Hot, hot, hot

I have been writing lately about estate planning.  Let’s shift back to real estate.  The real estate market is hot, hot, hot.  Multiple buyers are vying for the same property, even offering more than the asking price in an effort to secure their purchase.  Homes for sale are staying on the market only a very short time before they are scooped up by anxious buyers, and sellers are just sitting back and cooling their heels while the buyer insanity continues.

If you are a potential buyer, you must be prepared to move quickly not only financially but in all other respects as well.  It is important to honor the dates set forth in the offer, and to keep the seller under agreement (by the Offer) so that you don't lose the deal.   Some buyers write personal letters to the sellers advocating for why the sellers should choose their offer.  Other try to make their offer more attractive by foregoing a mortgage contingency—this is a personal choice, but it is important that buyer have sufficient financing to purchase the property.  Essentially it is an allocation of risk that sits squarely with buyer from onset.  Generally the mortgage lender will do what is necessary to approve buyers’ application and meet the closing date, but once in a while (rarely, fortunately) things don’t work out with the lender as the buyers hope.  If buyer does not get mortgage approval, the buyer is still contractually bound to purchase the property, (with funds from other sources, if necessary), and if they don’t or can’t buy, they will be in default and the seller will be entitled to keep the deposits paid as damages. 

If nothing goes wrong, things will move along in the normal course, and the lender will finally approve the loan to close.  At least three days before closing, lender must give buyer a Closing Disclosure which will set out all of the terms and costs involved in the transaction.  At that time, the buyer will be informed of the total amount necessary to close.  That figure will include not only the balance of the price due, but also all closing costs associated with the transaction.  The buyer will be instructed to provide those funds at closing, either by wire transfer or cashier’s check.

So what are the closing costs that are added to the balance of the price due?  They will include fees paid to the lender for processing your loan, funds for escrows if the lender will be maintaining escrow accounts for taxes and insurance,  legal fees, registry of deeds recording fees,  and perhaps some other small fees charged by the lender or the attorney.  Depending on the closing date, the lender may also charge “prepaid interest”—this is the amount of interest due on the principal for the balance of the month in which closing occurs.  On the first of each month thereafter, you will make your usual monthly payment.

You will be obligated to put homeowners insurance into place and provide a binder to the lender.  Often the lender requires that the full year’s premium must be paid for closing.  You will obligated to pay for a loan policy of title insurance on behalf of the lender.  As I have stated in earlier posts, you absolutely should purchase the optional owners policy of title insurance, which is available at a discount at closing if it is purchased at the same time as is the loan policy.  The closing attorney takes care of just about all of the processing on behalf of buyer.  Buyer should be sure to be responsive to any lender requests, but a good lender’s attorney should manage all pieces of this in a smooth manner leading to a successful closing.

So, buyers, put on your running shoes and go after the house you want.  But remember one thing: there is no such thing as just one perfect house.  There are many, many houses available for sale, and odds are you will be happy with any of them.  Kind of like online dating.

Estate Planning: the Perfect Holiday Gift

The information in this post is somewhat redundant to earlier posts on the same topic,  but it bears repeating for those of you who are not inclined to delve deep in the database of my earlier posts.

 It’s a clear and concise message:  Everyone, yes, even you, should have an estate plan.  It doesn’t matter where you are in life (ok, maybe millennials are excluded for now).  You may be the parent of young children.  You may be a single, divorced or widowed individual.  You may be an elderly couple.  You may be an unmarried couple with or without children.  You may be part of a blended family.  No matter what your circumstances in life, you should be sure your affairs are in order and are clearly communicated to those who must administer your estate after death.

There are many different kind of documents which may be appropriate for your circumstances.  My regular procedure, when approached by new clients, is to begin by sending them a questionnaire, which asks for detailed information about what assets they own and how they are titled.  This allows me to advise clients with respect to estate taxes, probate and other such matters.  The questionnaire also asks for family information and sets out a list of questions that the clients should consider in determining the provisions of their documents.  Once I receive and review the questionnaire, I will then proceed to a initial meeting with the clients in which I will explain all options, answer all questions, and make a recommendation for the proper plan based on all of their personal and financial information.

 So what does an estate plan consist of?  In every plan, there are three documents which will always be included.   They are a Will, a Durable  Power of Attorney, and a Health Care Proxy.  The Will in simplest form will set out the client’s wishes for distribution of assets, and appoint a Personal Representative (the new term for “Executor”) who is charged with administering the estate at the death of the decedent.  

 Even if you do nothing else, sign a Durable Power of Attorney.  This is an absolutely crucial document that each and everyone person should have.  This document appoints an attorney-in-fact and grants that appointee broad powers to act on behalf of the principal with respect to financial, business and other such affairs in the event the principal is incapacitated.  Absent this document, it would be necessary for some involved individual to petition Probate Court for appointment as a conservator.  This is a timely and costly process.   A valid Durable Power of Attorney saves all of that time and expense, and gives the appointee the legal power to act on behalf of the principal.

