Why Did the Implementation of TRID Impact Closing Dates? Exploring About Regulatory Changes

Jeff "King of the Castle" November 23, 2023

Why Did the Implementation of TRID Impact Closing Dates?

The world of real estate is a complex maze and one aspect that’s often misunderstood is the impact of TILA-RESPA Integrated Disclosure (TRID) rules on closing dates. Introduced in October 2015, TRID was designed to streamline and improve the mortgage application process, but it’s had an unexpected side effect: lengthening the average time it takes to close a loan deal.

Let’s begin by unraveling what TRID really means. It stands for Truth In Lending Act – Real Estate Settlement Procedures Act Integrated Disclosure. Quite a mouthful! This legislation rolled two previously separate acts into one, aiming to make life easier for homebuyers. But, how did this well-intentioned law end up causing delays in closing dates?

I’ll tell you why – timing plays a major role here. Under TRID regulations, lenders must provide borrowers with the Loan Estimate form within three business days after receiving an application. Then there’s a seven-business-day waiting period before they can close on the loan. Plus, if there are significant changes to the loan terms during this period, borrowers must receive a new Closing Disclosure form and wait an additional three business days before finalizing their loan deal.

What is TRID

Diving right into it, TRID stands for TILA-RESPA Integrated Disclosure. It’s a rule implemented by the Consumer Financial Protection Bureau (CFPB) to ensure that consumers receive clear and easy-to-understand information about their mortgage loans. The aim? To make sure borrowers are well-informed before they commit to a loan.

Now let me break down the acronym for you: TILA stands for Truth in Lending Act, while RESPA represents Real Estate Settlement Procedures Act. These two acts were combined under TRID to simplify regulations and create more transparency in the lending process.

What does this mean for lenders and borrowers? For starters, lenders have to provide Loan Estimates and Closing Disclosures forms that detail loan terms and costs. And these aren’t just handed over at any time; there are specific deadlines which lenders must adhere to. Remember – the goal here is clarity!

Let’s talk numbers – specifically timelines. A Loan Estimate must be provided no later than three business days after a consumer applies for a mortgage loan. Then, at least three business days before closing on the mortgage loan, consumers must receive a Closing Disclosure form detailing final terms and costs.

Remember those timelines! They play an essential role when discussing how TRID impacts closing dates – but we’ll delve deeper into that later in this article.

In summary: think of TRID as your compass guiding you through the sometimes murky waters of home loans—providing clear directions towards informed decisions!

Impact on closing dates

Since the implementation of TRID (TILA-RESPA Integrated Disclosure) regulations, there’s been a noticeable shift in closing dates. While it’s common knowledge that these changes were designed to add transparency for homebuyers, they’ve also had some unintentional side effects.

One of the more immediate impacts was an extension of average closing times. Prior to TRID, the typical timeline from contract signing to key handover was around 30 days. But post-TRID? Well, those timelines got a little longer.Despite these challenges though, it wasn’t all bad news. For instance, many buyers reported feeling much better informed about their financial obligations thanks to updated Loan Estimate and Closing Disclosure forms.

Additionally, while extended closings may seem like an inconvenience (and no doubt they can be), they’ve also provided extra time for parties involved in transactions. This includes realtors and lenders who appreciate having more time to iron out any potential issues or snags before the big day arrives.

In short: Yes, TRID made things take a little longer – but with greater consumer protection and increased transparency as the payoff. So I’d argue it’s not such a tough pill to swallow after all!

Finally, don’t shy away from asking questions or seeking expert advice when navigating these waters – after all, knowledge is power!