The implementation date for TRID is just around the corner, many real estate businesses are wondering just how the change will impact their processing. The goal of the changes for the Integrated Closures now to be used in home purchases is to make them easily understandable, but it won’t surprise any real estate business owners that these changes are going to take time in order to work out all the kinks.
Keep in mind the follow three facts when getting your clients ready for the process.
Stop Using Old Forms
The basic premise of this new implementation is that the old disclosure forms are on their way out in favor of new forms that explain the loan estimate and the loan closing. The new Loan Estimate form combines the Truth in Lending Disclosure with the Good Faith Estimate with a goal of simplifying matters for the buyer. This disclosure lays out the costs, risks, and the loan’s critical features.
Until the consumer has received the loan estimate and indicated the interest in moving forward, the lender can’t impose any fees (aside from fees linked to acquiring the credit report).
Disclosures Must Meet Strict Timelines
When a consumer applies for a loan, the lender has three days to provide the Loan Estimate form. This is a strict three business days from when the lender has been provided with the applicant’s name, Social Security number, income, property value estimate, and the total amount of the mortgage the consumer hopes to receive.
The Closing Disclosure also has to be provided a minimum of three business days before the consumer is contractually obligated for the mortgage. This is usually the closing date, but it is important that lenders work backwards from the closing date to meet these requirements. Major changes to the loan terms initiate a new three-day period.
The Date is Coming
From October 3rd on, lenders need to be prepared to comply with these requirements. It is anticipated that this could influence new processing guidelines on up to 40,000 transactions every single month. The bottom line is that lenders must be prepared to act quickly.
Make sure that all your staff are clear on what this means for your processing. Think about new systems for keeping track of deadlines so that the staff know when the deadlines are approaching. With multiple loans entering the closing phase all at the same time, you’ll need to be sure to document that you have provided these disclosures within the deadline. In addition, think about how you’ll handle any major changes in the loan details that would warrant a new three-day deadline. Having systems in place to help address these challenges will be crucial to success.