Major changes and overhauls have been taking place in most professions. The medical field has changed significantly over the years, insurance benefits and policies have been restructured, and the education field has revamped teacher evaluations, curriculum, and more. It’s just a fact of life right now. And real estate isn’t immune.
Since the passing of the Dodd-Frank Act in 2010, lenders, title companies, appraisers, and Realtors have all been dealing with major changes. Most of the changes have merely been annoying, and some have caused a bigger hit to the pocketbook for buyers and sellers, but nothing has been as drastic as the changes that recently took effect October 3rd, 2015.
This latest set of reform, known as TRID, is causing major delays for real estate clients. What is TRID? TRID is slowing the buying process by forcing our lenders and title companies to scramble, interpret gray areas, and create new computer programs. And, like most changes thrown upon us, there is nothing we can do about it. The best thing to do is to let you know how these changes affect you.
- New disclosure for buyers. Your REALTOR will be asking you to sign a form called (in Michigan) an “Authorization to Furnish TILA-RESPA Integrated Disclosures”. This is fancy talk for giving your agent permission to communicate with the lender and the title company. Imagine your deal being a three legged stool. The house you want is the seat, or top of the stool, and you have three support legs holding it up. One leg is the lender, one is the title company, and one is your agent. If one of those legs is missing, your stool will topple. The same thing will happen if your agent can’t talk to the others. Please sign this disclosure.
- Consummation Agreement/Closing Statements. New name, new format. Prior to Oct 3rd, you were supposed to be given your HUD/Settlement statement within three days of closing. If there were any changes needed, it could be done all the way up until the time you were sitting at the closing table. This has changed. You will be given your consummation agreement / closing statement three to ten days prior to closing, and NO changes can be made to it between then and closing. If a change is made, you have to start your 3-10 day clock over again. (The discrepancy in the timeframe is an undefined gray area of when/how you received the documents for review. Your lender will let us know when the clock starts ticking.) If you had inspections, a home warranty, or anything else done and you were planning on paying for it at closing, then you, your lender, and your agent need to make sure those charges are on there. Double check your interest rate, your tax proration, your down payment, house insurance and closing costs. Check all your fees and charges to make sure they are correct, otherwise you will be faced with a delay in closing.
- Back to Back closings. It was always a little tough to close on your old house and then close on your new house without leaving the table, but it was possible. This isn’t the case anymore. The suggestion is to allow a 7-10 day timeframe between closings. Why? See #2.
- Your deal will take longer to close. Realtors are being advised to write in the purchase agreement that closing will take place within 60 days. Previously, closings would take 30-45 days. The thought is that this will loosen up again once all the lenders and title companies become familiar with the new systems, but until then, it is expected to take 60 days from the time your offer is accepted to reach the closing table.
Change is hardly ever any fun. It takes patience and understanding. When I go to a restaurant and my waitress is training someone new, I am instantly annoyed. But after a minute of impatience, I remember that no one likes to be new at something, and the waitress is probably feeling stressed and aggravated, too. It won’t help anyone to show my irritation, and I decide to be extra patient and polite because this is no one’s fault, and there is nothing I can do about it.
That’s how we all need to view TRID. Buckle up, expect some bumps, and then just go along for the ride. With the help of your lender, title company, and REALTOR, we’ll get you to your destination: Your new home.