Before you pack that moving truck…

TRID (TILA-RESPA Integrated Disclosure) is at the forefront of every mortgage lender’s thoughts right now as everyone in the industry prepares for the impending form changes taking effect Aug. 1. While there’s no shortage of literature currently available about how lenders should prepare and what this means for their business, the potential effect on the borrower’s experience is less explored.

Let me paint the picture for you. It’s spring home buying season and the housing market is red hot. Homeowners who’ve sat on properties for years are now looking to take advantage of improved home values and prospective buyers are aggressively house-hunting while interest rates remain low. Imagine a young couple, for example, buying their second home- the one they hope to settle down in and perhaps start a family. They’ve called their trusted realtor, let them know what they’re interested in and are at the table prepared for this exciting move. Except this may not be like their first home purchase for a number of reasons.

Don’t Hold the Phone

Following an application, the lender will still have three days to send a loan estimate. However after Aug. 1, disclosures must be delivered and acknowledged by the buyer three days prior to closing. While past experiences offered the buyer more flexibility when receiving and digesting this information, missing this step restarts the clock and could change the terms and rates they receive, as well as delay the process. To avoid this, the borrowers need to be educated early on to ensure they are an active participant in the process and understand their accountabilities.

Delayed Closings

Today, it’s not uncommon for small transaction changes to occur during the contract and negotiation process that can quickly be rectified at closing. Soon, with the new regulations, borrowers may be shocked that there’s little room for error since all closing documents must be complete, delivered and acknowledged by the borrower three days prior to closing. This means that if any changes do occur, it could potentially delay the closing process, creating complications for buyers. This is heightened in a competitive market with buyers lined up for desirable properties. Since most buyers begin making financial adjustments, hiring movers or making temporary living arrangements based on a set move date established in their contract, complications like this can create a negative impression.

Communication & Education Among Parties

While borrowers are typically immune to any last-minute, unpredicted issues that may occur between lenders, title companies, realtors, etc., this may not be the case following Aug. 1 when it comes to buyer expectations. While smart lenders are proactively educating their trusted parties on what these changes mean, don’t leave out the borrowers. As with any change, there will be growing pains that may expose the buyer to new issues. Until the complexities and responsibilities are fully understood by all parties, the borrower could be put in strained or awkward situations for the first time.

While these scenarios leave much to be desired, the truth is, the forms will likely simplify things for the buyer in the long run as intended. However, borrowers will only reflect upon their experience. While first-time home buyers may not notice a difference, second-time buyers or those refinancing in years to come will need re-education.

While the impact of TRID is real, lenders that have done their due diligence to invest in compliance, ensure that their technology software up to speed, train staff, educate industry contacts and add staff will likely weather the changes just fine. For financial institutions that don’t have the necessary resources available, these changes are significant and they may have to forego offering mortgages. That’s why Credit Union Service Organizations (CUSOs) can provide relief by way of compliance expertise, trained staff, a top-notch technology platform and deep experience working directly with their clients’ customers or members every step of the way.

While you’re not alone in working to prepare for TRID, you may be in a situation where extra support is needed to ensure your members are happily packing their moving truck in route to their dream home this summer. Not only will they appreciate having a positive experience, they will think of their trusted lender who made it all possible for them.