New Closing Rules
The mortgage banking landscape changed significantly on October 3, 2015 with new closing rules brought forth by the Consumer Financial Protection Bureau (CPFB). The agency replaces the Department of Housing and Urban Development for oversight because HUD did not provide specific consumer protection and, I suspect, was not a lengthy enough acronym. Don’t government employees get pay in grade (PIG) raises by the length of their acronyms?
TRID is the new playing field. TRID stands for TILA-RESPA Integrated Disclosure Rule. It ensures you’ll be given forms designed to make it clear to you, the homeowner, exactly what you’re spending to buy your house, and you’ll have three days to look everything over. While you are waiting the three days you can appreciate the PIG that some government employees will receive for TRID.
Before the new rules, buyers often wouldn’t see their closing statement until the closing, or perhaps the day before, says Bill Golden, an independent real estate agent with RE/Max Metro Atlanta Countryside.
“If there are any significant changes to the loan terms, as described by the TRID rules, that will trigger another new three-business-day waiting period,” Golden says.
The states that will be hardest-hit are those in which the agents or principals must be physically present for the closing. Avatars have been discussed, but so far are not being allowed. “Escrow” states (ES), where the documents and signatures are normally submitted a few days prior to closing, will be less likely to have issues.
Georgia is a “closing table” state (CTS), and clients, agents and attorneys are accustomed to routinely making changes at the closing table and still closing the sale on same day. The new three-day waiting period will severely limit this practice for items covered in the TRID documents.
Arguably, this is a good thing. Nobody wants to feel pressured into buying a house with terms they feel they never would have signed off on, had they realized exactly what the terms were. But an unexpected three-day business waiting period can have an unintended side effect.
“This can be tricky when folks have movers lined up based on their closing date, and even more so if there are multiple transactions contingent on one another,” Golden says.
A lot of real estate agents aren’t too thrilled with TRID. On Inman.com, a real estate website for real estate agents and brokers, one agent wrote that TRID stands for “The Reason I Drink.”
Golden admits that it has been a pain for agents, homebuyers and sellers (PAH&S), but he says, “I think in the end, it will be a much better thing for consumers. Unfortunately, it involves growing pains and getting used to doing business in a slightly different way. We all balked at the Internet’s role in real estate when it first appeared … It just takes time to work out the kinks and get used to it (TWOK&GUTI).”
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