Today is the start of the second full week of the TILA-RESPA Integrated Disclosure rule, and it’s impacting real estate and mortgage finance at almost every point along the pipeline.
HousingWire checked in with Dave Jacobin, president of 1st Mariner Mortgage, to kick off week two of TRID.
Jacobin oversees 1st Mariner Bank’s mortgage division, which operates and lends in all 50 states.
Q: Is the new TILSA-RESPA Integrated Disclosure rule easier than previous rules?
David Jacobin: The form layout is better. The formulas used and the visual layout is much easier to digest. Simply put, everything fits on the form in a better-looking way than it was formatted before. At a glance, it is easy to see the estimated closing costs and cash to close figures. It’s good to have those numbers easily accessible to see what exactly needs to happen in order to do the deal from start to finish.
The information that is now included makes more sense. The current Good Faith Estimate does not show the total monthly payment or the total amount of cash you need to complete the transaction (including down payment, closing cost, prepaid costs, etc.). The TRID rule is basically adding those elements to the form.
The newly included items are broken down. The new form clearly states what each total is comprised of to ensure that the elements all add up to match what the total cost should be. The new rule is basically an attempt to improve or correct any faults with the current regulations.
Q: How will they help borrowers specifically?
Jacobin: The borrower will now be able to easily compare their loan products because they have a better view of the transaction for purchases and refinances.
The biggest change is that the Closing Disclosure will be due to consumers three days prior to closing. With this rule, every homeowner or prospective borrower has the opportunity to thoroughly check the Closing Disclosure form before they get to the settlement table. This way, they have the chance to ask questions, address changes and generally become more familiar with the material before they reach the settlement table.
Oftentimes, people feel intimidated or shy about asking questions or clarifying, which can lead to rushed and not well thought out decisions. TRID benefits everyone involved because both parties have the opportunity to understand the transaction and feel more confident about the terms.
Because everyone has more time to review the forms prior to closing, there will be a decrease in mistakes as well as a better understanding from the borrower.
Q: How does TRID impact the lender?
Jacobin: The lender, not the title company, will now be responsible for the Closing Disclosure. Before, the title company would prepare the HUD-1 after going back and forth with the lender on fees. When they were done, they would then send it to the lender for a final blessing – but the lender still did not own it. In the long run it will make settlements go smoother. It’s a big change for lenders and a big change for title companies.
The lenders will have to allow for more time in their internal process, in order to get the forms submitted by the new deadlines.
The change in regulation brings more responsibility and burden on the lender, but the increased clarity of the transaction benefits everyone in the long run. The new rule will make settlements run smoother, with less confusion and error.