You might have heard about TRID (TILA/RESPA Integrated Disclosures) or “The New HUD Form,” that is being implemented on residential escrows where a government-backed mortgage (most loans) is being used for the purchase. The new combined Truth-In-Lending/”HUD form” comes out of reforms mandated by the Dodd-Frank Act and overseen by the Consumer Financial Protection Bureau (CFPB). You may have also heard that the sky is falling because of it and escrows will take forever.
It is possible that the new escrow/loan requirements may delay closings by a few days in some cases but for the most part it will not affect closing times. The misinformation comes from requirement that the borrower must have the TRID statement 3 business days before the closing date and that certain changes to the terms of the purchase during that time can cause another three-day waiting period with multiple re-triggers possible.
Well, the reality is that there are only THREE things that could trigger a new three-day waiting period once the borrower has received the TRID statement. These very limited cases as published by the CFPB are:
1. The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans.
2. A prepayment penalty is added, making it expensive to refinance or sell (I’ve personally never seen this happen after a loan program has been chosen).
3. The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.
That’s it. These are the only three triggers that will require the buyer/borrower to be re-noticed and a new three-day wait period initiated. Stay calm, buy a home.
(updated on 6/17/2015 to reflect a postponement in the practice from August 1, 2015 to October 1, 2015. See http://www.consumerfinance.gov/newsroom/statement-by-cfpb-director-richard-cordray-on-know-before-you-owe-mortgage-disclosure-rule/ )