Written By: Glenn Michaels Op-Ed Writer
Periodically forms utilized by lenders are revised or added for everyday use by mortgage lenders.
On March 16, 2016, the United States Department of Housing and Urban Development’s FHA and the United States Veterans Administration (VA) have revised a joint form. The FHA form number is HUD – 92900 – A and the VA uses form number 26 – 1802 – A. All FHA and VA lenders must begin using the revised form beginning August 1, 2016. If your company uses a national processing software they will usually upgrade and have the new form for use as of August 1, 2016. If the software is proprietary, then make sure your Informational Technolology (IT) people bring everything up to speed.
A big change in our industry was changes to the Real Estate Procedures Act (RESPA) The forms all changes. What was four forms is now one large form. We always gave the consumer the HUD handbook, a Good Faith Estimate, Itemization of Fees, Truth in Lending Statement with the Annual Percentage Rate (APR) along with comments regarding any third party providers.
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We now have TRID rules in effect. All borrowers must receive the Settlement Costs and Real Estate Charges handbook and then the TRID forms.
TRID was mandatory as of October 3, 2015. We will go over the forms and what they mean for lenders. Instead of having all or most of the forms as mentioned above, they are all in one form. The new form is called “The Loan Estimate.” The previous forms are no longer in use.
The Loan Estimate when given requires a three business day waiting period before the loan can close. If the Annual Percentage Rate (APR) changes after the initial Loan Estimate was issued, the lender must wait another 3 business days from the reissue date. Some lenders are complaining about the three business days waiting period because it has delayed closings.
The Loan Estimate consists of:
• Application information and property details
• Loan type, purpose and terms
• Projected payments during the loan term
• Estimated Closing Costs and how much money the borrower needs to close
• The second page of the form contains all of the fees .
When the file is ready to close and if the Annual Percentage Rate (APR) did not change along the way then at closing the borrower will receive the Closing Disclosure. If there were changes along the way the lender must disclose again and then wait three business days before closing.
Prior to TRID coming out there was a tremendous amount of publicity regarding the impending rules and the disclosures. In my opinion all or most mortgage lenders weathered the storm regarding TRID and loans are closing as usual. I have heard that some closings have been delayed due to the three business day waiting period, but it has not made a big issue.
In our business the only thing that is constant is change and all lenders and their employees must change with changes.
About The Author
Glenn Michaels - As an op-ed writer, Glenn Michaels is a mortgage underwriting instructor for CampusUnderwriter (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years.