I recently bought a house and my experience during that process only confirmed my conflicted view of regulation in general and consumer protection in particular. In short:
1. It’s very necessary.
2. It’s often useless.
My husband and I started looking at houses in December, planning to build. First, we looked at real estate websites to see what things generally cost in the areas we wanted to live in and then talked to several lenders to find out what we would qualify for. I did not have an exact house in mind, so when I filled out an application with one lender and submitted basic financial documents, the form I got back was a pre-approval letter but not an official estimate.
These actions represent a pretty typical path for today’s homebuyers. They use self-serve options to find neighborhoods and calculate payments and then meet with lenders.
In my case, when we went to talk to the builder they had inventory they were looking to get off the books before the end of the year and were offering deep discounts. We saw a house we loved on Dec. 10 and closed on Dec. 29. With a VA loan!
No one was more shocked than I was at the fast closing. At HousingWire we report regularly on the shortage of housing inventory, lengthy times to get appraisals (especially VA appraisals!) and the numerous other challenges that are part of the closing process. But the builder — who also served as our lender — was highly motivated, and apart from a marathon session of gathering documents from files in our storage, it all went stunningly fast.
During those 19 days between seeing a house and owning that house, there was no time to shop for a better rate or more favorable terms. Yes, my time to close was lightning-fast compared to the 44 days that Ellie Mae pegs as the average time to close, but that was only one factor in when I looked at lenders.
Which brings me to the part about regulations being both necessary but also sometimes completely useless as written, and that brings me to TRID.
The TILA-RESPA Integrated Disclosure rule was conceived as part of the CFPB’s noble goal of giving consumers information about their total loan costs before they signed documents that bound them in a 30-year contract. I can appreciate that. But for all the good intentions behind this rule, it’s just not practical.
Like me, most homeowners are shopping…