TRID and Inflexible Sellers -- Deal Blowing Up

30 Replies

Man, today has been frustrating. I'm supposed to close on the purchase of a duplex in Aurora, Colorado this Friday, but my lender dropped a bombshell on me today. I'm fully approved, but they are saying the red tape that is TRID has caused them to have to push things back by 1 day. One day--no big deal, right? Well, the sellers are straight up refusing to move the closing date by one day. They understand it can't happen the day we had hoped, but they clearly want the deal to blow up for--who knows exactly what reasons. And, to make matters worse--I don't have a leg to stand on because it's my side that can't perform and come to the table with the loan and we're already past the loan objection deadline. Fantastic. They could technically not sell to me and also take off with my $5,000 EM--plus I'd be out inspector, appraisal, etc costs--not to mention an inordinate amount of time that I and others here on BP have put into this deal.

So, the latest idea is--if I can come to the table with all cash, we can close on Friday, and I can then refi in a few weeks. The lender is on board with that plan. The only issue is--I don't have that cash (I'm bringing $90k, but it's the remaining ~$200k that I was getting a conventional loan on). There's a couple folks I personally know that may (??) be willing to loan me the money on such short terms (1-3 weeks is what the refi lender is telling me), but I'm not super hopeful.

I'm wondering if anyone has any thoughts about how to make this work in some way. I'd really appreciate any ideas you may have to share. Feel free to post here or also feel free to PM me. Thanks!  

Originally posted by @Ned Carey :

Are you going to be an owner occupant? TRID doesn't apply to investor properties. 

That's odd. It's not OO. Are there new regulations for investments that are called something different?

Not that I am aware of. Maybe your title company is giving the lender bad info on what they need - or maybe the title company can set the lender straight. 

I was recently at a presentation by a title attorney who does mostly investor deals, who said it won't apply to most of his transactions. 

There  is a lot of confusion with the TRID guidelines, this is an adjustment period and everybody prefers to be safe than sorry. Pull a guide of the TRID guidelines and have a conversation with the title company. Did you notice that TRID backwards is DIRT?

Having said that, for a solution.....try to see if you can sit down with the sellers and their agent, see if there is some solution or compromise.

Oh, I remember the lender told me if we weren't fully compliant within DIRT... I mean TRID, that the loan would be unsellable. Could that really be true? 

Originally posted by @Wayne Brooks :

Having said that, for a solution.....try to see if you can sit down with the sellers and their agent, see if there is some solution or compromise.

 These folks have become incredibly unwilling to compromise. 

You need to send an email to your lender telling them that they NEED to close on time or nobody is getting paid, including them.

If they can't move it up by 24 hours then they are a horrible lender, TRID or not. Get in their *** and tell them to make it happen, otherwise the deal is dead, they don't get paid, you won't be working with them again, and sharing your experience with others.

It'll happen, you just gotta push.

The other question I have is, are the closing dates on your state contracts a hardline "time is of the essence" clause or if one party can close reasonably close to the close date you're still ok. In Texas, we have a closing date on our contract, but if the buyer ends up being a day or two late, seller still can't just end the Deal and take the EM.

Are you actually talking with the lender or are you talking to a broker? Also, see if you can get a feel from your RE agent as to why the sellers are balking. The only reason I can think of is that they received a better offer but it was after your offer was accepted. Maybe you can match the other offer if so. You might be able to find a hard money lender that could perform in this timeframe but based on your figures it looks like you are putting down 30% or so. I know a great HML guy in Denver but he never goes above 65% and often not above 60%. Maybe try Travis at Pine Group Financial? He is local also and does bridge loans. This is a hugely short timeframe but who knows.....

I was able to find this :

What types of loans are covered by TRID? TRID applies to all "closed-end consumer credit transactions secured by real property":

1. Primary Residence

2. Second home

3. Investment/Non-Owner Occupied

4. Construction-Only loans*

5. Loans secured by vacant land*

6. Loans secured by 25 or more acres*

*These loan types are not offered by Finance of America Mortgage

What types of loans are NOT covered by TRID?

1. Reverse Mortgages

2. HELOCS

3. Unsecured mobile home loans (not attached and no security in the real estate)

Unfortunately, the 3 day review period prior to closing cannot be waived.  The "rush" closings are not going to happen.  I am assuming you make your loan application after 10/1 ?

