New regulations are delaying a high amount of loans, new research finds
More than 75 percent of banks say TRID compliance is delaying loan closings between one and 20 days, according to a survey by the American Bankers Association.
The reasons for the delays, the survey found, include hiring more staff to cover the compliance (who required more training and hours), additional legal reviews and third party audits.
Additionally, banks have eliminated products in response to TRID, including construction loans, home equity loans, adjustable rate mortgages and payment frequency options. The reason for the elimination is due to a lack of clarity on the rules for such loans under TRID.
Seventy-eight percent of surveyed bankers say they are still waiting on updates to systems from vendors and have to do manual workarounds in order to achieve TRID compliance. Ninety-four percent of bankers say the “good faith” grace period should be extended.
Bob Davis, ABA executive vice president of mortgage markets, financial management and public policy noted the impact of TRID in a National Association of Realtors report.
“It’s clear from this survey and our discussion with bankers that TRID compliance remains a significant concern,” said Davis. “Consumers are seeing the greatest impact due to increased loan costs, fewer choices, and delayed closings—and that’s not what this rule was intended to do.”
Bankers, Agents Differ On Delay Impact
Despite the worry from banks, numbers from other surveys are not quite as dire. The National Association of Realtors ran their own survey, and while they found a similar 8.8-day delay was average for post-TRID transactions, only 10 percent of Realtor transactions faced any delays.
Many agents, in response to TRID, made changes to their business practices in order to accommodate TRID. Such changes included: adjusting purchase agreements with longer contract horizons; sharing contracts/amendments sooner with lenders; title insurers and closing agents; having inspections performed earlier; and adjusting the purchase agreement with new contingencies, as well as formulating a plan with lenders and title agents.
Additionally, although there was a dip in existing-home sales in November of last year after TRID’s implementation, the impact of TRID has been considered minor since then. Home sales jumped back up in December, so despite the alarming numbers coming from banks, home sales are still pushing forward regardless of TRID.