How the New Mortgage Rules Impact You
Imagine that you're playing a game where the rules constantly change, and everybody is always confused about them (including the rule makers). Welcome to the 2016 mortgage industry! Here are three ways the new mortgage rules impact your business as a real estate professional.
#1 - TILA/RESPA Integrated Disclosures (TRID)
Closing delays are one of the many unintended consequenses of recent government regulation. Since October, 2015, mortgage lenders are required to prepare a new "Closing Disclosure" and adhere to new timelines (see illustration below). Any last-minute changes to your deal structure could cause delays of up to a week on purchase transactions, and up to two weeks on refinance transactions. Delays can be even longer if your transaction takes place anytime close to a federal holiday.
Here are five things you and your clients can do in order to avoid unecessary delays:
- Write a longer timeline into your purchase agreement so that you don't have to amend the purchase agreement later on.
- Make sure your purchase agreement is properly worded if you have seller concessions or seller-paid closing costs (last-minute changes will re-set the timelines back to the beginning).
- Lock your interest rate for a longer period of time because rate lock extensions are likely to trigger new disclosures and re-set the timelines back to the beginning.
- Schedule the inspection and the appraisal as early in the process as possible in order to give the buyer and seller enough time to make adjustements if necessary.
- Turn in your paperwork ASAP so that unforeseen issues don’t cause more delays.
