Understanding the new closing process

The Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosures — known as TRID — include new forms called the Loan Estimate and the Closing Disclosure (CD) – the replacement to the current HUD-1 settlement statement. The changes are meant to help consumers more clearly understand the total costs of their home loans.

As lenders and title companies gear up for the change – now scheduled for Saturday, October 3rd – REALTORS® have been sitting in classes for hours in an attempt to understand the new process and what it means for them and their clients.

Under the Dodd-Frank Act, the responsibility primarily falls on the lender. The stakes for getting it right are high since the penalties charged to lenders for mistakes are also high. While there is much concern about a successful rollout, most lenders say they have a well-developed plan to comply with the 1,888-page integrated disclosure rule. But, as most REALTORS® can attest, the plans of one lender don’t always match that of another. Hopefully, the delayed launch of October 3 will provide enough time to clear up the remaining confusion.

According to NAR, while real estate professionals do not have any direct responsibilities under the TRID, they still have a role in the process. Real estate professionals need to educate their clients about what has changed and help them understand that the transaction will take longer. In addition, clients also need to be educated about the possibility for closing delays and so should be wary of scheduling back-to-back closings, as there is risk that one of the transactions may be delayed. Finally, real estate professionals need to help their clients understand that attempts at last minute negotiations could derail the closing and so the parties should try to have all issues resolved well in advance of closings.

NAR is actively seeking clarification on a few issues related to the new rules. When they receive it, we will be sure to keep you posted.


Related links

NAR submits comments on TRID delay – July 10

NAR Closing Document Webcast - July 16