 A Health Care Proxy is also recommended.  It is simplest form, the principal will appoint an agent who is authorized to make medical decisions on behalf of the principal in event of incapacity, customarily in the context of a terminal condition with no reasonable likelihood of recovery.  A longer form Health Care Proxy gives the principal the opportunity to express their wishes with respect to the types of medical interventions they may want provided or withheld in the circumstances.  Whichever you choose, you ensure that your medical decisions are being made by a person you trust to carry out your wishes.

An estate plan may also include one or more trusts to address the clients’ personal circumstances and needs.  Trusts may be funded during life, or after death. A couple with young children may want to establish a trust that requires assets to be held back from the children until they reach an age older than 21 years.  Parents of a spendthrift child may want to create a trust that will prevent the spendthrift child from receiving a large distribution all at one time.  Parents who have a disabled child may need a special needs trust for that child. Some trusts address the distribution of assets for a blended family.  And some trusts are created simply for the purpose of avoiding probate in the estate of the Settlor.  These are just a few of many examples of how trusts can become an integral part of your total estate plan. 

Most of all, however, the client must work with an attorney with whom they feel comfortable, someone who will listen to the clients’ wishes, be sensitive to the clients’ needs, work in partnership with the clients to achieve their goals, and when necessary, provide emotional support when addressing any difficult situations, all while presenting recommendations based on the clients’ individual circumstances.  I understand that this can be a very difficult process for many people who don’t want to think about their eventual death (I keep a box of kleenex in the conference room), and I think a good estate planning attorney should be gentle, supportive, sensitive yet highly knowledgeable at the same time.  I like to think that describes who I am as I work with my clients.  I am proud to say that the feedback I get from existing clients supports that. 

This post could be far longer, but it gives you a preliminary understanding of what is involved and, most notably, the importance of having an estate plan.   More detailed discussions will follow in future posts.  In the meanwhile, however,  you would be well advised to make that phone call or send that email to me, or whomever else you may choose, and get started on this crucial work.  It is a gift to everyone.

Respect at the End of Life

Do you sense a theme here?

This topic is one that I have thought about often and researched, and I have some very specific and personal thoughts, which I feel compelled to share.  There is certainly a legal component, but also deep and philisophical aspects.

As part of a complete estate plan, clients will execute a Heath Care Proxy. This document appoints an agent who is authorized to make health care decisions in the event of incapacity of the principal.  

The Health Care Proxy, however, is limited in that it focuses strictly on medical care, but not on other wishes you may have regarding your care as you near the end of life.   It is just as important that your agent and others close to you understand your wishes with respect non-medical matters.    It is crucial to have meaningful discussions with those on whose behalf you will be making decisions.  There are many decisions to be made that go beyond an understanding of strictly medical matters.

Just as important as the medical care is an understanding of what the patient wants toward the end of life.    While the patient is still mentally competent, ask the patient:  What is your understanding of the situation and its potential outcomes? What are your fears and what are your hopes? What are the trade-offs you are willing to make and not willing to make? What are your priorities beyond merely being safe and living longer?  And what is the course of action that best serves this understanding?

These questions, and the  responses to them,  help the agent and the family understand the wishes of the patient separate and apart from the strictly medical realm.  When does a patient cross the line from quality of life, to no quality of life?  If quality of life exists, the patient may wish to continue treatment in order to maintain that quality.   Quality of life means something different to each indivudual.  Of course, the severity of the treatment must also be considered—will the treatment be so invasive or painful that quality of life is compromised?   The decision is different for everyone, and it is crucial to understand not only what medical procedures are to be withheld or provided, but also to understand the patient’s fears, hopes and goals as they progress to the end of life. 

Ultimately, everyone hopes for a good death, a death with dignity.  Understanding the patient’s philosophies, fears, hopes, goals, and how to implement those, will guide the agent and the family when faced with making some very difficult choices. It is not only about medical interventions, but also about the decisions one must make in respecting the wishes of the patient.  It is about death with dignity, however defined for each individual.

Ethical Wills

A typical estate plan includes, among other documents, a Health Care Proxy which guides the appointed agent in making decisions about end of life care. This document, however, is strictly legal in nature and does not allow the principal to express any other thoughts and wishes. 

Many who take the steps to establish an estate plan ruminate over how to communicate matters  important to them other than those strictly financial.  This may be done by an Ethical Will.

Unlike a "living will" or "last will and testament," an Ethical Will isn't a legally binding document. It could be a letter—ranging from half a page to a bound book—or a video recording, addressed to those parties with whom you wish to share it. There are no rules governing what goes into it, or when the contents should be shared with the heirs, but the idea behind it is simple: Convey values, not valuables.

