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Can You Believe It? TRID’s Impact on Markets is “Minor”

by James F. McClister

In December, existing-home sales re-found their footing, making up for the misstep in November. What did we learn? TRID was the cause of November’s slip, but it’s not a problem anymore.

“Closing time metrics are showing minor effects of TRID,” explained Tom Popik, the Campbell Surveys for Inside Mortgage Finance Research Director, in an appearance on CNBC.

TRID’s Affect on Housing

When the National Association of Realtors released its existing-home sales report for the month of November, revealing a steep 10.5 percent year-over-year decline in sales, the industry looked to TRID as the culprit, with many citing the drop as hard evidence that the CFPB’s new disclosure rules were a bust. In December, sales recovered and then some, as the delayed sales from November rolled over into December, pushing sales up 14.7 percent to a seasonally adjusted annual rate of 5.46 million (up nearly 750,000 month-over-month).

Two months removed from TRID’s early November implementation, NAR Chief Economist Lawrence Yun feels comfortable saying the pace of sales remains healthy.

“While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” Yun said, adding that warm weather and the prospect of higher mortgage rates also contributed to the strong December gains.

TRID and Housing’s Future

NAR’s report should help quell some of the TRID fears that stemmed from November’s report. Since TRID came into effect, some in the industry have appeared eager to say it failed; the numbers, though, continue to support a relatively smooth transition.

During JPMorgan Chase’ fourth-quarter conference call, the bank’s chief financial officer, Marianne Lake, fielded questions about TRID’s impact. Her response: a little, but not really.

Lake explained that while TRID did have a momentary impact in November that dampened the bank’s origination volumes, overall the new rules did very little to impact revenue.

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