With the real estate world scrambling to understand the TILA RESPA Integrated Disclosures Rule (TRID) and prepare for its October 3 implementation deadline, it appears that the implications of this new regulation affect many aspects of real estate closing procedures. But what exactly does it mean for your home warranty orders?
As you’re likely aware, TRID requires lenders to deliver the new Closing Disclosure form to the buyer three days prior to consummation. In most instances, consummation will be the signing of loan documents. The greatest concern for your home warranty orders is assuring they are processed and listed accurately on the Closing Disclosure. This helps ensure that your clients are covered without creating added stress and confusion in your escrow.
By following a few general guidelines, adapting to these new timelines can be a hassle-free part of your real estate transaction. Here are a few best practices for a smooth home warranty order:
- Complete the contract – If your real estate contract has a section for home warranty information, be sure to fill it out as completely as possible
- Know your time periods – Being aware of important time periods within your transaction can help you keep your escrow on track and make sure your clients receive their home warranty benefits. Make sure you’re familiar with the milestone dates of the transaction, including:
- Loan document signing: Keep in mind the Closing Disclosure’s three-day review period is based off this date.
- Expiration of the loan rate lock: Knowing this date will help you determine whether a corrected Closing Disclosure will be issued which might begin a new three-day waiting period if the annual percentage rate increases beyond the allowable limits.
- Order early – With these new time requirements, failing to order your home warranty in time can cause it to be excluded from the Closing Disclosure. The earlier your home warranty is ordered, the less likely it is to be omitted. Some escrow coordinators recommend ordering at least 10 days prior to the scheduled loan document signing.
- Communicate, communicate, communicate – Be sure to provide home warranty purchase information to both your escrow officer and loan officer
- Verify – When you receive your copy of the Closing Disclosure, check section H under “Other Costs” to verify that the home warranty has been listed and the proper parties have been charged. Also, compare the figure to your First American Home Buyers Protection invoice to ensure the coverage and pricing is correct.
- It is never too late to obtain a home warranty. If the transaction has closed, please call your Area Manager for details.
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