Every week, we ask a real estate professional for their thoughts on the top trends in real estate.
This week, we talked with Ron Draluck, a certified mortgage planner with Fidelity Bank. A mortgage professional for 30 years, Ron was named the top mortgage originate in Georgia in 1988, and since the inception of the Gold Award in 1988, he has received that honor from the Mortgage Bankers Association of Georgia. An Atlanta native, Ron has a BA from Tulane University and an MBA in finance from Georgia State, and is a member of Lenders Who Care.
Atlanta Agent (AA): When it comes to the new TRID regulations, what things should agents be aware of?
Ron Draluck (RD): TRID is essentially a consumer protection law that attempts to make the costs of borrowing transparent. As a result, the lender is responsible for accurate information. It should be noted that borrower-qualifying credentials have not changed in years. It is compliance (TRID) that complicates the process.
Violators of TRID can, in some cases, be fined up to $1 million per occurrence. As a result, lenders are going to check, double check and triple check before disclosures go out the door. Additionally, certain changes such as a variance in APR > .125 and program changes must be re-disclosed with a three day mandatory waiting period before the loan may close. Since TRID became an immediate requirement, lenders have had no experience with the new rules, as well as the new forms. Because of that fact, it is recommended that closing dates be extended by two weeks from the normal closing expectations. Once TRID has been in place for 90-120 days, lenders may become more efficient and can potentially speed up the process.
Lenders must quote, among other things, the exact property taxes, the exact number of months of escrow, the exact attorney and title insurances, and sometimes, the Realtor’s commission. As a result, there could be a delay in disclosing at the beginning of the loan process. Don’t be surprised if estimates are slightly inflated at first to prevent under disclosing. Also, the closing disclosure (CD) replaces the HUD1 closing statement. It is now prepared by most lenders, not the closing attorney. The borrower must have it at least three business days (excluding Sundays/legal holidays) prior to closing. Certain changes as mentioned above would require the changed CD to be sent out with another three-day waiting period. There are no exceptions.
AA: How should agents prepare their clients for the lending process?
RD: It’s twofold. Firstly, agents will need patience. There will be many questions, and there will be quite a bit of re-disclosing. Any time there is a change – if the appraisal comes in different, for instance, or the seller’s contribution to the closing costs is tweaked – there must be another round of disclosures. It will seem superfluous, but it has to be done.
Secondly, not everyone is Johnny on the spot, so agents must pay attention and make sure their clients are fulfilling requirements, as they arrive, not eventually. The lender must be very careful to ensure that everything is done correctly, but if the borrower is not participating on an immediate basis, it can be detrimental to the closing timeframe.
AA: Finally, how can agents ensure they are properly educated on new lending regulations?
RD: Agents need to set realistic expectations with their clients on the closing dates. It’s been commonplace, in the Atlanta area, to have a 30-day close; that has not been a problem, assuming everything goes like clockwork.
But as I said before, lenders are now dealing with a new host of standards and paperwork.