Steven Diadoo – reporting from Albino Squirrel Pond in Lakeville, MN.
I promise this won’t be boring but, brace yourself, it’s a mortgage post. For you statistic lovers out there, you’ll be happier than … I don’t know, someone that loves statistics. But for the rest of us, I have done my best to recap Ken Fear’s whole enchilada in four simple paragraphs:
I haven’t received any questions about the new laws that went into effect in 2015 called T.R.I.D. but it has changed how quickly you can close on a house, AND, we now see that it costs a little more to buy a house: $258 on average.
Getting a mortgage now costs $258 more on average due to T.R.I.D. according to the following report published by the National Association of Realtors.
Check out what T.R.I.D. stands for: TILA RESPA Integrated Disclosure which stands for Truth In Lending Act Real Estate Settlement Procedures Act, or Truth In Lending Act Real Estate Settlement Procedures Act Integrated Disclosure. There it is – my right brain just fell asleep. Talk about “lack of regulatory clarity” nobody can even remember the name. (My next blog post will explain what all of that means in easy to understand language.)
On the one hand, these laws are passed to protect consumers from getting ripped off when they get a mortgage to buy a house. On the other hand, is it worth $258 per transaction? Not so bad I guess. On the third hand, three hands for this one, that’s one hell of an acronym.
Without further ado, Ken’s findings…
TRID: The Cost of a Better Experience
The implementation of the new Know Before You Owe or TRID rules were marked by initial delays that have given way to relative calm. However, half of lenders surveyed in the 2nd quarter Survey of Mortgage Originators indicated that they increased fees to consumers to cover TRID related costs. Weighted by production volume those costs amounted to $258 on average.
What drove the costs? 71.4 percent of respondents cited investor demand or TRID policy and 57.1 percent cited a lack of regulatory clarity as cost drivers. Some reports suggest that lenders have had difficulty selling the loans they originate to investors, which has caused them to hold onto loans longer, resulting in higher costs. Despite frequent anecdotes, increased manual underwriting was only cited by 14.3 percent of respondents.
Looking to remediation, 42.9 percent indicated that neither clarity, investor changes, nor software changes would reduce costs over time. 28.6 of respondents felt that these changes would reduce costs, while an equal share was unsure.
While the TRID rules may result in higher fees from some lenders, the rules were intended to protect consumers and to streamline the old disclosure process. This benefit is not easy to quantify and costs are not insignificant, but they are not likely to impact sales as fees are often added to the mortgage balance, spreading the charge over the life of the loan.
Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission.