TRID Update

FOCUS ON TRID: Advice from Linda Gifford, Maine Association of Realtors® Legal Counsel

Even if you have bought or sold property in the past, the rules and documentation is changing - As part of the changes, which stem from the merger of the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), two new forms—the Loan Estimate and the Closing Disclosure—will replace the HUD-1 settlement form and the Good Faith Estimate. Samples of the new forms are available from the Consumer Financial Protection Bureau.

What can you do to smooth out the process for your closing as the buyer or seller? The number one thing buyers and sellers can do is communicate, early and often with your real estate agent and with your lender (both buyers and sellers will be providing info to the buyer's lender or if your are having a cash sale, your title company or attorney). 

Your real estate agent will be communicating with you about the transaction and keeping you informed as to dates and timelines.  Buyers: You should check in with the lenders you tend to use and see what their processes will be.  How have they chosen to implement the disclosure process to you (the borrower)? What can you do to help? What does your agent suggest you put in your offer for days to close (we recommend 45-60 days) in your purchase and sale agreement?
 
For more guidance from the CFPB:  Click Here
 
Points in the transaction where you can make a difference: 

• Until we see how the process shakes out, you should add in some days to the time for closing - in the past we would usually be able to close on your property within 30 days.  If you pick 60 and it closes in 45, then good for everyone.
   
• Be sure the lender has a complete purchase and sale agreement with any addenda. Changes could result in a revised Loan Estimate going to the buyer and seller if new information is ascertained.
    
• Buyers - you will receive a Loan Estimate from your lender.  The loan process will be on hold until you (the buyer) indicates they intend to proceed.  So be sure that occurs! If you don't receive the documents, be sure to follow up with your lender in order to close on time.
   
• There will be conditions to be met by the buyer (as there always have been, for example, pay-stubs tax returns or bank statements) .  It will be critical for you (the buyer) to get these done on time.  The closing date cannot be set until all commitment conditions are done to the satisfaction of the lender.  Pre-TRID some conditions were met right up until "clear to close".  That can no longer occur. Get it done as soon as possible - at least 12-15 days out from your closing date.
   
• Your lender must get the Closing Disclosure (used to be called the HUD or closing statement) to you - the buyer - in a timely fashion.  Some lenders will use the mail rule which gets the Closing Disclosure (CD) to the buyer 7 days in advance of closing, and no receipt is necessary. Most lenders will use the 3 day rule which requires the buyer to acknowledge receipt of the CD.  This must be done by midnight of the third day out. So, if the CD goes to you on a Tuesday, you will need to open the email or link and acknowledge receipt of the CD by midnight (some banks may say 5 PM) of that same day in order to close on Friday. The closing date will be set in advance, so you need to be sure to follow the bank's receipt instructions - if you have any questions, contact your lender.
   
• All of the items which have previously appeared on closing statements will now need to be on the CD, necessitating gathering of the data early and giving it to the lender.  Lenders may also ask for anything which appears on the Purchase and Sale Agreement to be accounted for on the CD, possibly including things which you (the buyer) have paid for in advance of closing, such as oil, costs of building inspections, water tests, radon tests, septic inspections, etc.  There is a section on the CD, page 2 of 5, section H, "Other" which has a column for "Borrower-Paid Before Closing".  So be ready to tell the lender of all those pre-paid costs if you are asked. Your Realtor can help you obtain the receipts or ask your home inspector, be sure to keep copies of the checks, etc.
   
• Page 5 of 5 of the CD has a grid of contact information for the lender, mortgage broker, Buyer's Real Estate Broker, Seller's Real Estate Broker, and Settlement Agent. Be sure to review this info for accuracy.
   
• "The sky is falling" has been rampant about the 3 day period prior to closing, and whether or not certain issues will create a "reset" of that time period.  Issues which come up such as on the walk-through can be dealt with at closing, although the lender will have to not only approve the change, but create the new CD covering the change, which will take time, and in some cases be impossible to accomplish on the same day-so try to avoid any changes if possible.  But the only items which would require an absolute 3 day reset are if the APR goes up by more than 1/8 point on a fixed rate loan or ¼ point on an adjustable rate loan (could occur if closing date changes and pre-paid interest increases, but will rarely happen), a pre-payment penalty is added to the loan (will not happen) or if the buyer changes from their loan program of original choice to another (should not happen).
   
• Until we see how the closing process goes, it would be wise to not "stack" your closings by scheduling back-to-back closings - for example, if you are selling your home and need the funds to purchase a home, don't schedule the one closing only 1 hour after another closing. Leave time in-between them since any changes at the closing table will need to be approved and accomplished by a new CD generated by the lender.
   
• Communication and patience will be key!

The Deb Barouch Team has extensive knowledge of the industry with over 30 years of experience. We know dependable loan officers, home inspectors, etc to help you through this process. Please contact us if you have any real estate needs! 
Deb Barouch 
Broker  |  Keller Williams Realty
O: 207-553-2403
C: 207-838-4875
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