In the months leading to TRID implementation I heard many fears of how bad it was going to be after October 3rd. Closings would take 3 months or more. Many title companies would close their doors because they could not meet the new standards. Real Estate professionals would have difficulty keeping up with all the changes and many would leave the business.
To say there was some apprehension about TRID would be an understatement. I may have even muttered once or twice, “TRID is going to ruin Real Estate!” Well, it’s now November, TRID is finally here, and the sky did not fall.
But what exactly is TRID? And how did it really affect what we do? TRID stands for the new TILA RESPA Integrated Disclosures. These new disclosures replaced the initial and final Truth-in-Lending Disclosures, The Good Faith Estimate, and the HUD-1 Settlement Statement previously required for most mortgage loans. These changes took effect on October 3rd, 2015 and affects mortgage loans on real property. TRID does not apply to home equity loans, reverse mortgages, or mobile homes not attached to real property.
In addition to requiring new disclosures, TRID also affects the timing and deadlines of pre-closing activities. One important change is that deadlines now extend forward from contract dates, instead of counted backward from closing dates. For example, loan application with loan estimates must now be provided to buyers within three business days of lenders receiving the following items from a borrower or his or her agent; Property Address, Loan Amount, Income, Estimated Value of the Property, Name, and Social Security Number. A great acronym to remember these application triggers is ALIENS.
This can be very confusing for buyers as well as for agents. Imagine your buyers receiving a loan applications for every home they tour. To avoid such a scenario, consider sending property addresses to lenders only after you have an approved contract. Pre-approvals should be obtained without providing property addresses to lenders.
In my recent discussions with some of Central Florida’s top Real Estate agents – agents like Jenny Wemert who leads the Wemert team, a vastly successful Real Estate team in Central Florida, and George Philbeck of the Sosa/Philbeck Realty group, local leaders in the sale of bank owned and foreclosed properties in Florida – the consensus is that it’s still too early to know all of the implications of TRID, but thankfully its changes have had little impact on their daily operations.
Both George and Jenny agree that the key to worry-free transactions is awareness of TRID changes, and preparation. Jenny says as long as you prepare your clients and set expectations, you have nothing to worry about. She also advises that the best way to help your lenders is by educating your buyers about TRID, and about the entire buying process.
George says the biggest fear about TRID was delays. Some agents thought closings would take 30 or even 90 days after TRID was implemented. That just wasn’t realistic. There is always potential for delays, but that can be easily overcome by proper planning and good communication.
While it’s true that we are still in the initial stages of TRID implementation and many loans initiated on or after October 3rd have yet to close, I’m certain that armed with the knowledge of these new timelines and TRID requirements, most agents will experience minimal delays in their day to day operations.
My personal experience with TRID so far has been positive. I’ve accelerated my buyer’s timelines to complete inspections, and I’ve noticed appraisals and surveys being ordered and completed by lenders much faster. I also have assurances from my lenders that my closings will occur on time or sooner than expected. My hope is that your experiences with TRID mirror my own.
If you view these changes as positive for our industry and our customers, you will be successful. Change is often hard to accept. However, any business that fails to change with the demands of their industry, is doomed to fail.
In Real Estate, change is often prompted by the need to protect a consumer, whether buyer or seller, in an ever changing market. As Real Estate professionals, it is our responsibility to understand TRID, understand the changes required, and minimize its impact on our business, while at the same time protecting our customers.
The anticipated stress, complications, and many of the fears leading up to the implementation of TRID have so far failed to materialize. That’s not to say that there will be no complications in the weeks to come. However, armed with the knowledge of what TRID is, and how it affects our business, Real Estate professionals can expect continued success, while helping others achieve their dreams of owning a home.
Knowledge is power and I urge all Real Estate professionals to learn more about TRID by contacting their lenders, and by visiting the following TRID resource links for more information: Consumerfinance.gov/regulatory-implementation/tila-respa/#disclosures and Consumerfinance.gov.