Why TRID is Really a Good Thing
/Let me say first that I get the challenges that we are going to face once the new rules go into place. Getting the HUD (or I guess to use updated terminology, the Closing Disclosure) into the buyer’s hands three days before closing is going to require all of us to really step up our games. But why is that a bad thing? Shouldn’t we always be looking for ways to get better – particularly in the way we serve our customers? And isn’t giving a buyer more time to review the numbers to the biggest financial investment that he or she is going to make, a good thing? Personally, I probably would have set the number at 1 or maybe even 2 days that the closing disclosure should be delivered prior to closing, as 3 days is probably a bit excessive. But in principal, I agree with this direction and think it is a good thing for our borrowing clients.
And speaking of what is good for the customer, I personally believe that the CFPB really got this one right from a disclosure creation standpoint. We all know that when the government gets involved, specifically when their intent is to make things easier for the borrowing public, it normally goes in the opposite direction. We need to look no farther than their first attempt at making a mortgage lender’s Good Faith Estimate better for the borrowers. It even confused me when it was originally rolled out. But this time, I think the powers that be have hit a home run. The Loan Estimate (which now replaces the Good Faith Estimate and Truth in Lending disclosures) is much easier to follow and better explains to a buyer what their costs will be and does so in a format that is much easier to understand. And the new closing disclosure is equally impressive from an ease of understanding standpoint. And best of all, it mirrors the Loan Estimate. So now instead of having a HUD-1, which clearly spells out the costs, but is in a completely different format than anything the buyer has seen to that point, the new Closing Disclosure follows the same format as the Loan Estimate. So the client is not seeing something for the first time at the closing table, and trying to figure out how it matches what they’ve been provided. Below are examples so you can see exactly what I'm talking about.
Personally, I’m on board with these new changes. I think it is great for our customers and that it will make us better at what we do. Those that can’t step up to the challenge just won’t get the business.