The Consumer Financial Protection Bureau (CFPB) has mandated a change to closing cost disclosures in the mortgage industry, effective October 3, 2015. This change will affect closing periods on both purchases and refinances. The TILA-RESPA Integrated Disclosure (TRID) combines four disclosures into two consolidated forms:
- The Loan Estimate (replaces the Initial TIL disclosure and GFE )
- The Closing Disclosure (replaces the Final TIL and HUD-1 Settlement Statement)
The Loan Estimate must be received within three business days of application, and the Closing Disclosure must be received three days prior to signing loan documents (“consummating” the loan).
You can fully expect delays in securing your home loan if you apply for a mortgage on and after 10/3/15. The reason for delays will be twofold:
- Newly mandated waiting periods before being able to proceed with the loan processing
- Lenders, originators and title companies need time to “figure out” the nuances of communicating these changes, as well as in updating their software
In addition, any requested changes to your loan (such as interest rate, loan amount, loan term…) will require a new 3-day waiting period. When the GFE and HUD disclosures changed in 2010, there was a small standstill in the business while everyone figured out those changes. We all adapted and got past it, but I fully expect we will see the same thing occur again. I will be recommending 45-day locks and closing periods until everyone gets a little more comfortable with the changes.