Originally posted by @Ned Carey :

Are you going to be an owner occupant? TRID doesn't apply to investor properties. 

That is untrue. TRID applies to ALL loans - OO or investor. TRID has nothing to do with occupancy. Everything to do with disclosures, which is relevant for ALL loan types.

I was recently in a TRID course/seminar presented by a title company and they said that TRID disclosures do not apply to investment properties. Very confusing.

I found this:

Are investment properties covered?

Investment property transactions are covered by the TRID rule if the transaction is primarily for a consumer purpose. The TRID rule does not eliminate the business purpose exemption from Regulation Z or RESPA. If a loan is primarily for a business purpose (eg. The purchase of an investment property), then it is exempt from Regulation Z and RESPA. . . including the TRID rule. If a loan secured by an investment property is primarily for a consumer purpose however (eg. cash-out to pay college tuition), then the transaction is subject to Reg. Z and RESPA and must comply with the TRID rule.

Im pretty sure that TRID applies to all Fannie/Freddie loans. But the real issue is that the new TRID regulations are causing delays in settlements.  This is something that has been perfectly normal since the new regulations took affect on October 1. A lot of the former responsibilities of the title companies has been shifted over to the lender now.

My advice is to have your agent strong arm the sellers agent. The extension of a contract by 1 day in light of new regulations is a perfectly acceptable thing in the market place.  If they are willfully trying to blow up the deal, even though you can not perform by a matter of just 1 day, believe me when I say when this goes to court, the court is very likely to find in your favor.

Both your agent and the sellers agent should have made you both aware by the way that it was possible for the settlement to be delayed with the new regulations while lenders were shaking out their new processes.

@Upen Patel

http://www.consumerfinance.gov/eregulations/1026-3...

See/open "official interpretation" near top of page, just above "b. credit over applicable..."

Comments 3(a), 4 and 5.  Non owner occupied 1 or 2 units are exempt, and apparently occupied 3-4 units are exempt.

@Brian Kraft I forgot to ask, was your loan appBefore October 3rd?  If so, exempt.  If not, we advised all our clients to do 60 day closes with the new TRID, at least for the first couple of months.

Sorry for the double post, thought it dissapeared, apparently ther'ssa delay in the post showing up.

@Brian Kraft Impotant question: Why, EXACTLY is there a delay.  I assume you received a Loan Estimate 3 days prior to your closing, and now they need to Change that Loan Estimate, triggering another 3 day wait, right?  An"escrow amount" change does Not trigger the need for a new Loan Eestimate/3 day wait, just in case that is their issue.

Originally posted by @Arianne L. :

I was recently in a TRID course/seminar presented by a title company and they said that TRID disclosures do not apply to investment properties. Very confusing.

I found this:

Are investment properties covered?

Investment property transactions are covered by the TRID rule if the transaction is primarily for a consumer purpose. The TRID rule does not eliminate the business purpose exemption from Regulation Z or RESPA. If a loan is primarily for a business purpose (eg. The purchase of an investment property), then it is exempt from Regulation Z and RESPA. . . including the TRID rule. If a loan secured by an investment property is primarily for a consumer purpose however (eg. cash-out to pay college tuition), then the transaction is subject to Reg. Z and RESPA and must comply with the TRID rule.

 I can safely say that I'm more confused now than I was before.

It seems that several of us have found conflicting information.  I can only imagine how fast the people in the mortgage business heads are spinning !

Keep in mind, even if you could provide information that the lender is wrong in their interpretation, the investor who buys the loan could still put their safeguards in place during this transition time and require compliance.

Your best bet at this point if having the agents work on the seller for an extension

This just shows another example of the cost of regulation. The lender and or title company should have started preparing a few days earlier. That is not the sellers fault. 

I am sure a lot of deals are going to blow up due to these new regulations. Another example of government overreaching. The very consumers who it is intended to protect are going to lose deals. 

The solution as a buyer is to have an add addendum extend up to 5 days to comply with TRID regulations.

I would talk with your agent/attorney.  I am a managing broker in 2 states and both of them have mortgage contingencies which state if you cannot get a loan by closing there is no default on your part and the EM is returned back to you.

I would also try and sen a email and have it forwarded to the seller.  Explain that this is not a delay caused by you, and that you are not using this as a tactic.  It is just a delay on the lender do to new regulations and they have to comply.