The overwhelming majority of title professionals will be prepared for the Aug. 1, 2015, implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) rule, according to a survey conducted by ALTA.
The survey showed that 92 percent of respondents indicated that their companies will be prepared to handle the new forms and comply with the regulation. The survey polled more than 500 title professionals, including title agents, underwriters, attorneys and abstracters.
While most title professionals will be prepared for implementation, 87 percent believe TRID will delay closings or result in closings taking longer to complete. Only 5 percent believe the disclosures won’t affect closings, while 8 percent are unsure. The top reasons given as to why closing delays will occur include:
- 3-Day Delivery Rule
- Changes at the closing table
- Walk-through issues
- Issues with small lender/credit union readiness
- Lender/Realtor Communication issues
According to one person who took the survey, “lenders I've spoke with seem to have a timeline already in place for when the order comes in. The three-day rule cuts down a lot of the time lenders have to work on things. With the way business has always been conducted in this industry, a dramatic change like this will not happen overnight. There are too many hands in the cookie jar to make this go smoothly and to complete the assigned tasks on time.”
Some who took the survey believe the new regulations will cause transactions to take up to 60 days to close. Others believe the new forms will tack on an additional two or three weeks to the closing process. One person pointed out how this will impact REO sales and the strict closing deadlines. “The three-day rule will lengthen the lender's process, most likely delaying the closing from the seller's close-by date. This means the agents will need to get an addendum to extend the closing date, which takes additional time to get the seller's approval and signature. This could potentially become a vicious circle of delays,” the respondent said.
According to the survey, more than two thirds believe the TILA-RESPA forms will not help the CFPB meet its objective of helping consumers understand or be better prepared to understand the costs of buying a home. Meanwhile, only 15 percent believe TRID will help consumers better understand their transaction.
Some do believe the new Closing Disclosure will help consumers understand the costs associated with purchasing a home. According to one person, “The contents of the Closing Disclosure Form is great and I love the first page details. However, I believe the average consumer will choose to ignore the remainder. It is all about how much is my payment and how much do I bring to closing. Beyond that, most simply do not care.”
However, others said that while the forms may display fees in a more readable fashion, consumers will still want and need to read it and understand it.
“While the new forms are generally understandable, there will be confusion about the title premiums, just as one example. We will probably need to use a simple closing statement to help the borrower and seller understand,” according to one person who took the survey. (Read ALTA Board Approves Model Settlement Statements)
In order to prepare for the new forms and rules, 43 percent of those polled will devote at least 26 hours to training staff. Another 33 percent will spend at least 11 to 25 hours training staff to handle the disclosures.
More than half of those surveyed reported they have either viewed a test version of their software to produce the Closing Disclosure or that a demo has been scheduled. However, 39 percent indicated they have not viewed a demo of updated software and that nothing has been scheduled.
Collaborating with lenders to exchange data and meet production and delivery requirements of the three-day rule is the top concern of those who took the survey.
Because there are many unknowns with how the disclosures will work in actual transactions, ALTA has asked that the CFPB follow a “hold harmless” period of restrained enforcement and liability through the end of 2015 following the Aug. 1 implementation of TRID.