Although the Consumer Financial Protection Bureau’s new TILA-RESPA Integrated Disclosures (TRID) rule takes effect Aug. 1 and has many implications for lenders and settlement agents, real estate agents and brokers also will be affected by the use of the new forms and changes to the closing process, and the National Association of Realtors is mobilizing resources to train its members to tackle these challenges.
In the year and a half since the CFPB issued its final rule and asked the mortgage, banking, title insurance and settlement service industries to prepare to use the new forms and alter the way closings have traditionally been conducted, most of the implementation training efforts have been led by the title industry and lenders, the latter of which will ultimately bear responsibility for complying with the rule. But NAR is now stressing the importance of training with Realtors.
The association will host a training webinar on Thursday, March 19 at 2 p.m. EDT during which Ken Trepeta, NAR’s director of real estate services, and prominent RESPA attorney Phil Schulman will discuss the changes.
Trepeta also is offering insight and advice to Realtors in a video on NAR’s website. TRID replaces the HUD-1 Settlement Statement, Good Faith Estimate and Truth in Lending Act disclosure with new Closing Disclosure and Loan Estimate forms that must be in place three days prior to closing. But changes to the closing process are going to be of most concern to NAR’s members, Trepeta said.
“That is because the Closing Disclosure has to be given to the consumer three days before closing,” Trepeta said. “While things on that disclosure can change, as we’ve learned through the implementation, fewer of these changes are going to be as easy as we thought. Major changes to the disclosure, such as changes to the interest rate or the loan product, would require another three-day disclosure period. But other changes to the disclosure may require approval from a lender who may not be at that closing table.”
Last-minute changes will become a luxury of the past, and Realtors should keep communication tight between them, their clients, other Realtors, loan officers, processors and settlement agents to ensure a smooth process. In addition, Trepeta said Realtors should ensure that sellers abide by their agreements and don’t remove items from the home that are listed as included in the sale.
“These types of things could lead to changes in the settlement statement, which would require going back to the lender and getting approval,” he said.
NAR also is advising its members to pad the closing process by about 15 days to ensure that disclosures are properly given to consumers.
“If you’re in a state where deals normally close within 30 days, anticipate perhaps taking 45 days,” Trepeta said. “If it’s 60 days, maybe plan on it being 75 days, just to give that extra leeway. In addition to the three-day waiting period, certain disclosures have to be given within a certain amount of time. There has to be a certain amount of time given to the consumer to think about what they’ve got on that disclosure. All of these things are going to potentially add time to the transaction. Will it be 15 days? Maybe it won’t. Maybe it will be five days. Maybe it will be no time at all once we get settled with this process. But the safe bet is to do 15 days.”
Trepeta said NAR plans to do a lot more education on the new rule in the months leading up to implementation. The association will host two more sessions in May — one at its Regulatory Issues forum on May 12, and another in-depth event on May 15. Other updates will be available at Realtor.org/RESPA.