New Lending Disclosures - Effective October 3, 2015

The Consumer Financial Protection Bureau has announced the October 3 start date for the new TILA-RESPA Integrated Disclosure (TRID) rule. The new disclosure first combines, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate. Second, the HUD-1 and final Truth-in-Lending disclosure have been combined into another new form, the Closing Disclosure.

How will this affect my loan?

For those buyers who will be using financing for the purchase of their home, this Closing Disclosure will have a significant impact.  It is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. And although, this simplification of information will be a benefit to Buyers. The critical point is that the Closing Disclosure form must be provided to consumers at least three business days before consummation of the loan.

In plain English, this means that any transaction with a loan will be delayed for 3-6 business days from today's closing timelines. Three days is the minimum requirement for the Buyer to review and accept the Closing Disclosure. This minimum applies if the document is delivered by personal service. If the document is delivered by mail, there is another 3 days tacked on for the document to be deemed to have been received.

Also, if any changes are made to the material terms of the loan, a NEW 3-day review may be required. This could cause an even greater delay in closing time periods. The three particular changes that would require a new review are the following:

  1. The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans. A decrease in APR will not require a new 3-day review if it is based on changes to interest rate or other fees.

  2. A prepayment penalty is added, making it expensive to refinance or sell.

  3. The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.

In summary, the new disclosure requirement will result in no less than 3 additional days before a buyer is able to close on a loan. The 3 days are business days, which in real estate terms can be a huge delay when the market is demanding 14-17 calendar day close of escrows. It will be an adjustment for both Buyers, Sellers, agents, lenders and escrow officers in this market. Behind the scenes, real estate professionals have been working hard to make the implementation of this new rule as seamless as possible.

Kelly Kang

Sotheby's International Realty, 117 Greenwich St., San Francisco, United States

As a former litigation attorney, I love working closely with clients to create an individualized strategy. In this local real estate market, buying or selling your home can be a full-time job. As a busy professional, you’ll need an informed partner to help you through the process.

From drawing up a customized plan to celebrating the close, I will be with you every step of the way. I am actively involved in the fast-paced San Francisco and Silicon Valley real estate market.

I have an intimate knowledge of the area. And along with my background as an attorney and real estate investor, I am an agent who knows exactly how to find you your dream home. I will work hard to help you get it. My clients trust me to be their greatest advocate, whether I’m keeping them safe from the fine print or aggressively negotiating on their behalf.

And when I’m not at the office: You can find me at the climbing gym or climbing outdoors on weekends with my husband, daughter and our puppy, Gracie.