more on the closing side with the three-day rule, as well as the changes in the documents themselves."
Gone are the days of making last minute changes to loans, and real estate professionals and mortgage brokers aren't really use to having full disclosure wrapped up within three days of closing, Norden said.
"It's no longer where you can change a closing number or a settlement number the day before the loan closes," he added. "That is a major game changer for every realtor, every mortgage broker, every closer." 
Mortgage brokers also can't just move loans from one lender to another, something Norden said is a pretty common practice. "They would have to start from scratch."
The new Closing Disclosure is typically prepared by an attorney, settlement or title professional in collaboration with a mortgage lender.  Accuracy and completeness are critical as failure to properly prepare the forms will result in delays to a closing of a loan.
The new TRID rules now  leave lenders with 100% of the responsibility, which leaves mortgage pros with another challenge -- informing closers of the changes.
"Title insurers and closing agents across the country are going to find their roles change, where the facts will be dictated to them and they will not be in control," Middleman said. " Loans will be non-adjustable and they can't correct or change them on the fly, and that's way different from how it was done in the past. It's going to cost everyone more money"
Middleman added that all of the issues that used to push transactions cannot happen anymore. "It's the law and nothing can change three days before closing."

A recent poll questioned 1,743 settlement agents nationwide from February 20 to 24 to inquire about their preparations for the CFPB’s new integrated disclosure rules. The results found 92% of the respondents were familiar with the new rules, but only 36% were familiar with the new closing disclosure form, which is available with instructions on the CFPB website.
The Consumer Financial Protection Bureau (CFPB) requires lenders to use the new integrated disclosures beginning on Aug. 1, 2015.


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