Effects of TRID mixed so far

TRID was designed to clarify the process of home loan approval.

TRID was designed to clarify the process of home loan approval.

The implementation of the Truth in Lending/Real Estate Settlement Procedures Act Integrated Disclosure on Oct. 3 was expected to have detrimental effects on the real estate industry. Enacted by the Consumer Financial Protection Bureau, TRID consolidated standard disclosure forms used during the loan application process, and was predicted to cause slowdowns for real estate agents, appraisers and prospective homeowners.

"The HousingPulse survey found the impact of TRID to be minor at worst."

No clear change yet
A recent survey from Campbell and Inside Mortgage Finance HousingPulse Tracking, however, seems to indicate mixed changes in the process thus far. Using data from closings through the end of October, as well as insights from real estate professionals, the HousingPulse survey concluded the impact of TRID to be minor at worst. Compiled monthly, the HousingPulse survey records the share of home sales that have closed on time, as well as the total average closing time of several different types of home loans.

According to the October data, on-time closes related to Federal Housing Administration loans decreased slightly compared to the previous month, recording a 57.1 percent on-time close rate as opposed to 59.4 percent in September. At the same time, more VA loans on average closed on-time than in September, with 65.5 percent as opposed to 60.1 percent. The HousingPulse survey noted that these mixed messages persisted for a variety of loan types affected by TRID. Cash purchases, which are not subject to TRID regulations, did post a higher rate of on-time closes in October.

"While there was apprehension about TRID, so far impacts are minor," research director Tom Popik said.

Too close to call
Some experts have said it is still too early to tell whether or not TRID will have any measurable impact on the loan approval process. According to HousingWire, the most recent report from Ellie Mae on loan originations also points to little or no change as of yet. Ellie Mae CEO Jonathan Corr noted in a statement that average loan closing times remained at a constant 46 days, and the closing rate on purchased loans held above 70 percent, relatively normal compared to the recent past. Companies like Guaranteed Rate and Movement Mortgage have confirmed the origination of several TRID loans, according to HousingWire.

TRID was enacted to make the home loan process easier for first-time homebuyers.

In a sense, this could read as a simple sentiment of "no news is good news." However, some say they have already begun feeling the widely anticipated crunch of TRID. Jim Gallagher of the St. Louis Post-Dispatch interviewed several local mortgage lenders who have just begun feeling the effects of the new regulation. Ted Rood, a lender based in the suburb of Maryland Heights, Mo., told Gallagher that he had been forced to extend "a couple" of loan applications due to the new regulations.

"Closings are being postponed, locks extended at a cost to lender or borrower, sellers' plans disrupted," Rood said. He elaborated that while lenders may be willing to extend deadlines on rate locks at the moment, that could change if mortgage rates rise soon. Another lender interviewed by Gallagher also expressed concern that TRID rules may cause issues for customers who hope to close deals quickly, since lenders can no longer rush through the process. However, Rood noted he had not had to extend any closings yet.

The jury is still out on TRID at this time, but early indications point to some delayed closings as the cost of greater transparency to the consumer.