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Only 3 situations where TRID causes closing delays

SAN DIEGO – Oct. 21, 2015 – Despite industry warnings to the contrary, only three situations can delay a loan closing under the new integrated disclosures that became effective Oct. 3, according to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, who spoke at the Mortgage Bankers Association’s Annual Convention & Expo 2015 in San Diego.
Cordray’s comments followed a presentation by Quicken Loans Inc. founder Dan Gilbert, who compared the new Integrated Disclosure Rule requirements to the process of ordering a hamburger at a fast-food restaurant.
Gilbert suggested that if the TRID process was used to order a hamburger, the restaurant would be required to break down the cost of each ingredient – such as meat, onions, ketchup, etc. – before it could give the hamburger to the consumer. And if the consumer ordered the hamburger and then decided to forego the onions, Gilbert said the consumer would have to wait three more days for his meal.
Cordray played off the hamburger examples, saying he appreciated the advice and “the next time I go to five guys, I’ll work on my methods of buying a hamburger.”
Cordray downplayed many of the Ability to Repay and Qualified Mortgage rule doom-and-gloom predictions, such as one that claimed they’d cause mortgage costs to double, that they would result in no non-QM (qualified mortgage) originations because of the risk of litigation, and that small financial institutions would withdraw from the mortgage business altogether.
But, according to Cordray, although rules have been in place for almost two years – none of the concerns have come true. Instead, home purchase financing increased by nearly five percent in 2014. On jumbo originations, which are all non-QM loans, volume has substantially increased.
“And so far as we can tell, there has yet to be a single case brought against a lender for making such a loan,” Cordray said.
The CFPB chief said he’s been “disturbed” about some vendors’ poor performance getting their work done in a timely manner on TRID – that many lenders were unfairly put on the spot with last-minute vendor changes or changes beyond the due date.
“It may well be that all of the financial regulators, including the consumer bureau, need to devote greater attention to the unsatisfactory performance of those vendors and how they’re affecting the financial marketplace,” Cordray stated.
The director went on to highlight how warnings were issued about the TRID rule.
Cordray also talked about negative warnings issued before TRID’s Oct. 3 debut – that it would delay and disrupt closings, and that rate-lock costs will go up due to the new disclosures.
“These claims, although perhaps partially correct during a transitional period, essentially reflect a failure, or perhaps, a refusal to understand what the rule actually says,” Cordray said. “The rule does require that the consumer receive the Closing Disclosure three days in advance.” However, that doesn’t mean closing costs must be known to the penny three days before closing.
It also doesn’t mean that any changes of any kind will mean there will be a delay.
“That’s been a caricature, and it’s not correct,” Cordray said.
The truth is the Closing Disclosure can be changed right up to the point of closing, the CFPB chief said. Even after a loan is closed, the Closing Disclosure can be corrected.
In fact, Cordray said there are only three narrow circumstances where the closing would be delayed due to the mandatory three-day “closing disclosure” waiting period:
The first is when the basic loan product changes. An example of this is going from a fixed-rate mortgage to an adjustable-rate mortgage.
A second is when the annual percentage rate changes more than one-eighth of a point on a regular transaction or a quarter point on an irregular transaction.
Third, the loan can be delayed if a prepayment penalty is “blatantly added to the loan.”
“In those very limited circumstances, and those circumstances only, we want – and need – consumers to be able to consider their options,” Cordray stated. “Any other changes, such as modifications made after the walk through, or adjustments requiring sellers credits, do not affect the closing date, and in fact can be made using an updated closing disclosure without having to cancel or delay the closing.
“You can add onions to your hamburger without having to redo the deal,” Cordray added.
© 2015 Mortgage Daily. Distributed by Tribune Content Agency, LLC.
Source: Florida Realtors Feed

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