On October 3, 2015, the new TILA-RESPA Integrated Disclosure (TRID) closing rules went into effect. Designed to make it easier for homebuyers to shop for and compare mortgage products, some feel TRID was the most time consuming “preparation-for-change” event in the lending industry’s last 30 years. Others say it’s gone quite smoothly and was a welcome change to increase clarity and consistency.
So was the concern about the TRID transition justified or just hype? The answer could depend on whom you ask.
Hype Makes Headlines
There was a terrific amount of media attention before the TRID transition, but for those who prepared, most say it went smoothly and has not impacted people dramatically.
Janell Anderson, CRP, NEI’s Senior Vice President of Domestic Operations, said, “The experience at NEI went extremely smoothly. TRID’s intent will be positive in both the short and the long terms for the real estate, lending and relocation industries -- as well as helping to protect individual consumers.”
Realtor.com reported the industry panel at the Realtors Conference and Expo in San Diego had encouraging things to say about the new regulations. Dan Chiesa, Vice President of National Mortgage Production for Quicken Loans, presented that some loans were delayed, but most of the loans the company closed since the rules took affect closed no later than the typical Quicken loan did before the change.
Likewise, Richard Cordray, Consumer Financial Protection Bureau Director, relayed at a speech during the Consumer Federation of America Financial Services Conference that the housing industry’s concerns about TRID may have been overblown. “When our ‘Know Before You Owe’ mortgage disclosure rule took effect two months ago, some again asserted that its implementation would paralyze the market…Reports from participants across the market seem to be indicating that implementation of the new rule is going fairly smoothly,” said Cordray
Nothing Like Experience
National Association of Realtors (NAR) economist Lawrence Yun said November’s U.S. home resales drop, their sharpest drop in five years, was likely due to TRID regulations that came into effect in October (as well as
sparse inventory and affordability issues impacting a large buyer’s pool). Yun said it appeared lenders and closing companies were being cautious about using the new mandated paperwork.
Although NEI did not experience closing delays, the Realtors Confidence Index in November reported that 47 percent of their respondents said they were experiencing longer closing times compared to last year—a rise from 37 percent in the previous month of October. NAR’s Yun said the longer closing times may be delaying home sale transactions until the following month, making the slowdown in existing home sales for November temporary.
Some smaller lenders felt that the TRID anxiety was not overblown because the stress and new documents greatly impacted their productivity – but anxieties are expected to diminish as they become more experienced with TRID compliance requirements.
One TRID challenge faced by companies was the education of relocating employees. NEI emphasized the importance of:
- Using the correct forms...for instance, the Good Faith Estimate was replaced with a Loan Estimate and the HUD-1 Settlement Form was replaced by a Closing Disclosure
- Completing the forms accurately and sending them within the required timeframes; and
- Reminding them that the TRID regulations require more time than closings before TRID went into effect. Lenders now prefer to receive relocation-specific documents much earlier in the process than before to ensure enough time to correct any inaccuracies or collect missing information to close successfully.
NEI advises employees to be proactive in reviewing their personal home purchase situation with a qualified lender who is experienced with TRID changes as soon as possible after the initiation call. Just as important as finding a lending company who understands TRID rules is selecting one who is also fully knowledgeable about the new documents and timing requirements.
There have been a handful of employees who submitted incorrect forms provided by smaller lenders that hadn’t prepared as well as others for TRID. However, after NEI consultation, they were able to send the correct documentation the next day. Because of such proactive methods on NEI’s part, most relocating employees have not seen significant differences in process or negative impacts.
“It can take a little bit of getting used to seeing things differently on forms than before, but it’s been a seamless transition,” says Vicky Oakley, NEI’s Director of Closing Services. “This is due to our proactive preparation, working together with Stewart Title and our lending service partners to conduct detailed on-site and WebEx training.”
Worth the Silver Lining
Time will tell, but it seems that those who prepare, educate employees and continue to follow the set rules and forms should have little to worry about.
“There’s also a huge silver lining in the end,” says NEI’s Mitch Ulrich, CRP, Senior Vice President – Global Mobility Strategies: “The regulations will make it easier on individual buyers and bring better clarity, transparency and consistency for all.”