Numbers Count: Communication as top concern in new disclosures
Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.The numbers: Communication around new consumer-friendly mortgage disclosures, known as the TILA-RESPA Integrated Disclosures (TRID), is a key concern for mortgage professionals, according to a survey released Dec. 1. Two out of 10 mortgage professionals surveyed said communicating the differences between the pre-TRID world and the post-TRID world was their main concern with the implementation of the new disclosure process that took effect in October, according to the survey by Genworth Mortgage Insurance, covered on HousingWire.com. Having the right technology and complying with the new disclosure process were the top concerns in the survey. What counts: We and other lenders have been using the new disclosure forms for two months, and we’re finding they are easier to understand than the previous forms, which was the federal Consumer Financial Protection Bureau’s goal in making this change. In a nutshell, two forms given at the start of the mortgage process in the past were combined into one easier-to-understand form, the Loan Estimate (LE); and two forms at the end of the process have been combined into an easier-to-understand form, the Closing Disclosure (CD). Along with the new forms, there are specific timeframes for you to review and sign forms.
The Loan Estimate provides a borrower clear information on the costs associated with the loan, including closing costs. Once you receive the Loan Estimate, you have 10 days to decide whether to proceed based on the cost estimates. But you may help move the loan process along by telling your lender to proceed as soon as you are comfortable with your loan choice.
The Closing Disclosure is laid out similar to the LE, so it is easy to compare initial estimates with the final actual costs of a mortgage. Keep in mind that, if possible, it’s good to make any changes to the loan product you want early in the process, since any change to the loan product or the annual percentage rate (APR) in the Closing Disclosure can trigger an additional mandatory three-day waiting period before the loan can close.
The new disclosures are certainly easier to read and understand than the previous documents. If you’re in the homebuying process, take some time to review the LE and CD and talk to your lender about both, so you understand all the costs in your mortgage.