Buying or selling a home? Patience is a virtue!
The mortgage process has been daunting from some homeowners and a new rule from the Consumer Financial Protection Bureau (CFPB) is meant to allow consumers more time to review documents before closing on their transactions. In theory, slowing down the pace a bit could be beneficial to some homebuyers. The overall result, however, could increase the timelines for closing the transaction for all home loans even when there is the need for speed.
The new rule will go into effect on August 1st and will combine two traditional disclosures into one, at the initial application and at the closing itself. TRID is the acronym for the Truth In Lending RESPA Integrated Disclosure and will be the hot topic for several months as lender and settlement agents prepare and implement the changes required. The traditional Good Faith Estimate and the TIL (APR disclosure) will now be one document titled the Loan Estimate. The HUD-1 Settlement Statement and the Final TIL, will now be called the Closing Disclosure. The language and emphasis on critical information appears to be more consumer friendly, but will take some getting used to for the industry. Possibly delays in the closing are due to a three business day wait period for consumers to review and compare their final figures to the ones initially disclosed to them by the lender. An error in the APR of more than 1/8% on a fixed rate loan would cause an additional 3 day wait period to occur. While lenders and settlement agents strive to not have errors at closing, a borrower might change their mind about the loan product or term during this three day period and thus, we begin anew.
As with any new change, lenders and settlement agents will be slowing down to make sure they do this right. The goal will be do it right, do it once. The penalties for not complying are severe and no lender wants to incur the wrath of the CFPB. So as they say in the traffic reports, expect delays. But don’t think there is a short cut – breathe in breath out, move on!
Call us today to find out about your mortgage options!
By Pam Woodall