In 2015, new regulations governing mortgage lending industry known as TRID was enforced. TRID is the TILA and RESPA Integrated Disclosure. Although TRID is mostly concerned with mortgage lenders, the new laws also affect just about all parties, including real estate agents, in a real estate transaction when buyers need mortgage. That is why realtors should also know some important and basic tips.
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Help educate borrowers/buyers
Mortgage is a complex process. Borrowers/buyers need to have basic understanding of mortgage process, what documents to provide. It is strongly recommended to have your client talk to loan officers first before you start showing them properties. Loan officers can help you prequalify your buyers, determine your buyers purchasing budget, and explain the loan process.
Loan estimate and closing disclosure
Loan estimate now replaces the old Good Faith Estimate. And Closing Disclosure replaces the HUD-1.
Lenders may no longer issue pre-approval letter
While some lenders still issue pre-approval letter, many other lenders will now only issue LE (loan estimate), which is a required document issued to the borrowers. For lenders that do not issue pre-approval letter, buyer’s agent will need to obtain the Loan Estimate from lender in order to submit offer. Buyer’s agent and buyer must first locate a subject property before LE can be issued. LE cannot be issued without a subject property.
If offer is not accepted, another new LE needs to be reissued when you find the next subject property.
Time needed to close escrow and loan contingency
When filling out purchase agreement and joint escrow, be sure to check with loan officer/lender how soon can loan be expected to close. This affects your escrow closing period. Also do NOT remove loan contingency unless you have confirmation from loan officer/lender.