On October 3rd, new federal government mandates go into effect that could delay closings. The new rules, known as TRID or Truth In Lending Act Real Estate Settlement Procedures Act Integrated Disclosure regulation, require lenders to give borrowers a new combined Closing Disclosure for that details all the charges, fees and line items associated with the loan three days before the closing date.
This three day disclosure period is intended to give borrowers adequate time to review the form. Here’s where the delay may occur: any changes in the annual percentage rate within that three-day period—more than one-eighth of a percent for a ﬁxed-rate loan or a quarter of a percent for a variable rate loan—or changes or additions in other fees, such as adding a prepayment penalty, requires another three-day disclosure period.
Some banking and real estate industry veterans predict the new rules will delay closings which will cause major headaches on both sides of the table.
Borrowers can mitigate delays by carefully choosing a lender that is prepared for these changes, and sending bank statements, W-2s and pay stubs to their lender as soon as they go under contract. Also avoid making any changes to the APR within 10 days of closing.
Sellers can protect themselves by accepting offers from buyers with a 90-day rate lock, and allowing several days between the closing of your current house and the closing of your new house.