What You Need To Know About the Mortgage Process | Keeping Current Matters

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Housing in the SpotlightIn June, the Consumer Financial Protection Bureau (CFPB) proposed a delay to the new TILA-RESPA Integrated Disclosure rule, known as “TRID.” A final decision could push TRID’s effective date from August 1 to October 3, 2015.

Citing time needed to correct an internal “administrative error,” the CFPB said that the new timing would better accommodate consumers and providers busy with the start of the new school year, and also allow providers more time to adopt the new rule.

TRID requires the merger of documents provided to a borrower during the loan process. First, the Good Faith Estimate and the initial Truth-in-Lending Statement will now combine to form the “Loan Estimate,” which must be provided within three days of application.

Second, the borrower will now receive a “Closing Disclosure,” which combines the final Truth-in-Lending Statement and the HUD-1 Settlement Statement. This new form must be provided at least three business days before the loan is consummated (i.e., when the borrower becomes contractually obligated per Regulation Z), which in most states is the same as the closing date or when the borrower signs the promissory note.

Upon TRID’s effective date, lenders, escrow and title agents, and closing attorneys will be required to integrate these forms into their processes.

The new TILA-RESPA Integrated Disclosure rule (known more commonly as TRID) takes effect on October 3, 2015.

Under the new rule, lenders must provide borrowers with a new “Closing Disclosure” which combines two separate documents: the HUD-1 settlement statement and final Truth-in-Lending disclosure. Beginning in October, lenders must provide this document at least three business days before the loan is consummated or when the borrower(s) becomes contractually obligated as defined by Regulation Z, which in most states is the same as the closing date or when the borrower(s) signs the promissory note.

Real estate professionals and lenders have feared that this new document could delay closings if there are last-minute changes. To address concerns, the Consumer Financial Protection Bureau (CFPB) stated that closing delays should not occur except in three unique and unlikely cases, which include:

  • An increase to the loan’s annual percentage rate (APR) by more than one-eighth (.125) percent for fixed-rate loans or more than one-quarter (.25) percent for variable-rate loans. Unlike a home loan’s interest rate, an APR reflects the annualized cost to obtain a home loan, and is a way to compare lender fees and loan options.
  • The addition of a prepayment penalty where the initial loan approval did not account for this factor. Prepayment penalties are rare and depend on the type of loan borrowed.
  • A total change in the loan type, such as a change from a fixed-rate to a variable-rate loan.

The CFPB further assured that the rule makes allowances for ordinary changes without delaying the closing date for both buyers and sellers.

While this new rule may seem scary, we’ve done our homework and will be ready for the August 1 deadline. If you have any concerns about how the new TRID rule impacts your clients, please don’t hesitate to contact me today.

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Jul
07

TRID Explained

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New Forms Arrive October 3, 2015

For over 30 years, loan officers have been required to provide two documents anytime a borrower submitted a loan application. These documents are known as the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (TIL).

At the time of closing, we also provide the HUD-1 Settlement Statement and the final TIL.

Now, the Consumer Financial Protection Bureau (CFPB) has announced the “TILA-RESPA Integrated Disclosure,” now known industry-wide as TRID. As part of the new rule, some existing documents will merge as of this October 3, 2015:

Application: The GFE and TIL will be combined into a new form called the Loan Estimate, which is designed to give consumers a better understanding of key features, costs and risks of the mortgage for which they are applying. This form is to be provided no later than three days after application.

Closing: The HUD-1 and final TIL will be combined into the Closing Disclosure, which more clearly explains the final costs of the transaction. This form is to be provided to consumers at least three business days before the loan is consummated (i.e. when the prospective borrower(s) becomes contractually obligated, as defined by Regulation Z), which in most states is the same as the closing date or when the borrower(s) signs the promissory note.

While these new forms and procedures may seem scary, rest assured we’ve done our homework and will be ready for the August 1 deadline. If you have any concerns about how the TRID rule might affect your customers, please don’t hesitate to contact me today.

Source: CFPB

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The housing market is heating up! For buyers, this may lead to submitting multiple offers or a potential bidding war.  If you or someone you know is in the market to buy a home, here are six ways to give your offer the best chance for seller acceptance,especially when the competition is stiff:

Get preapproved for your loan and have a strong cover letter prepared for your seller.

When making offers, try to be first and don’t lowball. Being first to the negotiating table plants you in the seller’s mind. But when listings are scarce, lowball offers are a losing strategy.

Opt for an escalation clause that tells the seller you’ll beat any offer exceeding your bid by $1,000, up to a maximum amount of your choosing.

Perform inspections upfront. It may cost a few hundred dollars, but it shows you’re serious. And when you make an offer without contingencies, sellers pay attention.

Tell them you love it by asking your agent to deliver a letter listing the reasons why this house is perfect for your family (include pictures and be specific).

Don’t overpay. Instead, research the market by reviewing comparable property sales prices, schools and online reviews for local businesses. Chatting with neighbors can also provide a wealth of information

Categories : Housing Market
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