If you have bought or sold property with a mortgage since October of 2015 you
probably noticed some things have changed. If you are in the process of buying or
selling right now, there are some things you should know. The new mortgage
rules that the government put into effect last fall have changed the way
borrowers compare loan products and fees and regulates the timing of loan
disclosures.
The law that went into effect in October of last year is called the TILA-RESPA
Integrated Disclosure rule or TRID. The idea behind this change was to allow
consumers to shop around for a loan and have time to compare payments and
fees. The new disclosure form has all the closing costs and estimated cash to close
in a standardized format which makes comparing loan products easier for the
consumer.
There are benefits to the buyers with these new disclosures which not only give
them a clearer picture of the costs, but a period of time to go over the figures and
ask questions before they commit to the loan. The government felt that one of
the reasons for the lending crisis was that consumers were not given adequate
time to read the loan documents and ask questions before they had to close on
the property. These new rules require waiting periods before final loan
documents can be signed. There is also a low threshold for any changes in costs
from the initial disclosure period. The new regulations require the buyer to be
given the Closing Disclosure form at least 3 days before the closing so they have
time to review the final numbers.
This all sounds pretty straightforward and like a pretty good idea on paper but
how is it actually working? We have had about 10 months of working with these
new regulations and the biggest change we have seen is the amount of time from
accepted offer to closing. Before TRID, 30 days was a pretty standard closing time
frame. After TRID, 30 days closings are rare and now we are looking at 45 to
sometimes 60 days depending on the type of loan. The 3 day waiting period for
the Closing Disclosure can cause the closing to be delayed. The time period is 3
days not 72 hours and if one of the days is a federal holiday you need to add
another day. If you have a closing scheduled for a Monday, the Closing Disclosure
needs to be delivered the preceding Thursday by hand or the preceding Monday
by mail. All of the closing figures need to be in ahead of this time period for all
this to work properly. As we all know, closing figures can change at the last
minute and that could trigger a new Disclosure and a new waiting period. It is
vitally important that the lender and the title company have ALL the costs in
plenty of time to issue a correct Closing Disclosure. No one likes to have to delay a
closing and this is a big change from the way we used to handle closing
statements.
We have been very lucky in this area and have had minimal delays in getting
things to closing. Everyone does need to be aware of the extended time line for
closings after TRID and plan accordingly. For those of you that are looking to be
moved by the holidays, you need to act quickly. It is already September 11 and
with the new 45 to 60 day closing time, an accepted offer today may not close
until the end of October or middle of November. If you don’t want to be moving
in the winter then now is the time to make that offer. Or if you are a seller, time
to look at a price reduction to try to get an offer so you aren’t closing in
December. Keep these timelines in mind so you can plan your move and not be
surprised when you find out you can’t schedule your closing for 30 days like you
thought you could. For more information on TRID visit my website at
www.choicerealtyfreeport.com.