At Palm State Mortgage, we know there is some curiosity among borrowers concerning the new rules which come into practice on October 3 of this year–That is this week!
We want this blog to remove the mystery about the meaning of this new legislation for new borrowers.
Making Mortgage History: Home buyers Get New Forms
On that date home buyers applying for a mortgage will receive some newly federally required paperwork. Fear not the forms! They are designed to clarify and simplify the mortgage process.
You will be receiving new rate and fee quote forms from lenders. You might have heard about the new nationally required papers by the name TILA-RESPA Integrated Disclosers or TRID.
Palm State Mortgage Company reassures borrowers that these consumer disclosures will indeed, make the home loan process easier and clearer. TRID is actually designed to help and protect you as consumers of a financial product, a mortgage.
The language of the new forms will help you make sense of the rate and fee quotes you will be getting from lenders.
Making Mortgage History: What is the Mystery?
So, what is the mystery, and the reason for a little less than a golden reception for these changes?
The truth behind the mystery and the cool reception is that some lenders and consumers fear these new forms and explanations will slow down the already lengthy home-buying process to a snail’s pace.
Yes, the new federally mandated disclosure rules do impose more time on the system. The new legislation will require lenders to “deliver these new rate and fee disclosure documents to you twice during the home loans process” —once after application and once before closing.
You will also see below, how everyone involved in your home purchase and mortgage must become accustomed to compliance “with disclosure timing rules in the beginning and end of the loan process.”
Some experts say “Speed wins when writing home purchase offers, and this extra time can mean the difference between a seller accepting and rejecting your offer.” Only in the course of time will we be able to see if this worry is true, or if the extra time prevents mortgage mishaps and mistakes.
New TRID Document One: Making Mortgage History with New Loan Estimate Disclosure and Timing Rules
The first new disclosure form is termed the Loan Estimate.
This document is packed with goodies for the borrower. It will show you:
1. Your rate quote,
2. Your loan term,
3. Line-item fees,
4. And the amount of cash you need to close the deal.
5. “Before the lender can collect fees for critical next steps in the loan process — like ordering an appraisal, which your loan can’t close without — the lender must also obtain your intent to proceed based on the quoted terms.”
Here is how the process might slow down: If you applied with a lender who’s using mail delivery late on a Wednesday, they would mail your Loan Estimate and intent-to-proceed disclosures Thursday, you might get it Saturday, and they couldn’t collect fees and order your appraisal until they received your consent Monday, which is already day six into the process.
Let’s Take A Look at How this Works Digitally: “If you applied with a lender who’s using electronic delivery late on a Wednesday, “they could deliver your Loan Estimate and intent-to-proceed disclosures for you to consent to online that evening, and they could collect fees and order appraisal that same evening — all on the first day of the process.”
Making Mortgage History EASY
We are pleased to see that The Consumer Financial Protection Bureau (CFPB) will allow the use of mail or electronic delivery of the Loan Estimate, as described above. It’s nice to have options.
New TRID Document Two: Making Mortgage History with the Closing Disclosure Form
Put simply, this second new form, the Closing Disclosure Form highly resembles the Loan Estimate Form.
Borrowers will receive this paperwork a minimum of three days before closing. The important factor in this paper is the transparent separation of which costs are expected to be paid by the buyer, seller, and third parties.
With this form, the borrower now has final terms in the initial format, plus a little time to absorb and figure the meaning of the dollars and cents involved in the acceptance of this new debt.
You will be surprised at how much the Closing Disclosure Form resembles the Loan Estimate. The information it contains makes it easy for buyers to comprehend the closing terms and compare them to the originally quoted terms.
A Special Understanding of Time:
The new CFPB disclosure rules do not permit Sundays and holidays to count within this three-day waiting period. The first day of the count is the day after you get the Closing Disclosure.
Suppose that a lender sent your Closing Disclosure on a Wednesday, and then you would count the three-day waiting period as Thursday, Friday, and Saturday.
Then, they can fund your home loan and do closing on Monday, which is actually day six from the time you received the disclosure.
What is the fastest timing for the new disclosure process?
Under the old rules, you could fund the same day you got final disclosures. Many real estate agents will have to adjust because they are comfortable with writing purchase contracts on this old timing schedule.
There is no doubt that, as of October 3, TRID forces home owners, their agents and their lenders to carefully coordinate closing in order to fulfill the new TRID timelines.
Palm State Mortgage Company has prided itself for years in its step-by-step approach to the mortgage process. Taking on compliance with TRID will be no different.
Do not let the fear of new laws or paperwork deprive you the joy of owning your own home.
Palm State Mortgage Company knows the laws and regulations, old and new, and we will walk you through the mortgage process so you can enjoy the delights of your new home.
Making sure your mortgage process goes as quickly and smoothly as possible is as easy as following trusted directions. Feel free to ask us about the new TRID rules. We can even simplify the TRID closing timelines for your real estate agent.