Did loans take an unusually long time to close in November, or was that simply your imagination?
You probably didn’t dream it up.
Although real estate closings haven’t been the 45-day odyssey some expected them to be following the October 2015 launch of the Consumer Financial Protection Bureau’s (CFPB) TRID (aka the “Know Before You Owe”) rule, the time to close a loan rose slightly in November compared to the same period last year, according to ongoing research by the National Association of Realtors (NAR).
Year-over-year change in time to close
The trade association shared this surprising finding this week on realtor.org as part of its ongoing analysis of how the sweeping mortgage industry regulation, also known as the TILA-RESPA Integrated Disclosure, or TRID, rule is affecting the business of real estate.
‘Add 15 days to closing timelines’
In the two-year lead-up to TRID’s implementation on Oct. 3, 2015, NAR had advised its members to expect to add at least 15 days to their customary closing timelines to accommodate for the rule’s various disclosure and delivery deadlines, fee tolerances and any last-minute snafus that might require a total reset of the process.
Some compliance experts and industry leaders, however, said the new closing process could take up to 45 days to complete, especially as mortgage, real estate and settlement service providers adjusted to the new requirements and ironed out the kinks in their software and employee workflows.
The delays proved to be much less of a pain point for real estate agents than expected, with NAR reporting that the twelve-month average time to close was about 36.7 days in November 2015, the first full month following TRID implementation.
Why aren’t closing times shrinking?
However, although one might expect closing times to continue to shrink as the industry gets more comfortable with the post-TRID world, this does not seem to be the case, according to NAR’s analysis.
The twelve-month time-to-close in November of this year rose to 40.5 days, about four days longer than the same period last year.
This is “a surprise relative to the recent easing pattern,” said Ken Fears, NAR’s manager of Regional Economics and Housing Finance Policy.
So what happened?
Fears said the increase could be related to a busy September and October selling season, with many of those contracts closing in November, as well as the aftereffects of the presidential election, when mortgage rates rose nearly 50 basis points, spurring buyers and refinancers who may have been dragging their feet to move into the market.
“These delays should ease in the coming months as refinance volume eases and as lenders continue to adapt to the new settlement process, but a longer average time-to-close may be part of the new normal,” Fears said.
