How Will New TRID Rules Affect Real Estate Wholesalers?
New TRID mortgage and closing rules threaten the biggest shake up in the industry so far. How will they affect real estate wholesalers?
A new set of rules went into effect on October 3rd, 2015. The TILA-RESPA Integrated Disclosure rules a.k.a ‘TRID’ are the most notable changes to the industry since at least Dodd-Frank. The head of the Mortgage Bankers Association warns that these new commandments of mortgage lending and real estate closings will impact everyone from loan officers to Realtors to individual home buyers and sellers. Some companies have reportedly spent millions on restructuring to be prepared. Others still may have little clue what they mean for their transactions.
There is sure to be some closing mayhem ahead. Whether these new rules and forms will really make a positive difference will have to be seen. Much of that depends on whether the rules are followed. After all, the previous issues that the Consumer Finance Protection Bureau is reportedly attempting to fix with these changes, were in reality a lack of following the rules and forms that were already in place. Unfortunately it could be the end consumer who is hurt worst as normally happens with regulatory changes like this.
TRID rules which are meant to simplify the mortgage and closing process with 2 new documents have 2,000 pages of guidelines. So no one should be surprised if there is a lot of confusion over the next few months.
The four main things you need to know are:
- The amount of paperwork lenders can collect upfront is being limited
- The old Good Faith Estimate is being replaced with the ‘Lending Estimate’
- The old HUD 1 Settlement Statement is being replaced with the ‘Closing Disclosure’
- There is now a 3 day waiting period between receiving the final Closing Disclosure and actual completion of the transaction
Real estate wholesalers can be better prepared to navigate TRID challenges by; building extra time to close into real estate contracts, requiring copies of buyers’ official loan commitments faster, making sure all parties for both transactions have their Closing Disclosures 3 days in advance, and by working with title companies that are on top of new TRID rule implementation.
Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.
