Parker County Today May 2016 - Page 13

Loan Closing Considerations to Make under Recent Law Changes By Stephanie E. Kaiser, Attorney-at-Law, Puls + Haney Parker County affords its residents a unique opportunity to live and engage in a rural lifestyle while still having access to big city resources. Land sales are on the rise and, as some are learning, financing such purchases can be met with delays. Some delays may be attributable to appraisals and closing schedules; others are attributable to TRID, which is a new law that went into effect on October 3, 2015. What is TRID? Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which was signed into law on July 21, 2010. The Dodd-Frank Act established the Consumer Financial Protection Bureau (CFPB), which issued a number of mortgage-related regulations. TRID represents one of those regulatory changes and stands for TILA-RESPA Integrated Disclosures; TILA refers to the Truth-in-Lending Act, and RESPA refers to the Real Estate Settlement Procedures Act. Generally speaking, TRID applies to certain mortgage loans whose primary purpose is consumer. A lender may be able to rely on how the loan proceeds will be used to determine whether the primary loan purpose is consumer (e.g., if 100% of the loan proceeds will be used to purchase an individual’s primary residence, and if the residence is worth more than the land, then the primary purpose of the loan is likely going to be consumer). Sometimes, additional information is needed to determine the primary purpose of a loan. One of the best ways to avoid delays in closing a TRID loan is to communicate with the lender regarding the terms and conditions on which the loan can be made. Through such communications, the lender may be able to determine whether the loan is subject to TRID and, if so, begin making the disclosures necessary to get the closing timeline started. Concluding Thoughts The Dodd-Frank Act is thousands of pages long, and the regulations issued by CFPB are extensive. This article, therefore, highlights just some of issues to consider when financing the purchase of your home in Parker County and the timeline for closing that loan. Stephanie E. Kaiser frequently trains and advises lending institutions and others on the Dodd-Frank Act and the regulations issued by CFPB, including TRID. For additional information on Puls Haney Kaiser, PLLC, you may visit PA R K E R C O U N T Y T O D AY The applicant must be provided with a Closing Disclosure at least three business days prior to consummation of the transaction. The Closing Disclosure replaces the HUD-1 Settlement Statement and final Truth-in- What can be done to avoid closing delays? Mailing the Loan Estimate and the Closing Disclosure adds three days to the timeline absent evidence of earlier receipt, and the waiting periods associated with the disclosures may only be waived in a “bona fide personal financial emergency,” which is narrowly defined. As a result, the timeline for closing a TRID loan is generally unmovable. MAY 2016 How can TRID affect my loan and closing? When TRID applies to a loan, a Loan Estimate must be delivered to the applicant within three business days of receiving the application and at least seven business days prior to consummation of the transaction. The Loan Estimate replaces the Good Faith Estimate and the initial Truth-in-Lending disclosure and is often provided before all of the information necessary to make a sound credit decision is received. Under TRID, the lender cannot require the applicant to provide verifying information related to the application before issuing the Loan Estimate. The Loan Estimate, therefore, must be based on the best information available at the time of the disclosure and be made in good faith. If certain information changes, then a revised Loan Estimate may be required. If a revised Loan Estimate is required, then it must be provided at least four business days prior to consummation of the transaction. Lending disclosures and allows the applicant to compare the actual costs to the estimated costs prior to closing. 11