Tila Respa Integrated Disclosures is more than a new mortgage banking acronym, it has become a new real estate industry four-letter word. Call it unintended consequences from a government that wants to protect its’ gullible citizens from predatory lending or (reader to make their own inference).
The Consumer Financial Protection Board was tasked by Congress to reduce and clarify and streamline documentation of disclosure for real estate transactions so that the masses could better understand the loan that is being offered to the consumer. The CFPB has created a blanket policy to issue easily understood documentation for proposed real estate financing terms offered by banks. Will it work? Time will tell. Will it cause confusion? Most likely!
The reality is that this is will be the new realty…
The recent implementation of TRID took effect Oct. 3rd 2015. We woke up Monday morning Oct 5th and resumed business as usual. However; something was be different…
Banc Home Loans' interpretation of the compliance laws and implementation of procedures will allow us to do our business and be competitive with our offerings with timely results. Our investments in technology and talent will allow us to still close a loan in 30 days or less!
Now more than ever, lenders, agents, buyers and sellers need to work together for a successful escrow. It will no longer take a village to close a real estate transaction but an army of knowledgeable and capable real estate professionals and the clients’ positive involvement.
The Loan Estimate Form is a combined document of the existing Truth in Lending and Good Faith Estimate. The entire document will be 3 pages which includes; estimated closing costs and cash to close, itemized break down of costs, a five year projection of loan payments, APR and a new term TIP. TIP is a new factor of “Total Interest Percentage” for the loan.
The Closing Disclosure is the Final Truth and Lending and the HUD1 Settlement Statement. This is a five page document which will include; estimated closing costs and cash to close, more detailed itemized cost breakdown than The Loan Estimate Form, sellers’ costs, real estate commissions paid to agents, and cash to close comparison with The Loan Estimate Form.
Timing and New Documentation Procedures:
Borrower and loan officer complete application for submission.
Loan Estimate Form sent out within three business days of application.
Borrowers E-Sign confirmation of receipt!
Appraisal cannot be charged to borrower until confirmation of Loan Estimate receipt and Intent to Proceed Form has been fulfilled by borrower.
Any valid change of circumstance in transaction during escrow such as rate lock, program change, seller concessions, appraised valuation issues, etc.. will require a new disclosure and waiting period.
Back to step (2), issuance of new Loan Estimate.
Four days before closing, the final Loan Estimate must be sent to the borrower and verification of receipt.
Three days before closing, the final Closing Disclosure must be sent to the borrower and verification of receipt.
Working Together for a Successful Closing!
Borrowers will need to be even more attentive and available to requests for loan documentation and have the ability to E-sign documents.
Listing and selling agents: mid-escrow negotiations could cause a re-disclosure and delay of closing. Get those repair requests in earlier than later.
Last minute concessions to closing costs could cause re-disclosure and delay of closing.
Most importantly, all parties involved in the process will need to have a little more patience and keep lines of communication open during this learning curve.
Danny Ponder is a Loan Officer with Banc of California, Banc Home Loans, a seasoned veteran in the mortgage business. Lending available in 48 states, Conventional, Government, Jumbo, Portfolio, Construction, and Commercial.