Avoiding the Stress of Closing Delays

Buying a house is often the single largest purchase you make in a lifetime. It can be stressful. You do not need delays with your loan to make it any harder on you.

Closing delays have been common following the new federal mortgage closing rules that took effect in October 2015. These rules essentially require much earlier notification of all closing costs, including tax and fuel adjustments. The law requires postponement of the closing if there are changes after the closing disclosure is provided to the borrower.

The first closings under the TRID (TILA/RESPA Integrated Disclosure) rules rolled out in the last weeks of December. The stress of complying with strenuous documentation and deadlines on top of the holiday season almost broke even the most diehard of buyers. For first-time buyers, we saw sheer panic as the dream of spending Christmas or New Year’s Eve in their first home faded. Even more serious is the possibility of sellers losing patience with the TRID related delays and walking away from a sale.

Realtor.org studied the impact of TRID and reported its findings in a February 9, 2016 post. It reported that since TRID implementation:

  • 4{002f3a62ed5e808149bf28bcaa2d37c27af8bb67782254068890d388cb02c96f} of transactions were delayed, but less than 15 were cancelled while the average delay is 8.8. days
  • 4{002f3a62ed5e808149bf28bcaa2d37c27af8bb67782254068890d388cb02c96f} of survey respondents had problems getting closing documents for transaction and half found errors when they did get access.
  • Missing concessions and incorrect names or addresses were the most frequently cited errors, but incorrect fees, commissions, and taxes were also reported
  • E‐settlement procedures had fewer errors and faster remediation

There are effective ways for buyers/borrowers to avoid closing delays under the new closing disclosure rules.

  • Be careful of timing.
  • Ask for at least 45 days from accepted offer to mortgage approval.
  • Schedule your building inspections quickly after your offer is accepted and resolve building issues early on, well before final mortgage approval.
  • Watch out if you are also selling.

We had a client selling a home immediately before he closed on a loan for his purchase in Kent. The lender was demanding documents from his closing which held the loan approval open.

Thankfully the seller in Kent was patient and waited a few extra days. At one time you could sell then buy on the same day. Now, we recommend you give a week between the sale and new purchase.

Applying for the loan early in the process and asking for a longer rate lock period give buyers some leeway. It should be 10 to 14 days beyond your scheduled closing date. If your closing is delayed you won’t lose the rate you expected.

With the new rules, your rate is locked prior to the Closing Disclosure (CD) is issued. If the rate changes after the CD, even due to lender delays, a new disclosure must be done. That can trigger as much as a 10-day delay in closing.

Tell your lender everything from the beginning and respond quickly when asked for documents. Provide copies of financial information when you apply. If you wait until you are asked you may lose weeks. We advise you have two years of W-2s ready, two months of pay stubs and two months of statements from every bank account. Keep copies, either paper or electronic, of everything you give your lender. In the current lending environment, you may be asked again and again for something you have already provided. You lose time arguing that you already sent it. It is much easier to resend an electronic copy.

Finally, keep your financial activities stable from time of application thru closing. Sudden large purchases or credit card debt or withdrawals can cause delays and even denial of a conditionally approved loan.

Those seeking detailed information on TRID and resources to help you comply should consult the website of the Consumer Protection Financial Bureau, a government agency.

When you open the front door of your new home, you should be ready to enjoy it. We want you to get through the TRID process relaxed and looking forward to homeownership. The lawyers at Cramer & Anderson are pleased to discuss your prospective purchase any time. To reach Dolores R. Schiesel, call the Kent office of Cramer & Anderson at (860) 927-3568. Click here for her online profile.

Also practicing in the real estate area are Kenneth Taylor, Kim Nolan, Robert Fisher, Perley Grimes and Lisa Buziad.