The fears of many realtors seem to have come true at the end of 2015: The TRID (TILA-RESPA Integrated Disclosure), a set of regulations designed to make the mortgage process as transparent as possible for homebuyers, has actually made it more difficult to get those same buyers into a home. The delays created by the implementation of TRID, which came into play on October 3, made themselves evident on the November home sales report, which was released near the end of 2015.
Sales of existing single-family homes, condominiums and cooperative apartments were down 10.5 percent in November, which marks the largest drop since July of 2010. Economists suggested that a number of issues could be behind the lag in home sales, but two facts point the finger more clearly at TRID: 1) 47 percent of respondents to the National Association of Realtors’ survey said that closing times were delayed during the month and 2) that trend was consistent in all four regions of the country, suggesting the new regulations struck everyone equally.
TRID isn’t going anywhere, and that means realtors need to adjust if they don’t want to get bogged down in delays. Fortunately, we’ve got four tips for staying ahead of the curve and beating slow closings. And that means more time for more sales.
The biggest issue affecting realtors and all parties involved in the homebuying process because of TRID is accuracy. Need proof? The new regulations require that a Closing Disclosure be provided to the purchaser three days before closing on the property. If any of the details regarding the loan need to be changed at the last moment, that means a new CD and another three day waiting period. Can you guess the average delay suggested in the home sales report from November?
Yes, three days.
This suggests that having every detail correct before creating the CD is essential to keeping the sales process efficient. You’re a good realtor—accuracy has always been a priority. But now as much ever. Not just for you, but for all parties involved—buyers, lenders and settlement agents included. This will be one of the most complex financial transactions that your clients will ever make. Emphasize the importance of getting the numbers right the first time, and be there to help them through the mess. Keep in touch with lenders to make sure that the details are solid from the start.
The biggest enemy of accuracy is poor communication. If you want to get no. 1 right, you had better make sure that you keep your communication channels running as efficiently as possible. That means staying in touch with your clients, lenders, and settlement officers throughout the process. It will also behoove you to serve as the operator between those parties at all. If you’re client is figuring out their mortgage situation, don’t be afraid to stick your nose in and make sure that all is running smoothly between the parties involved.
Your client wants to get into a home, and you want to put them in that home. What’s going on behind-the-scenes is your business, both literally and metaphorically. Don’t be afraid to get involved.
Now may be a time to consider simplifying your options to make communication easier. Consider using fewer, more qualified settlement agents rather than spreading yourself thin.
This is obvious, but the more you can get done early, the sooner the project will be complete. There are a number of facets to homebuying that you can encourage clients to do in advance, as to save time later.
One major step to saving time in the mortgage process is getting your clients pre-approved. This will benefit your client twofold. Aside from simply saving time, getting pre-approved is handy for shoppers in that they’ll know what they qualify for in advance, which should make looking for a home easier. They’ll already know what they can afford.
Once they’ve found the house they love, help them to schedule their walkthroughs early. Under TRID, the final closing date must come—you guessed it—at least three days after the final walkthrough. If you’ve set that date in advance, then you can plan a closing meeting accordingly. The later you schedule the final walkthrough, the greater the chance of delays in scheduling the closing afterwards.
Yes, TRID offers all the chances in the world for delays to take place. But that doesn’t mean you should devolve into paranoia.
The government realized that the new regulations would cause an uproar, so they passed legislation just a few days after TRID was enacted to ease the pressure on realtors and lenders. TRID enforcement will be delayed until February 1, 2016. And then, in the lead up to that deadline, the Consumer Financial Protection Bureau told the Mortgage Bankers Association that “initial examinations for compliance will focus on achieved industry progress,” and will offer corrective feedback for minor violations found, not punitive damage.
That means that you won’t even get a slap on the wrist—just friendly advice—if there are minor errors on your CDs. Take that commentary in stride and let it help you get used to the new regulations, as opposed to spending days sweating the details out of fear of fines.
The only thing you have to fear is fear itself. Don’t let it hamper your business.
In the meantime, work on improving accuracy among all the parties on the sale, improve your communication between those parties, and encourage your clients to plan ahead of schedule. Do that, and your business won’t worry about delays or the Big Bad TRID.