TRID Fallout: Why Your Mortgage Costs More and Takes Longer
by Cheri S. from St Pete Beach, Florida
Ask Kate about the TRID fallout and why your mortgage costs more and takes longer: Shouldn't advanced technology lower the cost of getting a mortgage? Well, that's assuming the lender can close your loan... on time! Cheri is waiting for her refinance to fund. When she calls about the delay, the bank tells Cheri to call the title company who tells her to call the bank. And nobody is sayin' nuttin'. When did closing a refinance become this convoluted? Ummm... can we all spell T-R-I-D?
Ask Kate: Refusal to Fund Mortgage Refinance After Closing By Cheri S. from St Pete Beach, Florida
I closed on my refinance February 17th yet they still have not funded my loan.
When I call the mortgage company, he tells me the title company has told him not to fund the loan.
When I call the title company she tells me to call the mortgage company.
Yesterday I was told it should be funded then but it still has not been. Do I have any recourse since they will not tell me why they aren't funding it?
Am I better off to just back out, or do I have that option?
They were to pay off several accounts for me which I now have to pay myself since they are due. I assume I will be refunded the excess if the loan does fund, but if not, who do I contact to get the excess payments?
How long do they legally have to fund without giving me a reason for not funding?
Thank you, Cheri S.
Kate's Answer: Refusal to Fund Mortgage Refinance After Closing
The mortgage process is taking about 10 days longer to close than it did a year ago, thanks to TRID. According to lending industry bean counters, every day that a funding is delayed, it costs the banks big-time.
Not familiar with TRID? It stands for Truth in Lending Real Estate Settlement Procedure Act Integrated Disclosure and is a stickler for technicalities. Intended to protect consumers, this new act, courtesy of CFPB (Consumer Financial Protection Bureau), is slowing down mortgage closings. Read more about TRID at New Loan Estimate Form: Know Before You Owe.
Now who do you think pays for this additional cost caused by funding delays? Yes, YOU my dear borrowers. Case in point, ask your favorite mortgage originator how much more it costs to lock in your mortgage rate for an additional 10 or 15 days. Read more about Mortgage Rate Locks
So, without knowing all of the details of your refinance, Cheri, I am guessing TRID is, at least in part, responsible for your delay because lenders are scared stiff they may overlook a funding requirement. In turn, their hesitancy s-l-o-w-s down your process.
Cheri: Do I have any recourse since they will not tell me why they aren't funding it?
Assuming this is your owner-occupied residence, a right of rescission period protects borrowers from cost incurred during the refinance process should they cancel during the set 3-days. See FHA Prepayment Penalty News and 3 Day Right of Rescission
for more information.
Thus, if you let them know you are considering exercising your 3-day right of rescission, it might get them off their duffs. But be prepared to follow through. Empty threats are never recommended.
Cheri: Am I better off to just back out, or do I have that option?
If the loan has not funded, there may still be time to cancel it. But you could end up owing broken lock fees, cancellation fees, or appraisal fees if you do not cancel within the 3-day right of rescission period. Banks can be creative when it comes to hiding these cancellation fees. So read your disclosures thoroughly to find out what you've agreed to. (Better yet, borrowers should read them before signing, of course.)
Cheri: They were to pay off several accounts for me which I now have to pay myself since they are due. I assume I will be refunded the excess if the loan does fund, but if not, who do I contact to get the excess payments?
Hard lesson to learn but always be prepared to make another payment or two on debts being paid off in a refinance for this exact reason - funding delays. Otherwise you could end up with late payments that lower your credit scores. Read more about Credit
Generally speaking, whoever is responsible for disbursing funds at the end of the transaction will issue refunds in the case of a cancellation. Although it could be the lender, it will probably be the title company or escrow company. Read more about Title
Cheri: How long do they legally have to fund without giving me a reason for not funding?
Hmmm... This is not a legal answer, mind you, but if they keep dragging their feet with no explanation and your rate lock agreement expires, you have a pretty good complaint to send to the Consumer Financial Protection Bureau. (Of course, TRID is their baby but you'll never catch them admitting it contributed to your delay.)
So, like a broken record (boy, that's an old saying isn't it?), I am going to tell you to fire up your laptop and start filing complaints if your loan doesn't fund. Go here for the Who, Where, and How
... How to Contact Washington DC, Your State Government Officials, and CFPB itself
to get action regarding your bank's delay.
You'll also get more help at Mortgage Lender Cancels Refinance at Closing Due to Technical Error
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