TRID has hit and hit hard. The Truth in Lending Act Real Estate Settlement and Procedures Integrated Disclosure situation that came into effect for loans originated after October 4, is upon us and it is half as horrific as many predicted.

As for those that said the implementation of the Act would have no effect on residential properties, they were wrong, especially when it comes to the big lenders that integrated all of the costly programming.

Many loans are not closing on time, while many are.

For those that missed the earlier reports of TRID and its potential failings, here is a recap:

Congress decided there were not enough regulations after it re-regulated the real estate market after the Recession.

The first wave came in the early 2010 with the Dodd-Frank Wall Street Reform and Consumer Protection Act, which caused appraisal management companies (AMC) to proliferate. Good appraisers lost business to those that were more skilled with handling the governmental red tape, causing the accuracy of appraisals to worsen. As a result, the now-protected consumers were paying more for an inferior product.

Then, once the good appraisers learned to play the game, the appraisals returned to normal, although more expensive as appraisal management company owners have families to feed and had to charge fees that were passed to consumers. It is not the AMCs’ collective fault that they were created and fueled by Dodd-Frank.

So things seemed to be going well. Lending practices were tightened and appraisals were dished out to some local companies that actually knew the market with only a few out-of-towners who think Belle Meade is a suburb of West Meade.

Along with the AMCs, Dodd-Frank added several pages to the closing statement, or HUD-1, and forced lenders to do what they said they were going to do as it pertains to fees and charges on the Truth-in-Lending statement.

Bad lenders had left the business for the most part by then, and the good companies did what they said they were going to do, so this was not a problem, albeit another layer of bureaucracy.

TRID changed everything but virtually left everything the same. The new disclosures that were the last pages of the HUD-1 are now the first pages of the CD (Closing Disclosure), which is a loan document now.

Here’s the rub, there are deadlines for everything, and if a deadline is missed or something changes, the clock restarts, just like a basketball shot clock with a change of possession or missed shot.

So, if the lender has all of the documents ready to go in order to ensure the loan closes on the contract date and passes those documents to the buyer but the pass is intercepted by the spam folder, there is a new three-day clock.

Another potential problem: Before sending the CD to the borrower and waiting the three days, the lender and the title company must balance the CD. That alone should not be problematic, except the new programing that some of the large lenders purchased that would communicate with the title companies didn’t work and failed on a number of levels. That might be fixed soon enough.

Beginning a couple of weeks ago, loans with some of the big banks could not close on time. At least in Nashville, loans with the smaller local banks stood ready, but if a big bank had the loan that had to close in order to provide buyer No. 2 the funds to buy seller No. 3’s house, no dominos fell and nothing closed on time.

As one lender from a larger institution said, “If I ever see Barney Frank, I would like to hit him.” He was joking, right?

Another mortgage broker lamented “the only people making money on this are the moving companies.” The moving companies are paid by the day, and many buyers had to pay for extra days.

And the local tradition of seller paying for the title insurance and buyer receiving the benefit of simultaneous issue is foreign to this programming. By moving page two to page one and adding some of the former last pages to the first part of the documents, plus adding a series of three day deadlines, they stopped Nashville dead in its tracks on many transactions.

In years past, if an HVAC failed the day of closing and there was not enough time to have a new $5,000 HVAC installed, there were two options: 1) give the buyers a credit for a new HVAC or 2) the seller credits the buyer $5,000 in closing costs.

In today’s world, a seller-paid credit for a new HVAC would have to go through underwriting, and the underwriter would not allow it. If, in a miraculous gesture of generosity, the seller decided the day before closing to pay the buyer $5,000 in closing costs, the new documentation would have to be created and the three-day clock would restart.

What this situation begs for the parties to do is have the seller write the buyer a check “outside” closing. But wait! This is a federally regulated transaction, and the buyers and sellers have signed documents saying that there are no “side deals” and that everything done at closing is included in the contract and there are no financial incentives, such as a new HVAC being offered in order to encourage the buyer to close.

What’s a few days going to hurt?

Richard Courtney is still a real estate broker at Christianson, Patterson, Courtney and Associates and can be reached at richardcourtney.com.