Mortgage Lenders Scrambling to Follow New TILA-RESPA Requirements

Just as I suspected, the demise of our old, familiar HUD-1 closing form and the implementation of the new TILA-RESPA integrated disclosure requirements (TRID) has thrown residential mortgage lenders for a loop.

The change was scheduled for August 1, 2015, then delayed until October 3, 2015. Now Congress is considering another delay, but this time it’s a proposed delay in enforcement of the law.

First of all, now that a 6-page disclosure statement is required, along with the stringent time frames for preparation and presentation of it, banks, credit unions, title companies and other mortgage lenders are scrambling to understand their obligations. No institution can correctly follow a new law with no precedent, even with the best of intentions. It’s just impossible.

If it were simply a matter of completing new forms, that might be doable. But TRID changes also involve time frames that are, as I’ve said in the past, impractical. Closing a residential real estate transaction has always been complex and timely in nature. Changes were often made on closing statements at the last minute, and buyers generally didn’t do a final inspection of their home-to-be until the day before or even the same day their real estate closing was scheduled, when the seller had moved out and the place was empty.

That behavior has to change now, and exactly HOW it will change is what remains to be seen. And I do mean SEEN… basically, we all have to see the use of the new integrated disclosure statement in action before we actually come to understand it. But TRID requires presentation of an accurate closing statement to the homebuyer 3 days prior to closing, a mean feat indeed.

So, the same week TRID became the law of the land, the House passed HR 3192, The Homebuyers Assistance Act on October 7, 2015. The Senate has not yet voted on its version of the bill, and I took note that GovTrack.us only gives the legislation a 21% chance of being enacted.

I guess that means buyers and sellers, brokers and lenders may all be scrambling to understand and comply with TRID for the foreseeable future. And it means the White House is in favor of their scramble.

The Executive Office of The President, Office of Management and Budget, Washington, DC published its Statement of Administration Policy on October 6, 2015, the day before the House passed HR 3192. I quote from that policy document, “If the President were presented with H.R. 3192, his senior advisors would recommend that he veto the bill.”
So, there you have it. TRID is the law of the land, and will likely remain enforceable, with no respite.
Real estate professionals and lenders are all reliant on software applications to produce the required forms, as well as information they collect from sellers, buyers, taxing authorities and other entities. Collecting correct data on time and processing it with new software both add additional layers of complexity to closing a home sale transaction.
I’m thinking it’s not a coincidence that mortgage applications were up over 25% the week prior to implementation of TRID. Real estate professionals and lenders wanted to initiate as many transactions as possible before the new law took effect. And now, since TRID has taken effect, you can ask any real estate broker, closing agent or lender to find out how they are getting along in the scramble.