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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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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The Consumer Financial Protection Bureau (CFPB) issued a new rule that combines mortgage disclosures previously established by the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into a single rule effective October 1, 2015. To help lenders navigate the TILA-RESPA Integrated Disclosures (TRID) Rules, the Mortgage Bankers Association (MBA) just released a resource guide written by two of the industry’s top compliance experts, Richard Horn and Ballard Spahr.

Jeffrey Schummer, MBA’s Vice President of Education Development says, “TRID is 1,888 pages in length and affects every business functioning in the single-family mortgage market. Compliance with this new rule requires major systems and operational changes. As such, MBA’s TRID Resource Guide will help companies to ensure compliance by the August 1st deadline.”

What is it?

The TRID Rule combines four existing disclosures that are required under the Truth-in-Lending-Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) for most real property-secured closed-end credit transactions. To help improve consumer clarity and promote industry compliance with TILA and RESPA initial and final disclosures, the Good Faith Estimate (GFE) and initial Truth-in-Lending Disclosure will be replaced by the three-page Loan Estimate. The HUD-1 Settlement Statement and final Truth-in-Lending Disclosure is being replaced by the five-page Closing Disclosure.

Who will be affected?

The Final Rule applies to most closed-end consumer mortgage loans that are secured by a one to four unit dwelling attached to real property. The Final Rule does not apply to home-equity lines of credit, reverse mortgage loans, mortgage loans secured by a mobile home or by a dwelling not attached to real property, such as land, or to creditors that write five or fewer mortgages a year. A partial exemption will be given to certain junior liens which are associated with housing assistance loans for low/moderate income consumers. Unlike many of the CFPB mortgage rules, the Final Rule does not include an exception for small creditors.

What will change?

Under TRID, changes will be made to the following processes:

• The Loan Estimate must be placed in the mail or delivered no later than the third business day after receiving the application and no later than the seventh business day before consummation. The consumer must receive the Closing Disclosure at least three business days prior to consummation.

• Lenders must keep copies of the Loan Estimate for three years after consummation, and retain copies of the Closing Disclosure, in addition to all Closing Disclosure-related documents, for five years after consummation.

The Final Rule also includes several other substantive changes and additions to TILA and RESPA, including,

• Defining what constitutes an application: The removal of the seventh catch-all item.

• Date changes that lenders must provide the Loan Estimate (currently the GFE). As a result of a Change of Circumstance, the time frames are different for the delivery of the initial Loan Estimate and revised Loan Estimate.

• Variances, formerly known as tolerances, are changing and this will force more fees into the 0% and 10% categories. Lenders may have greater responsibility imposed on them for the amount their partners charge.

• The Loan Estimate will not have number line items as found on the GFE, this will leave three main categories under Loan Costs: Origination Charges, Services That You Cannot Shop For, and Services You Can Shop For. Under Other Costs, there will be separate categories such as Taxes and Other Government Fees, Prepaids, Initial Escrow Payment at Closing, and Other.

• All Loan Estimate fees will be rounded to the nearest dollar.

• Borrowers must receive the Closing Disclosure at least three business days before consummation. The loan product changes if the Annual Percentage Rate (APR) becomes “inaccurate,” or a prepayment penalty is added, a new Closing Disclosure must be provided and an additional three-business-day waiting period after receipt of the new Closing Disclosure is required before the loan can close.

• The HUD-1 Settlement Statement replacement, the Closing Disclosure will have different line items from its predecessor. The line items will be associated with three general categories under Loan Costs: Origination Charges, Services Borrower Did Not Shop For, and Services Borrower Did Shop For. Other Costs includes separate categories and line items:

Taxes and Other Government Fees, Prepaids, Initial Escrow Payment at Closing, and Other.

• The Closing Disclosure will also contain additional new disclosures required by the Dodd-Frank Act and a detailed accounting of the settlement transaction.

• Similar to HUD-1s, lenders will be responsible for preparing the Closing Disclosure, which is usually prepared by a settlement agent. Settlement agents may still be used by lenders in providing the Closing Disclosure if the settlement agents are compliant with the Final Rule’s requirements for the Closing Disclosure.


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$ Reasons to Buy Now

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4 Reasons to Buy NOW! | Keeping Current Matters

Summer is here! The temperature isn’t the only thing heating up right now, so too is the housing market! Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects appreciation in home values over the next five years to be between 11.8% (most pessimistic) and 26.7% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have started to inch up, most experts predict that they will begin to rise even more over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up approximately three quarters of a percentage point over the next 12 months.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.


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