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State to see big changes in real estate transactions
Some major adjustments will soon come into effect for both realtors and buyers in the state's housing market.
Beginning Oct. 3, real estate transactions will include, among other modifications, a mandatory three to six day waiting period before closing on the property in question.
Explaining this and other changes was Senior Vice President Clint Morgan from Ruoff Home Mortgage out of Fort Wayne. Morgan was the special guest speaker at a meeting in the Inn at DePauw banquet hall recently.
"The rule that's about to be put in place, called the 'TILA/RESPA Integrated Disclosure' (TRID), is a major documentation change in the real estate world," Morgan said. "We work regularly with realtors from around the area and the state, and the more we can have open lines of communication, the better off we are when the changes are put into place.
"(Wednesday) was a group session to kind of identify the changes and talk about how they would impact certain files or the way that an individual or company does business so we can be ready when it comes to the door," Morgan added.
Morgan is also the President of the Indiana Mortgage Bankers Association, a coalition or mortgage companies, banks, credit unions and affiliate members and vendors in the industry.
The TRID documentation essentially dictates that its predecessor, the "HUD-1 Settlement Statement," will be replaced by the new Closing Disclosure; a mandatory three to six day period must take place prior to the closing appointment; the new disclosure will make back-to-back closings more difficult; and invoices will be required much sooner in the transaction, "certainly prior to the day of closing," Wednesday's handout reads.
"We have 16 locations around the state, Greencastle being one of those," Morgan said. "My job is to prepare our loan officers. We have 110 officers in the state, all working in different communities. Interacting with each of those people ... I just try to educate them and have them as up-to-speed and as sharp as possible when they're out in the field."
Why
The final ruling and official interpretation, as described in line one of an official release on consumerfinance.gov, states that "sections 1098 and 1100A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) direct the Bureau of Consumer Financial Protection (CFPB) to publish rules and forms that combine certain disclosures that consumers receive in connection with applying for and closing on mortgage loan under the Truth in Lending Act and the Real Estate Settlement Procedures Act."
Basically, the combining of the pre-existing rules, with the four aforementioned additions, forms TRID.
How
Morgan and Ruoff have directed those interested in learning more about the practical process to examine the Real Estate Settlement Procedures Act, in which the following is stated:
"Within three days (excluding legal public holidays, Saturdays and Sundays) after a person applies for a reverse mortgage transaction, the lender or mortgage broker who anticipates using table funding, or dealer in a first-lien-dealer loan shall provide to the person a servicing disclosure statement that states whether the servicing of the mortgage loan may be assigned, sold or transferred to any other person at any time," the release reads. "If a person who applies for a reverse mortgage transaction is denied credit within the three day period, a servicing disclosure statement is not required to be delivered."
Furthermore, email is now officially considered to be a form of initializing the closing (or three day) process. If a creditor sends the required disclosures on Monday, the consumer is considered to have received them on Thursday, three days later.
The creditor may also rely on evidence that the consumer received the email. So, if a creditor emails the disclosures at 1 p.m. on Tuesday and the consumer then emails the creditor with an acknowledgment of receipt by 5 p.m. on the same day, the creditor could claim that the disclosures were received on the same day.
Summary
The adjustments are intended to improve the quality of services from realtors, as well as better the home-buying experience. Not only will realtors have better, more efficient services, the consumer will also have a wealth of information at their fingertips without the obligation to act quickly.
"Right now it's like a 30-day process to buy a house," Morgan said. "You shop for a house, write a contract, probably talk to a mortgage person before, you write a purchase agreement, you offer that to the seller and they accept it.
"Then, 30 days later you show up at the closing and you get to see the numbers," Morgan continued. "So, if you're expecting say $5,000 but on the day of closing they tell you they need $6,000 or $4,000 -- it's that process that we and the CFPB are trying to harness, overhaul and make more transparent for the consumer."