TRID – Was it Effective and Can it be Blamed for Closing Cost Delays?
TRID – Was it Effective and Can it be Blamed for Closing Cost Delays?
TRID (TILA-RESPA Integrated Disclosure) has recently been added to the long list of REALTOR® acronyms. October 2015 was the launch of this new rule that has created new methodology, structuring, and organization across the board for REALTORS®, buyers, title companies, and lenders. Each field has been impacted to some extent, whether small or great, creating extensive change in the closing process.
“Success or failure: When TRID works, it works great. When it doesn’t work, it is not a good experience for the buyer,” says David DeElena, Colorado REALTOR® and Broker Associate with Coldwell Banker.
What is working? What’s not working? What can you as the REALTOR® do?
Since the Launch of TRID: For Better or Worse?
We spoke with experts across the board to gauge their feedback on how the new system has progressed in the time that has passed since the implementation of TRID. The consistent answer: It has not been an easy adjustment.
“Though new processes were well thought out, the initial awkward and often clumsy flow has definitely improved in our shop as I am now not working 18 hour days anymore,” says Calvin Ann Evans, Compliance Officer at Universal Lending Corporation. “We now have far less investor suspense items and quality control deficiencies around TRID/KBYO as when first implemented.”
Fortunately, lenders and title companies alike have seen improvements in adjusting to the extended processes that TRID requires.
“Practice and repetition allow the process to be smoother for all involved,” says Rob Chaney, President of Loan and Mortgage Operations at FirstBank. Joint efforts have been absolutely necessary in order to keep processes going smoothly.
“Collaboration between title companies and lenders has been critical to the process,” says Noelle Lovato, President at Guardian Title Agency, LLC. “Early preparation of files and continual communication with the REALTORS® and lenders has allowed us to provide great service to our clients.”
Has TRID created an additional burden during the buying process with an improper refocus?
A recent ClosingCorp study from February 2017 revealed that the top 5 closing costs that most surprised homebuyers were mortgage insurance (24 percent), bank fee/points (23 percent), taxes (22 percent), title insurance (21 percent), appraisal fees (20 percent) and fees paid by the buyer vs. seller (20 percent). Al-most 25% of buyers still do not understand impending closing costs.
“Just learning by doing appears to have lessened the delays, but the issue of REALTORS® not playing the central role in helping with the final review of numbers is not a good development,” explains Dr. Lawrence Yun, Chief Economist and Senior Vice President at the National Association of REALTORS®.
David DeElena elucidated that while things have gotten better, he doesn’t believe TRID has achieved the goal that it was supposed to. “Buyers still do not know the figures that they need to know prior to closing,” says DeElena.
Benefits of TRID
Despite mixed feelings on TRID, there have been positive reviews of the new rule. “When TRID is performed within its expectations, buyers get their figures and are more financially able to be prepared for closing. This creates a smoother transaction with a lot less stress,” says DeElena.
“The forms are very consumer friendly and provide a much easier format to help consumers under-stand all the costs associated with the purchase of their new home,” says Chaney. “They provide a much simpler way to present the data.”
Evans agrees with Chaney and adds that TRID requirements have actually forced better communication between all of the settlement service providers and between the RE-ALTOR®, lender, and borrower.
“There can be problems if the consumer doesn’t understand that the Closing Disclosure (CD) can still change before closing, but overall, it has helped in early identification of issues that could potentially delay a closing,” says Lovato.
Negative Results from TRID
“The goal of TRID is noble,” say Yun. “However, the rollout and the lessening of trust development be-tween clients and REALTORS® do not necessarily serve the consumers’ best interest.”
Kim Woodcock, Compliance and Risk Officer at The Mortgage Company explains; “There is additional confusion due to the aggregate adjustment not being disclosed on the Loan Estimate (LE). Most lenders are in the practice of giving a cash to close worksheet. The worksheet takes into account the aggregate adjustment, but we are not allowed to disclose that on the LE. It does not seem logical that the LE is designed to be more accurate but a regulation prohibits us from making it as accurate as possible.”
“Lenders are giving “best guesses” on figures, and because of that, when they are off, they’re off. Meeting a deadline with inaccurate information is of no value,” adds DeElena.
Lovato brings up another hurdle by explaining that transactional challenges can still occur with accurate disclosure of the CD three days be-fore closing, therefore requiring multiple disclosures to the buyer before closing.
Can TRID be partly blamed for Closing Cost Delays?
There are many things that factor into closing cost delays; one that has been a continued problem is appraisal delays. How much, if any, of these delays fall on TRID?
“TRID has added new timelines and new milestones to the mortgage process that has caused closings to take longer. With that said, I don’t think ‘blame’ is the right term here,” says Chaney. “The new regulations have set up a new paradigm, due to new timing requirements, which has taken the industry time to get used to.”
Lovato believes that with experience, the industry has adjusted and closing delays have been minimalized.
Yun agrees that the reported delays are fewer; however, he believes other long-term effects have developed. “Now with REALTORS® not getting the documents directly,” says Yun. “It lessens the role and some consumers may misread the documents that lead to future problems.”
What Can You Do?
There are ways that you as the REALTOR® can assist in creating more positives and fewer negatives in the eyes of your clients.
The best thing you can do is to take the time to educate your buyers. Whether you believe the glass is “half full” or “half empty”, TRID is here to stay. Evans recommends referring back to the Colorado Inter-Industry TILA-RESPA Integrated Disclosures Best Practices document that was posted by DORA, the CMLA, and All-Regs.
“Communicate. Communicate. Communicate,” says Jerra Ryan, Vice President of Compliance at First Choice Loan Services Inc.
Chaney agrees with a focus on communication, and advises REALTORS® to work with lenders who give in-sight into their process and work with clients to understand the process and what steps they to take to ensure a smooth transaction. “Tell the lender and title company when there are changes to seller credit or price changes on the property,” says Chaney.
“REALTORS® can be more proactive – the challenge that REALTORS® have now is that they are so busy that things are slipping through the cracks,” added DeElena.
“The best advice we can give to RE-ALTORS® is to continue to keep their clients well informed about the process – and to make sure the buyer knows who to call with any questions,” says Lovato.
You can ease issues for your clients by being proactive, communicating effectively, and continuing to educate your client and all involved.
What do you think about TRID? We would love to hear from you on what REALTORS® can do to make the process better. Email us at Communications@ColoradoREALTORS.COM.