Real estate agents and brokers have oft complained about the TILA-RESPA Integrated Disclosure (TRID) rule (also known as the “Know Before You Owe” rule) hindering their transactions in various ways since its inception in October 2015. However, lenders have been the ones complaining lately of a lack of clarity regarding just who can receive the mandated Closing Disclosure.
Lenders and title companies refuse to distribute copies of the Closing Disclosure to buyer’s agents. They have been under the errant belief that doing so violates federal consumer privacy policies — a belief unchallenged by the Consumer Financial Protection Bureau (CFPB)’s prior failure to address the dispute. Although a buyer’s agent can access the Closing Disclosure through their client, some agents note that lenders’ unwillingness to directly provide copies of the Closing Disclosure hinders their ability to provide timely and thus effective advice for their buyers.
To clear the way for real estate agents representing buyers, the CFPB recently issued a press release describing proposed changes and technical updates to the TRID rule. One rule directly addresses the authorization lenders have to share the mortgage disclosure documents with privy persons — buyer’s real estate agents.
Buyer’s agents can quickly review Closing Disclosures for inaccuracies and errors — a practice which is part of their fiduciary duty owed to their buyers, according to a survey conducted by the National Association of Realtors® (NAR). An agent’s voluntary review of the Closing Disclosure prevents lenders from causing errors which cost agents their fees and, ultimately, their clients. The survey indicates that 54.5% of agents struggled to obtain copies of the Closing Disclosure, many of which contained minor or material errors caught by the agents’ review.
However, the survey also indicated that only 25.4% of agents requested a copy of the Closing Disclosure from their buyers — meaning approximately 75% of agents were barred from the Closing Disclosure because they only attempted to obtain copies from the lenders.
TRID: Wavering between beneficial and burdensome
These updates reflect the ongoing, stressed relationship between TRID and lenders, with real estate agents and brokers caught in the middle. TRID has taken the brunt of complaints from both camps, ranging from delayed closings — although recent data from Ellie Mae indicates the average delay is only three days — to the refusal of investors and bond holders to purchase TRID mortgages on the secondary mortgage market.
On the other hand, a survey by mortgage lending advisory firm STRATMORE revealed 91% of homebuyers expressed satisfaction with their experiences obtaining TRID mortgages. The same survey indicated 87% of all lenders had successfully integrated TRID into their practice.
Thus, TRID continues its battle to balance the advantages between lenders and homebuyers, while maintaining responsible and fluid relationships with related professionals like buyer’s agents. The proposed updates signify another step toward a playing field with even rules for all persons involved in a home purchase — a goal furthered by agents’ ability to directly obtain Closing Disclosures from lenders without hassle.
Prudent buyer’s agents review the Closing Disclosure as a voluntary extension of their fiduciary duty, ensuring the document is properly completed and the included information is accurate. Lenders’ willingness to provide these agents with copies of the Closing Disclosure saves buyer’s agents the trouble of asking their buyer for a copy.
A buyer’s agent whose meticulous review of Closing Disclosures saves homebuyers time and money benefits from satisfied clients, who go on to refer future homebuyers to the agent in return.