Sharing our real estate tools, tips and links to get you a "clear to close."
triD HAS ARRIVED-NO NEED TO PANIC
NO WORRIES October 3rd has come and gone, so applications for residential home loans going forward are now subject to the new “Know Before You Owe” rules promulgated by the Consumer Financial Protection Bureau (CFPB). The law is more formally known as TRID, which stands for TILA RESPA Integrated Disclosure rules. It is designed to protect consumers while providing transparency from loan application to settlement in a real estate transaction.
TRID made significant changes for lenders that has many benefits to consumers. The two new disclosures in particular will be helpful for buyers and in time should speed up the closing process.
Must be given within three business days of buyers giving the lender basic information about themselves and the property they are buying;
Figures are good for entire process, but expire after ten days if buyer gives lender no intent to proceed
Can't charge fees or deposits to receive estimate;
Can change and redisclose under limited circumstances. See examples below:
Buyer decides to change loan programs or the amount of the down payment.
The appraisal on the home came in higher or lower than expected.
Client’s credit status changed, perhaps owing to a new loan or a missed payment.
The lender could not document overtime, bonus, or other income provided on your client’s application.
Closing Disclosurereplaces the HUD and locks lender into figures three days before close and should not delay closings unless one or more of the following occurs:
The APR (annual percentage rate) increases by more than 1/8 of a percent for regular loans (most fixed-rate loans) or 1/4 of a percent for irregular loans (most adjustable loans). A decrease in APR will not require a new three-day review if it is based on changes to the interest rate or other fees. Lenders have been required to provide a three-day review for these changes in APR since 2009.
A prepayment penalty is added, making it expensive to refinance or sell. Very Rare these days and in many cases illegal.
The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments. Very rare and should disclose
No other changes require a new three-day review There has been much misinformation and mistaken commentary around this point. Any other changes in the days leading up to closing do not require a new three-day review, although the lender will still have to provide an updated disclosure.
For example, the following circumstances do not require a new three-day review:
Unexpected discoveries on a walk-through such as a broken refrigerator or a missing stove, even if they require seller credits to the buyer.
Most changes to payments made at closing, including the amount of the real estate commission, taxes and utilities proration, and the amount paid into escrow.