Economists' Outlook

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Lenders Make Headway, Reducing Delays and Cancellations rom TRID

The lending industry has struggled with recent changes to the closing process. However, the 1st quarter Survey of Mortgage Originators shows clear improvements in handling the new regulations.

The new Know Before You Owe or TILA RESPA Integrated Disclosures were implemented in October, but lenders have wrestled with incorporating the changes into their processes. However, survey respondents in the 1st quarter indicated a sharp drop in the share of transactions that were impacted dropping from 8.3 percent to 1.8 percent. Simultaneously, the share of transactions that were cancelled due to TRID fell to none and average delay fell from 6 days to 3.8.

trid delay

However, a majority 70.3 percent of lenders continue to advise their clients to take rate locks that are longer than the standard 30-days. Respondents advised for modestly longer locks than in the 4th quarter including several lenders who recommended a modestly longer 7-day rate lock. Rate lock extensions also increased, but 73.3 percent of lenders who advised for longer locks felt that they could close on time without them.

rate extension

Lenders made great strides in the 1st quarter to normalize operations under TRID. However, anecdotes suggest that they have increased staffing and costly manual underwriting to deal with unclear interpretations of the regulations. The CFPB has indicated that it will recommend changes to the process later this year. Clarifications and improvements from these reviews may help lenders to further normalize operations, but those changes would not come until late 2016 or 2017. In the interim, lenders continue to maintain a steady flow of financing for the real estate industry.

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