Are You Ready? Is Your Lender Ready?

There is a big change coming later this year...All mortgage applications taken after August 1 will require the closing documents to be provided to the consumer at least three business days prior to consummation. This is thanks to the new TILA-RESPA Integrated Disclosure rule. I have attached a brief recap below. (I say brief because the actual document is over 1,600 pages).

Think about this for a minute: When was the last time your lender had your client’s closing package to the attorney and the attorney had all of the documents prepared 3 days ahead of closing? I know, it’s frightening to consider. Well, in less than 6 months, that is going to be the new reality for all of us.

Fortunately, for my team, we have exceeded getting all of our purchase closing packages to the attorney at least 48 hours in advance of closing, over 85% of the time, covering the past 4 years. But even with an exceptional track record like ours, we are going to have to raise the bar even higher.

Our goal, starting at the beginning of this year, is to get every purchase closing package to our attorney 72 hours in advance. Granted, we can’t hold the attorneys accountable at this point to also prepare their docs, but we can certainly keep up with our performance. The reality is that when we get to August, we will likely need to have our closing docs out at least 4 days prior to closing, to give the attorney a day to prepare the docs for signature. Raise the bar again!!

Change is a constant for all of us in real estate. I’d suggest you start thinking now about how you can tweak your own process and timeline. A simple example would be to make sure you are scheduling all home inspections within 3 days of contract acceptance. This will allow your lender to get the appraisal ordered sooner, particularly on a deal with a short time frame. And, you certainly need to be thinking through all of the potential contractual issues, those that are typical and those out of the norm that tend to come up at the last minute, causing a change to the contract affecting the numbers. Any change to the numbers affecting the Closing Disclosure will require a restart to the 3 day wait. It’s a brave new world!

I’d also suggest that you work with a lender that is prepared for what is coming. Those that consistently miss closing dates and/or have packages coming in at the last minute are going to struggle mightily with this. Now is the time to start preparing!

Click Here if you'd like to read a recap of some important related items.