Taking the Right Steps May Keep You from Delays
It’s difficult for everyone concerned when a closing is delayed. A new consideration has been added to the mix with the TILA-RESPA Integrated Disclosure (TRID) rules for mortgage applications submitted on or after October 3, 2015.
The new Closing Disclosure has been put in place to add protection for customers by moving the Closing Disclosure timeframe from 24 hours to 3 business days, if hand-delivered, and 6 business days, if sent by mail. TRID rules will require the lender to give customers 3 to 6 more business days under certain change in circumstances to review the closing disclosure.
Three Things Will Require a New 3-day Review for Your Buyers:
- The APR (Annual Percentage Rate) increases by more than 1/8 of a percent for fixed-rate loans and ¼ of a percent for adjustable rate loans. A decrease in APR will not require a new 3-day review.
- A prepayment penalty is added, making it more expensive to sell or refinance.
- The basic loan product changes, such as a switch from a fixed rate to an adjustable interest rate or to a loan with interest-only payments, or a switch in terms, for example, going from a 30-year mortgage to a 15-year mortgage.
This should help:
We hope this information will provide help to ensure new October 3, 2015, TRID requirements don’t delay your client closings:
- The Closing Disclosure must be delivered to the buyer/consumer at least 3 business days prior to the scheduled closing date. If by mail, the disclosure should be delivered/mailed 6 business days prior to the scheduled closing date.
- To meet the Closing Disclosure delivery requirements of 3 and 6 business days, mentioned above, the closing agent should get information to the lender 10 to 14 days prior to the closing date for completion of the Closing Disclosure. We suggest you communicate to the closing agent all your buyer paid charges, so the closing agent can comfortably get information to the lender. Plus, remember an additional 3 to 6 more business days may be needed, if a re-disclosure is triggered.
- The closing agent will need your real estate company’s state license number and your individual real estate number for the Closing Disclosure. Every file should contain the listing and selling agents name and phone number, contact information for the buyer and seller and the lender’s contact information.
- Keep in mind that depending on the agreement, the lender, not the closing agent, may be preparing and delivering the Closing Disclosure.
- Consider booking the actual closing date earlier in the process. This will help everyone in the process, encouraging everything to be completed in a timely manner. You can use the booked date to help prorate taxes, determining HOA (Homeowner’s Association) dues, calculating odd days’ interest and so on.
- Make sure any repairs that need to be completed and proof of the completion/re-inspection should be done prior to the closing.
- If applicable, well certificates need to be recorded. We suggest you solve this at the time the property is listed. Be clear on who is paying to record any well certificates.
- Study the new Closing Disclosure form/format so you are able to answer questions from buyers and sellers. The new rules could affect the dates you put in place. Make sure they are realistic.
Please note, changes/adjustments that affect the value of the property may trigger additional disclosure and review periods.
The laws are continually changing to protect your customers, and the information can be hard to digest. If you have questions, give me a call or send me an email. I’m here to help make the process as smooth as possible for you and your customers.
Loans are subject to credit approval.
Sources include: Old Republic Title company’s “Top 10 Things Real Estate Agents Should Know About the New TILA-RESPA Integrated Disclosures (TRID)” and the Consumer Financial Protection Bureau’s “Will the new mortgage disclosures delay my closing.”