Implementing TRID: Change Is Painful

[Leo Kingston]

Change is not usually a comfortable thing, unless we are changing to something easier or more familiar to us. Well, the new residential closing documents I’ve written about a couple times already are neither easy nor familiar. They are proving to be problematic, to say the least.

Real estate professionals call it TRID, which is short for Tila-Respa Integrated Disclosure. But some have suggested it’s an acronym for something else entirely. Apparently a growing number of agents and brokers agree that TRID actually stands for The Reason I Drink.

Closing delays have become commonplace, and closing delays create a host of other issues in their wake. Additional costs and magnified frustration with lenders’ requirements compete with the near-impossibility of having the required buyers’ walk-through of an empty house three days prior to their closing on it.

I can only assume the new 3-day rule was set by somebody who has not participated in many residential closings. It was probably suggested by an apartment-dweller and legislated by people who have their staff members or their brokers take care of domestic matters, such as a home sale.

Expecting sellers to vacate their homes 3 days prior to closing is unrealistic, and completely unprecedented. It is certainly not easy or familiar, is it? Therefore, the change is painful.

But I have to say one thing about it… One buyer I know would LOVE to have TRID requirements forcing her sellers to move out 3 days prior to closing, but it does not apply to her privately-financed residential transaction. Her sellers are elderly, and simply ill-prepared to be out by the closing date.

There are certain exceptions to TRID requirements. According to the American Land Title Association, the following types of loans do not have to comply with TRID:
Home-equity lines of credit
Reverse mortgages
Mortgages secured by a mobile home or dwelling not attached to land
No-interest second mortgage made for down payment assistance, energy efficiency or foreclosure avoidance
Loans made by a creditor who makes five or fewer mortgages in a year
And, in addition, 100% cash transactions (no lender involved) are also exempt. HUD-1 forms were not formerly required to close cash sales, and TRID documents are not required to close cash sales now, although either the HUD-1 or the TRID forms can be used if the parties so desire.

In my own real estate businesses, I regularly have some transactions that must be TRID compliant and others that are exempt from TRID. Can you guess which ones I prefer?

But the home buyer I mentioned earlier doesn’t have the force of the new law working for her, and her sellers and their agents are not feeling as much pressure as they would undoubtedly be feeling under the TRID requirements.

These are my thoughts on implementing TRID so far. What are your thoughts… don’t be shy!