October 3, 2015, heralded in a huge change for the mortgage industry. It became the implementation deadline for some of the largest changes the industry had seen in decades. The TILA-RESPA Integrated Disclosure Rule (TRID) was enacted by the Consumer Financial Protection Bureau in order to make the borrowing process more transparent and understandable.
So a year later, was the “Know Before You Owe” Rule set out to do what it was designed to do? Let’s first explore the impetus behind it.
WHAT IS TRID AND WHY WAS IT NEEDED?
As the Consumer Financial Protection Bureau wrote, TRID was designed to help buyers “…understand their options, choose the deal that’s best for them, and avoid costly surprises at the closing table…” Two of the major changes under TRID were the forms and the amount of time given to buyers to review the financials.
With TRID, if a change to documentation was requested, the review clock began all over again. Industry experts feared delays and extraordinarily long closing timelines.
WHAT DO THE GROUPS AFFECTED BY TRID THINK?
The simple form changes did require an overhaul to the technology and processes that were used before TRID. However, the industry had about two years to prepare for it so many mortgage companies and title agencies overhauled their processes before they were required to do so.
In early September of 2016, NAR Research surveyed nearly 2,500 REALTORS® to understand how TRID had affected them. Their feedback was mixed. Contrary to what was previously surmised, delayed closing transactions fell from 10.4% to 8.5%, while cancellations grew slightly from .6% to .7%.
The survey also showed that REALTORS® were more likely to request closing documents from the title company than from the lender. According to the surveyed REALTORS®, large retail banks seemed to be less responsive and face greater delays than smaller lenders such as mortgage banks or non-banks, like credit unions.
One REALTOR® shared his clients were overcharged by lenders in the past, “They paid outrageous loan fees. This has dropped significantly.” This was one of the main objectives in the ruling.
According to HousingWire, Pete Mills of the Mortgage Bankers Association reported mixed reviews. “TRID was a massive undertaking from a systems and business processes standpoint. Although many anticipated the rule would significantly disrupt the closing process for consumers, the impact of TRID on consumers was mitigated because lenders and other participants in the closing process dutifully prepared for the final rule.”
Title and closing businesses have made serious investments in software and process flow upgrades in order to accommodate TRID and it seems to have paid off for many of them. But transactional challenges remain in the lending industry as they must accurately disclose information to buyers three days before closing. That has been challenging. Still, it appears to have been less of a challenge than what was expected and buyers have more accurate information from which to base their decisions.
Remember TRID is about transparency for the buyer and being able to cut out hidden costs, and shop around for the best deal.