Economists' Outlook

Housing stats and analysis from NAR's research experts.

TRID has resulted in delays and cancellations of loans, but the majority of loans are being closed on time according to lenders who took part in NAR’s 9thSurvey of Mortgage Originators. While originators were advising clients for longer rate locks, the majority felt that these loans could be done on time. This trend suggests that timelines could normalize in in the future and a majority of respondents expected this normalization in the next six to nine months.

The Know Before You Owe or TILA-RESPA Integrated Disclosure (TRID) rules were intended to protect consumers and to streamline the old disclosure process. The new rules were implemented on October 3rd and since then 8.3 percent of transactions were delayed according to lenders due to TRID, while another 1.5 percent were canceled. To deal with the delays 55 percent of lenders were advising their clients to take 45-day lock periods and 5 percent were recommending a 60-day lock, while 35 percent were not endorsing a change.

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Of those lenders who advised for longer rate locks in the 4th quarter, 15.4 percent indicated that they could have closed most of their loans without the buffer and an additional 38.5 percent felt that some of their settlements could have been completed on time. However, 46.2 percent indicated that the buffer was necessary on all transactions.

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The results above suggest that longer rate locks are not necessary in all cases and that lenders may begin to rein them in as their comfort with the TRID environment grows. This process could reduce some delays and ameliorate costs. To this end, 60 percent of lenders expect operations to normalize in the next six months, while 10 percent were not affected by the new rules, and 25 percent expect delays to remain a permanent fixture in the TRID paradigm.

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TRID has increased time-to-close for a limited portion of the market and lenders have responded with buffers to allay issues. In time, the market will normalize and these buffers will come down, but longer time lines may become a normal part of the TRID environment for a small portion of the market.

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