I had dinner with one of my real estate attorneys, Robert Kaplan, the other weekend, who suggested I write an article on the new T.R.I.D. law that was put into law last year, to protect the borrower in real estate transactions.
There is a new term out there over the last year, it’s called T.R.I.D., as a purchaser, do you know what it means and what it’s function is in the real estate process? TILA/RESPA Integrated Disclosure forms, also known as “TRID” or “Know Before You Owe” was created by the Consumer Protection Financial Bureau in November 2013.
The Consumer Financial Protection Bureau integrated the Real Estate Settlement Procedures Act and Truth in Lending Act disclosures and regulations. Any transaction involving a mortgage must use new CFPB disclosure forms.
The new TRID rules and forms took effect on Oct. 3, 2015.
It allows buyers a three-day waiting period to see all the terms and conditions in the purchase of their property, to make sure what they are receiving in the transactions, are what they agreed to, with respect to their mortgage and interest rates at the time of their agreement with their lending institution.
You can check out this link for further information: https://www.realtor.org/topics/trid-tila-respa-integrated-disclosure.
In the past I have experienced a switch and bait scenario at several closings, where certain lenders would add additional costs and even being so bold as to increase their interest rates by 1/8-1/4 point or more, due to erroneous and false reasons.
Unfortunately, most lenders are honest in their dealings with consumers; however, it only takes a few to tarnish and potentially ruin the reputation of an industry.
The government then steps in and adds more paperwork and bureaucracy to an already burdened and complicated real estate process, due to those few who abuse the system.
However, all the parties in the transaction, including the real estate agents and brokers, have to note their license numbers as well as their corporate numbers (optional) on either their commission agreements or their deal sheets when sending them over to the seller’s attorney.
Now, everyone is on the hook, so today, we are all accountable in the real estate transactions for any improprieties.
Did any bank executive ever go to jail for misappropriation of funds or adding costs and raising interest rates at any closings, none that I am aware of; or did anyone in Wall Street or hedge funds go to jail for the last debacle in the mortgage industry with their Collateralized Debt Obligations being sold to every Tom, Dick and Harry, other countries or mortgage scams and rewriting loan documents, that brought our economy to its knees?
None that I am aware of either.
I guess multi-million dollar fines are sufficient for those banks, and for our government, but everyone else, on the lower level, go to jail.
What a system! It’s about the money and always will be, unless something drastically changes; but it’s been a pork barrel since 1776.
I am not going to go into any explanation here, but you can Google the term CDO’s and read up as to what they are and the perilous and tragic impact they had on our country’s economy, jobs and many other things.
Why didn’t we have T.R.I.D. before?
It is the way our country and system works in all facets of everyday life.
When there is a dangerous road, we wait until enough people die in accidents, before a traffic light or some safety control is put in.
We are in many situations, Monday Morning quarterbacks, even though we know that we could do something on Friday, we just wait for the tragedies to occur.
My opinion is that bureaucratic red tape is always the culprit in getting things done and you scratch my back and I will scratch yours, scenarios.
It’s politics as usual and we are so use to it, that we are numb from it all (that’s why we have the worst voting statistics in the world, because most don’t care, because they feel nothing will change by voting)
So again, now that the T.R.I.D. law is here, it will hopefully minimize and prevent those lenders and/or brokers from slipping in any extra costs or language that wasn’t in the original agreement; because the purchasers have that three-day window to go over their documents with or without their attorney, to make sure they are getting what they agreed to.
This allows the powers to be, to go after any and all involved in the real estate transaction, who may abuse their positions and do any illegalities and potentially prosecute and penalize them.
However, will the laws on the books be followed and executed to the full extent of the law? I am not sure, but I doubt it.
However, it is all about the money that the government can collect and not about jail time that just might put a damper on these activities or any other types of illegal situations.
They collect the penalty, but how does that protect the consumer?
How does this set an example for an industry that has been in the past and maybe presently, plagued with these kind of activities? What about jail time?
It is no different than when our multiple listing service has fines for illegal or unethical activities, there is no jail time, not this is comparable; but if the fine is even from $250-$5000 or more, the deterrent is, in my opinion, a slap on the hand, unless they take away the access to our Stratus system that allows us to search for properties, but that is another day’s conversation.
We will see what the impact on real estate will be when whomever the next President will be in November.
Remember, if you don’t vote, don’t ever complain, because you don’t count!
Phil Raices is the owner/Broker of Turn Key Real Estate at 7 Bond St. in Great Neck. He has earned designations as a Graduate Realtor Institute Certified International Property Specialist.
He can be reached by email: Phil@TurnkeyRealEstate.Com or by cell (516) 647-4289 to answer any of your questions or article suggestions.
