So the CFPB extends the date of TRID until October 2015 but that doesn’t change the fact that our action plan needs to be shared and implemented for everyone to understand and be ready. A two month extension just gives those already prepared an additional two months to share solutions and expand the “Gap of Excellence” between those that have committed to being ready to comply, and those that would run around spreading fear or complaining that it isn’t “fair” to have to do all of this work. As you know, I prefer to work with those who have made the choice to become the professionals.
Today we really need to drill down on the timeline. While each market will be slightly different, and certain loan products may result in different turn times, it is important to establish a framework and set expectations so you can communicate effectively during the loan process. This can be done by understanding where the important milestones are, and all the tasks associated with them.
We began by doing a “Full Document Pre-approval” for those clients that saw the value in being prepared and affording themselves the best opportunity to be selected as the winning bid by providing all the documentation needed for you to issue this pre-approval. This pre-approval letter should explain the documents reviewed and contain specific language that alerts everyone to their obligations toward a timely closing. In fact, a short video would also be a great idea.
This timeline begins with the contract. The purchase contract needs to be specific as to the intent to comply with the timeline and the responsibilities of all parties to their piece of the process. If you MUST have a ten-day inspection period, then just understand that you can’t ask for a 30 day closing. Many home inspectors will be happy to inspect the property and provide a report in 48 hours. If issues are found, negotiating these items further delays the process. So again, be clear that you will close the loan within 28 days OF A COMPLETE LOAN SUBMISSION PACKAGE! This includes the contract and all documents and fees required to proceed.
Within three business days of application we need to be sure all support services are ordered and we have a timeline of their competition. What are the turn times for:
- Title Insurance
- Home Owners Insurance
- Supporting documentation like Condo questionnaire
All of these items can and will be different based on your area, property, and loan program. It is important that you are clear as early in the process as possible as to these potential delays. Especially if you are using a loan program like USDA where underwriting turn times can go from a few days to a few weeks overnight!
The second important milestone is submission. When you submit a COMPLETE file into underwriting is an important point in the process. The better you have done your job, the fewer conditions likely to be dealt with. Once you have your file submitted, you have to begin to line up the remainder of the timeline.
The third important milestone in the process is loan approval. This should be no less than five to seven business days prior to closing. It is at this point we can dial in the balance of the transaction. You can talk about rate locks and any other unresolved items. Once the rate is locked and you have all the final numbers supplied by the outside parties, you can issue the Closing Disclosure. Again, depending on who will be issuing the CD and their time frame to deliver, you should be ready to close easily within a traditional thirty day window if everyone is working together.
Establishing the timeline early is important to clear communication and a hassle free transaction. The better everyone does their job being prepared EARLY in the transaction, the more likely the transaction closes smoothly and well within the time allotted. If everyone gets better, the entire experience is better for everyone!