On October 3rd, the world of real estate was just a little rocked. On that day, the Truth-In-Lending Act (TRID) and the Real Estate Settlement and Procedures Act went into effect. These two national Acts touch on nearly every aspect of closing procedures, but there are a few specific ways that consumers need to be aware of for their own protection.
Before, buyers were given what we called a HUD-1 Settlement Statement anywhere from one day to one hour prior to their closing. With the new legislation, this document has been replaced by the Buyer's Closing Disclosure, which includes information like loan APR, principal, interest, taxes, insurance, prepayment penalties, etc. Important information, right? Due to the highly sensitive nature of the information, the new regulations allow for three days of review.
The delivery of the document is the first in a long line of dominos leading up to the closing. Depending on the mode of delivery, different amounts of time are allotted for transport and receipt:
1. Emailed: If the document is sent electronically, the buyer must confirm receipt in writing
2. Hand delivered: If the document is hand delivered, the buyer must confirm receipt in writing
3. Mailed: If the document is mailed, three days are allotted for delivery and buyers do not need to confirm receipt
Receipt of delivery is so important because this is the next domino in line. From the day of a buyer's receipt, a three-day review period starts. The three-day wait period has a few nuances of its own: First, if a federal holiday falls within the period, add one more day. Saturdays count, Sundays don't. And, it's days, not hours that matter here--three days, not 72 hours. If changes are made to the document, a new three-day wait period is triggered, which cannot be waived.
So, what does all of this mean for buyers and sellers? A few hints/tips:
- Only work with people you know and trust: There's a lot for us all to get used to, remember and understand, and there's a lot at stake.
- Sign documents as soon as you receive them: With this new system, delinquency may lead down a dark road of waiting and frustration.
- Know what to expect from your lender: Ask up front if your lender works with electronic signatures or not--this one simple factor changes a lot.
- Discuss walk through plans in advance: Come up with a plan that everyone is happy with since no credits can be applied just prior to closing.
Thinking of buying or selling and have questions? I'm here to help!