Measures intended on improving homebuyers’ understanding of the real estate closing process will go into effect this weekend.
New home loan applications received on or after this Saturday will be subject to the Consumer Financial Protection Bureau’s final rule for TRID. TRID stands for TILA-RESPA Integrated Disclosures, forms that will replace existing closing disclosures as well as the HUD-1 settlement statement. The introduction of these new forms will come with new procedures and deadlines.
These changes primarily affect operating procedures for mortgage lenders and, by extension, their third-party service providers such as title companies. However, consumers should be prepared to set aside more time for closing, especially in the beginning as the industry conservatively adjusts its tack.
Federal Title & Escrow helped UrbanTurf highlight the most relevant changes that will come with this move from the standpoint of the consumer.
More Time to Review Closing Documents
The Closing Disclosure form consolidates the final Truth in Lending disclosure with the HUD-1 and must be delivered to the consumer at least three business days prior to the scheduled closing date. This is known as the 3-Day Rule.
A three-day window is great for consumers who can use the time to fully review their documents, ask questions and gather funds and other items needed for closing, but the 72-hour window is firm.
If the terms or costs of the home purchase change prior to closing it’s likely it will trigger a closing delay of three business days. One exception to the rule is a “bona-fide personal financial emergency” such as the imminent sale of a consumer’s home at foreclosure.
Timely Communication Could Avoid Closing Delays
Because timelines are firmer under the new rules, it’s important for consumers to provide their lenders and closing agents with information for their closing as soon as it’s requested.
Most lenders and title agents are implementing electronic document delivery services to monitor communication with consumers. The same technology should make it easier for consumers to submit necessary information and forms.
Electronic document delivery will also potentially improve the security of the consumer’s non-public personal information, another consideration of TRID implementation.
No More Last-Minute Closing Surprises
The final rule for TRID attempts to improve consumer understanding by simplifying the documents and disclosures buyers receive regarding their home loan and real estate closing. It also aims to cut down on settlement delays by instituting a strict series of deadlines.
The rule also adds types of closing costs to the “Zero Tolerance” list meaning lenders who increase these costs after the established deadline will face penalties. Among these costs are lender or broker charges, fees charged by a service provider selected by the lender and charges for services for which the consumer is not permitted to shop.
The new forms and procedures will make it easier for consumers to receive the information they need to make the right financial decision for themselves well in advance of the closing day when they are expected to sign on the dotted line.
This article originally published at https://dc.urbanturf.com/articles/blog/what_dc_homebuyers_need_to_know_starting_monday/10403.
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