How Long Will It Take To Close A Mortgage Loan Under The New Process?
By now, we’ve all had some contact with the new TRID forms and procedures. TRID, the acronym for TILA RESPA Integrated Disclosures, took four forms and condensed them into two forms. These forms are given to buyers at the start of their loan process (the Loan Estimate) and at the end (the Closing Disclosure). The Closing Disclosure, more commonly called the CD, replaced the long-used HUD-1 Closing Statement so now, no more HUD!
While the new process didn’t do much to the way the start of a loan application takes place, it has made a distinct difference in the closing portion of the process! That’s because the CD is (a) now given to your buyer a minimum of 3 days before they sign their loan docs and close and (b) because the final closing paperwork, the CD, is now being prepared by the Lender, not the Escrow Officer.
So what does all this mean to a Realtor in regards to how long it will take to close a sale when your buyer is securing financing for the purchase? The CFPB’s estimate was 88 days. Many Mortgage Companies and Realtors are estimating 60 days. The Loan Officers are saying 45 days. And the vast majority of purchase contracts are still saying 30 days!
What is the real answer? I think that the realistic answer ‘will eventually be,’ add 5 days to your normal closing times. The reason I say ‘will eventually be’ is because every Lender and every Title & Escrow company has prepared for this change and made the change in a different manner. For Lenders, this is “all new” for us to gather all the figures in the transaction. For the Title & Escrow companies, they are now sort of “out in the cold” as to when things should be happening because they are no longer driving the bus at closing! But “this, too, shall change!”
When the CFPB drafted these new forms and made the new rules, they received input from Realtors, Lenders, Title & Escrow companies – and most importantly, from the borrowing public. They put exhaustive time and energy into making the forms simple and understandable to the average borrower. I applaud them for their work. If you’ve taken the time to read a Closing Disclosure, they are easy to read and make a lot of sense.
It will be some months before we’re all accustomed to the new closing process. But I think we’ll find that “soon,” the closing process will get quicker, and we’ll have more happy, satisfied, and informed buyers.