TRID has caused a lot of concern for residential real estate. The high percentage of home sales that include purchase loans makes the relationship between mortgage and home sales vital to the health of the industry and the national economy. There was an enormous amount of preparation to adjust to the new TRID regulations that were implemented October 1st, and a clear belief that closing periods would be dramatically extended. We reviewed the performance of many of our brokerage accounts to see what happened.
October was the kind of month that researchers like the WAV Group would prefer to remove from results, or at least circle. Whenever certain technical anomalies like the implementation of the new TRID requirements impact home sales processing, it throws off the data.
The Adjustment Results
Across our brokerage accounts with Mortgage businesses, we saw an acceleration of closings in September ahead of the TRID implementation as everyone worked at a peek pace at the end of the month to get deals done. In most markets, mortgage purchase applications were up in October over 2015, but not nearly as high as the September or August year over year comparisons. We think that this is a TRID impact, and may account for about an 8% forecast adjustment. November should be interesting as we get into the second month of TRID and a seasonally adjusted softening in the market.
The FHA reported some good news. They have reached their required 2% capital fund reserve requirement ahead of time. This is good news that may lead to one of two outcomes – reduction of premium rates or improving availability of credit standards. The reserve requirement is to hedge against risk. It seems that FHA is more focused on improving availability than reducing rates. This should broaden lending for FHA qualified applicants.
There was a lot of concern that TRID was going to impact loan availability across the housing industry. It would seem that with the exception of a lot of anxiety, the implementation in October did not have an uber-dramatic impact as changes took place across the market. We will see what November brings, but for now – congratulations to everyone for making the TRID adjustments. Your efforts and planning have paid off.