It has been announced. Proposed. Debated. Postponed and proposed again. There have been numerous seminars and as many webinars, and probably a prayer meeting or two. But in the end, one thing remains clear: TRID is coming!
The TILA-RESPA Integrated Disclosure rule, more commonly known as TRID, goes into effect Oct. 3, 2015.
You knew that. Your real estate referral partners probably knew that, too. However, TRID is a perfect topic for you to present to real estate agents to highlight the difference working with a credit union can make. Here are three message points to tackle when you’re talking TRID to those professionals.
What a pre-approval is in a TRID world
The Consumer Financial Protection Bureau has made some aspects of TRID crystal clear. When we have six specific pieces of information — name, Social Security number, estimated property value, loan amount, income and property address — we officially have a loan application. That means the three-day Loan Estimate (LE) clock is ticking.
We also know that creditors can’t charge any fees to the borrower (other than a reasonable fee for obtaining a credit report) until the borrower receives the LE and indicates a desire to proceed. This is also pretty clear.
Additionally, creditors cannot require the borrower to provide any documentation verifying income related to the application prior to issuing the LE. Clear? Yes.
And yet, TRID is not clear. At least not when it comes to pre-approvals.
If the borrower applies for a pre-approval and does not provide a property address, we are missing one of the six pieces of information that trigger an LE. That means no three-day time clock is ticking.
So, in this instance, could creditors require documentation to verify income in order to issue a pre-approval? Can they consider pre-approvals separately from the loan application and not part of TRID rules? Or is a pre-approval “related to the application,” meaning creditors would not be able to require documentation prior to issuing an LE?
This is not a clear-cut issue. There are varying opinions regarding how pre-approvals will be handled moving forward. However you and your credit union decide to handle preapprovals is certainly a policy you will want to make your real estate referral partners aware of.
TRID is not a mortgage issue
Because TRID is integrating mortgage disclosures such as TILA, RESPA, and HUD-1 into new forms, many mistakenly believe it is merely a mortgage-related issue. It isn’t. It will affect all of us who make our living helping people buy homes.
TRID sets in place new rules with new waiting periods that will impact closing dates. We don’t need to paint doomsday scenarios regarding deadlines; however, the possibility of adding days to closing is real and one you should discuss with your real estate referral partners.
Communication is key
The top two reasons a real estate agent recommends a lender are 1) solid pre-approvals and 2) good communication throughout the process. We have already discussed TRID as it relates to preapprovals. As for communication, this should be welcome news for most credit unions, where you already excel at communicating with your members and helping them with exceptional service.
Bottom line, the key to avoiding TRID delays will be clear communication from the start. It only makes sense that your members would start the process with you, their local credit union. That’s a fact worth driving home with your real estate referral partners.
You can get the conversation started with real estate professionals by downloading our 'Explaining TRID to Real Estate Agents' slide deck.