TRID Changes: What to Expect Next
It has been almost two and a half years since TRID regulations for closings went into effect. (Can you believe that?) Though it might not seem like it has been that long given how much time and money was dedicated to preparing for the “Know Before You Owe” rollout, now is a good time to see where it stands.
Aspects of TRID are still being tweaked
It is March 2018, and Congress is still making changes to the regulation, as well as debating the entire Dodd-Frank financial reform legislation. In fact, a proposal to repeal Dodd-Frank passed the U.S House recently. The full repeal died in the Senate, but that chamber did push through a package of smaller rollbacks and changes, so it will be interesting to see if federal lawmakers can reach common ground on how to change the 2010 law. Dodd-Frank, which became law after the housing crash in 2007/2008 is the reason the new rules and its overseeing agency, the Consumer Financial Protection Bureau (CFPB), exist.
The CFPB is still being criticized more than two years later because some in the industry believe the agency has not been clear enough on how the written rules affect real estate deals. Even if full repeal of the Dodd-Frank Act isn’t a possibility, it’s clear that lawmakers will have plenty of time to hear from those affected by TRID (like your law firm) when debating what – if any – changes need to be made.
TRID may see changes but…
Regardless if the regulations are ever relaxed or changed, the fact that TRID has been our guidepost for a couple of years means that it has already shaped how closings are performed. The title industry spent millions of dollars to comply with these changes, so while changes to TRID sound great, its effects are here to stay.
Ever since TRID was implemented, there has been an industry emphasis on the American Land Title Association’s Best Practices for both large firms and sole practitioners. The seven pillars of the ALTA Title and Settlement Company’s Best Practices ask real estate attorneys and title agents to 1) maintain the proper licensing, 2) ensure that a company has proper procedures regarding escrow services, 3) have a procedure protecting non-public personal information, 4) ensure that a company has proper closing procedures, 5) guarantee proper delivery after a deal, 6) be properly insured in case of errors, and 7) have an avenue for consumer complaints regarding poor service.
While officially adopting the Best Practices is voluntary for real estate attorneys and title companies, it’s easy to see why making sure you and your company are following these standards are beneficial when it comes to TRID. (The CFPB also made amendments to Regulation X around the same time, which emphasizes the Best Practices because there was a provision in the changes that holds mortgage lenders liable for the work completed by their third-party service providers.)
The benefit of automation and embracing technology
Back in 2015, we wrote in an Easysoft Legal Software whitepaper that the TRID overhaul forced many attorneys to make the switch from manual to electronic management. In that same document, we advocated for using technology and automation saying, “these new documentation requirements and procedures present a perfect opportunity to add technology to your real estate closing process. The risks of human error are too great; the penalties too high, and the repercussions too serious to continue to manage the process manually.”
In fact, we made technology changes ourselves by introducing Easysoft Legal Software’s EasyCDF program. TRID- compliant from the start, EasyCDF ensured that our clients had some peace of mind.
EasyCDF's capabilities include:
- Automatically populating GFE-HUD comparison sheets
- Displaying charges as a lump sum or itemized
- Providing over 200 of the different real estate closing forms needed
- Preparing automated and balanced disbursement ledgers
- Printing checks
- Filing 1099-S forms electronically
- Automatic calculation of fees, payments and balances
TRID was a very big deal because it overhauled how companies and agents performed closings. New forms – and new software – was needed. All of this was done in the name of transparency for consumers. Here is a refresher on just some of the changes TRID triggered. Remember TRID is an acronym of two acronyms – the Truth-in-Lending Act (TILA), and the Real Estate Settlement Procedures Act (RESPA).
The most noteworthy changes under the new rule came in the form of the integrated closing disclosure forms because it replaced four documents with two. Information from the Early TIL Statement and Good Faith Estimate were combined into a Loan Estimate document and the TRID- compliant Closing Disclosure form replaced both the Final TIL Statement and HUD-1 Settlement Statement.
Under TRID, the Loan Estimate must be delivered to the consumer or placed in the mail within three business days of receipt of an application and no less than seven business days before consummation of the transaction. TRID also requires creditors to retain the Closing Disclosure form for five years after consummation. Other documents, including the Loan Estimate, must be retained for three years.
The need for marketing
The goal of TRID, according to the CFPB, was to make the homebuying process more transparent for consumers. That transparency, the CFPB hoped, would lead to people researching closing agents on their own and picking title companies and real estate attorneys that worked best for them. In fact, the right for buyers to find their own providers is something that is mentioned on the TRID forms by labeling title insurance as “optional.”
Regardless of how much shopping is being done, consumers are paying more attention than ever before. Not only are some of the bigger firms now pushing for sleek websites, strong social media presences and other marketing strategies, a more open market also means that there’s a huge opportunity for real estate attorneys and title agents to reach those same potential clients and demonstrate how they can best meet their needs. And it does seem that at least some homebuyers are taking advantage of this new customer research. In a February 2016 survey conducted by ClosingCorp of 1,000 homebuyers after TRID was implemented, 78 percent of buyers who said they were informed that they could shop for different service providers, 74 percent of that group, said they shopped for provider. Interestingly, only 55 percent of them said they saved money -- somewhere between $1,000 and $5,000 -- as a result.
That 2016 survey – done about four months after TRID took effect -- also gave a glimpse into whether consumers found the TRID process easier to understand than the previous homebuying experience, especially because the pool was made up of only repeat homebuyers.
A January 2017 survey by the same group concluded that half of all homebuyers (50 percent) selected their title company or real estate attorney themselves. Of those who did not make their own selection, 35 percent said their realtor selected the company for them, showing that it is still very important for closing agents and real estate attorneys – and even big title companies – to build solid relationships with area Realtors for business leads.
Even though it’s a small sample size, the survey also contained information showing how using technology is advancing the real estate industry. According to ClosingCorp, 72 percent of homeowners said their loan estimates and closing disclosures were delivered electronically, showing that there is both a customer desire for such a service and that lots of closing agents and companies have such capability in place. Automation and e-closings are no longer novelties. They are expected, and TRID gave those involved an excuse to change over because it simplified some of the complex changes of the new process.
Despite loud grumblings before and after TRID’s implementation, the fervor of complaints and worries has died down as we have adapted to the new procedures. That being said, Congress, the CFPB and all relevant stakeholders will have plenty of opportunities to change and finetune the massive overhaul as needed. No matter what TRID changes get passed, the lending and closing aspects of homebuying have been changed forever – and mostly for the better, especially for those providers, both small and large, who want to seize the opportunity. Thanks to the push for greater transparency for the consumer, the real estate market is now more open, especially to small practices or solo real estate attorneys.
All you need is good technology to help you deliver quick and accurate results and a defined strategy for how to attract potential customers. Learn how Easysoft Legal Software can take care of streamlining your closing process so you and your team can focus on building your business.
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