We all know the premise of introducing TRID (Tila Respa Integrated Disclosures) was to benefit the consumer by giving clear and concise forms to disclose accurate fees, and also to slow the transaction down so they wouldn’t feel as rushed, and could have more time to properly evaluate the loan they are choosing.
Well, let me tell you, I currently have some exceedingly unhappy clients that should have been able to close weeks ago, but due to the new restraints on time if anything at all changes in the loan transaction, they are now having to pay lock extensions, and wait an inordinate amount of time to get to the final destination.
Let me break it down for you.
They inherited their deceased mother’s home last year, had to go through all the trials and tribulations that comes with losing a close family member, wrangle with attorneys, and creditors, until they could properly look at refinancing out of mom’s two loans into their own new fixed rate loan.
They have good credit, consistent income, easily qualify according to the Ability to Repay rules with low debt ratios, and were trading in a first and an adjustable rate second for a nice new 30 year fixed loan with a low rate. They also wanted a little cash out to pay some additional unexpected bills.
All went smoothly, albeit with a few panics trying to get Change of Circumstance forms signed by both parties to ensure the transaction could continue on within ample time of the lock expiring. Finally the Initial Closing Disclosure (CD) went out, they acknowledged it, and final loan documents were drawn.
At this point there were other fees that they decided to add more cash out to cover, forcing the entire process to come to a halt. The file went back to the underwriter, there was a small wait time for her to review, rerun the automated underwriting engine, and clear the file to close again. The CD went out again, they acknowledged it immediately, but then we had the three day wait till they could sign the next set of final loan documents. This process took an additional week, due to turn times, and weekends in between. And, of course, the lock is ticking.
We managed to obtain a two day free lock extension from our bank, which was superb and would just allow us the time to fund after they signed again, bearing in mind there is the additional three day rescission period for a primary residence refinance.
Second signing time comes along, and after reviewing the closing statement they decided it would likely be in their best interests to up the loan amount even more to give themselves a cushion, given they are new to home ownership, thrown in at the deep end, and would prefer to have some assets to hold in the bank.
Well, guess what? Now we have an expiring lock that we have no chance to extend without a cost. And, who can pick up this cost? Not us! Although before government crackdown we likely would have credited it from our commission to ensure happy clients at the end. Our clients don’t understand why, when we have approved them again, they have to wait to get their final loan documents back out again.
But, here we are going through the same deja vu sequence, waiting for the underwriter to rerun the file, issue the clear to close again, reissue the amended CD, and sit and twiddle our thumbs until they can sign loan documents again. This time there is a cost to extend the loan for 10 days, that the borrowers are paying for, due to, well…us not having a choice.
Now, let’s reevaluate this particular situation. Very frustrating for all involved, of course. But, the clients have the right to change their minds, their situation changes, their decisions change, and now they are paying for it, in time, and more importantly, money.
In the past, actually only last September, we could have turned the file around in a day or two, once rerun by the underwriter the final documents could have gone right back out, and the clients sign and close well within any need for a lock extension, and without the panic to re-acknowledge the change of circumstance CD as quickly as possible to ensure the process continues.
We try not to push the clients to move quickly to acknowledge the CDs, in order to give them ample opportunity to read and understand the document, but when it’s also conversely detrimental to their financial well-being, incurring charges than cannot be offset, how is this possibly putting them in a better position?
I would encourage any member of the government, the agencies, or the CFPB to discuss this with me and explain just how this is helping our clients. Are we not forcing the clients to move along with a loan they don’t want in order to avoid costs that could be incurred? Are we not still panicking them into signing something they may not be 100% comfortable with, but they’re loathe to change as it might mean they lose their new home purchase should the seller’s not be willing to wait any longer? I’ll stake my life on it that there will be Loan Officers out there that will push it along regardless of what the clients want or need just to avoid these situations.
It may just be me, but I’m left with a bad taste in my mouth after enduring, what can only be described as, an uphill battle for these two young ladies, who were brand new to mortgage lending, and likely won’t be in any great hurry to do this again. What an utter shame.
Suzanna Ravin has been working in the lending industry for the last twelve years, currently managing a retail branch Peak Mortgage, a division of Finance of America Mortgage, LLC. She maintains her top originator status by remaining very hands-on with her clients’ transactions. Often referred to as the Loan Guru, she loves to be completely informed on lending guidelines, and regulations.
You can reach Suzanna at firstname.lastname@example.org – 916-462-8811- www.peakmtg.com/suzannaravin or visit her Facebook Business Page