Know Before You Owe Implementation

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As I said in The Wall Street Journal last week, the new Know Before You Owe regulation, also known as TILA-RESPA Integrated Disclosure (TRID), is without question the single largest implementation challenge that the real estate community has faced since Dodd-Frank was signed into law. Lenders and others involved in real estate transactions have spent billions of dollars on new systems and training for employees to make sure these new rules don’t disrupt home purchases. 

In the long run, these changes will be positive for consumers by improving the disclosure regime, facilitating comparison shopping, and eliminating surprises.  However in the near term, Know Before You Owe will still pose implementation challenges that risk confusing homebuyers and possibly delaying some settlements.

As such, this week we launched new consumer tools on MBA.org designed to assist consumers during the home buying process. These tools will help consumers navigate the financing of a home so every potential borrower feels prepared from beginning to end. You can find those documents on our Consumer Tools webpage.

Specifically, the home buying tools section is made up of five elements, each with its own document:

  1. Prepare for the Process – Educating and readying consumers for the challenges in the home buying and financing process
  2. Evaluate Your Credit – Providing information and insights on consumer credit ratings.
  3. Shop for a Mortgage – Understanding the costs in a mortgage, including information on the new Know Before You Owe mortgage rules and forms that went into effect on October 3, 2015.
  4. Get the Facts on Closing – Helping consumers understand the closing process, and the types of paperwork and documents they may see at the closing table.
  5. Plan for the Unexpected – Helping consumers budget for their new home, and prepare for surprises and unknowns.

These resources are merely one example of MBA’s commitment to consumer satisfaction during the home buying experience.  Indeed, the CFPB and other regulators are also committed to consumer protection. And MBA appreciates the written guidance the Bureau provided last week in response to our industry’s request for clarification on “good faith” compliance standards.  Yesterday, Fannie Mae and Freddie Mac also released guidance to their sellers outlining the GSEs’ expectations regarding compliance with the Know Before You Owe rule. Together, these clarifications should help reduce the potential disruption that the new disclosure regime could cause.

There is little doubt that we will need to continue to work with CFPB and other regulators to ensure that consumers are protected as more regulations affecting our industry come down the pike.

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