Ethical Wills are becoming more common as a way to express non-legal thoughts. It is a letter or document in which you can set out other things that are or have been important to you during your life.

The Ethical Will is written for the benefit of the heirs, but the process can be very cathartic for the author as well.  The author has the opportunity to reflect on his life in ways he might otherwise never do.

Ethical Wills may take many forms.  One verson might be more formal, and include any or all of the following items, or any others not listed here with are important to you:

Your history, past and present.

            Your earliest memories and childhood.

            Your teenage years.

            College years.

            Early Adult years.

            Marriage.

            Children.

            Grandchildren.

Work

Travel

Your later years

Personal Values and beliefs

            At different points of your life, and why?

            What values resonate with you?

            What values are most important to you?

            Who taught you these values?

            What values do you wish to see in others around you?

            What values do you wish to leave to others?

Your hopes for the future

            Hopes and dreams for loved ones

            Family traditions to be continued

            How to help others     

            How to do good in the world?

            How to make a difference?

            How to find peace

Life lessons and achievements

Growth from losses and failures

Achievements and accomplishments

Gratitude:  what are you thankful for, and why?

Advice to your family and friends

Personal values and beliefs

Any closing thoughts

Another version may be more informal, and simply be an enumeration of things you would want others to remember about you.

In simplest form, an Ethical Will talks about quality of life issues, what constitutes a “good death”, and when that good death should be allowed to happen.  It provides guidance to your Health Care Agent which, in the context of a grave or terminal condition, expresses at what point you feel your quality of life would be so compromised, or non-existent, so that you wish further treatment to be discontinued.   In making such decisions, you might discuss with your doctor, and/or your loved ones, what fears you have, what your priorities are,

Ultimately, it can be whatever you choose it to be.  It may provide history, thoughts, feelings and hopes about your life and those you hold dear.  is a gift to your loved ones.

The Gifts that Keep on Giving

I often work with seniors in putting together estate plans designed to see them through the rest of their lives.  Their goals are diverse, and my job is to help them put their affairs in order as they choose. In addition to executing the documents appropriate for that stage of life, however, there are other things seniors can to do ensure the orderly administration of their estates.  Customarily, each spouse will name the other as the Personal Representative of their estate, so the surviving spouse will be charged with that responsibility after the loss of the first to die.  After the death of the survivor, most commonly one or more of the children are named as Personal Representative(s), and will be responsible for the administration and probate of the estate of one, and possibly two, parents. There are, as I call them, three gifts that parents can give their children to make the administrative process easier when the time comes. 

 First, the parents can do what is known as “pre-need funeral planning”.   The parents make all arrangements in advance, from choosing a funeral home, to arranging for burial or cremation, to the selection of items such as a casket or urn, an officiant, the type and location of a funeral or memorial service, a wake or shiva, and all other matters that are important to them.  The parents pay for all in advance, so upon their passing, everything is already in order.  This takes an enormous burden off of the children who are otherwise faced with making many choices very quickly at a time when they may not be in an emotional condition to make rational decisions.   There is also no need to worry about having access to sufficient funds to cover the costs of a funeral.    

The next gift the parents can give their children is to keep accurate, organized and complete financial records in one location so that the Personal Representative doesn’t have to wander through stacks of random paperwork to determine what mom or dad owned at death.  I have an image in my mind of an incredibly disorganized client whose random bank statements, stock certificates, investment account information, retirement account statements, life insurance policies and who knows what else (you get the idea) are bursting out of drawers all over the house.  The assembly and unraveling of all of that information will be like the most frustrating treasure hunt the searcher will ever experience.  So even if you are the most disorganized pack rat known to man, give your children the gift of breaking that habit, at least for these purposes.

Finally, I often tell my senior clients that one of the greatest gifts they can give their children (with tongue in cheek) is to “clean the attic”.  Often parents have been living in the same home for decades and have amassed a staggering collection of items that they have not thought of in almost as long.  When the time comes that the children must clean out the house, the job will be far more challenging if nothing has been done to purge in advance.  Many professional organizers offer services to help seniors assess and dispose of ancient and unwanted items, so that dismantling the home will be more manageable for the children later on.  Of course, this does not apply to the antique tiffany lamp sitting in the attic for three decades that two of the children suddenly both want and will fight over for weeks, nor does it apply to the situation where the children each put a colored sticker on various items around the house in order to lay claim to them.  (All true stories, and it amazes me sometimes what happens to sibling relationships when it is time to divide up mom and dad’s personal property.)  That aside, there is no doubt that the attic and basement will be stuffed with long-forgotten items that can be disposed of in an organized purge with the assistance of a competent professional organizer.

I urge seniors to consider whether they wish to address these “gifts”.  Any or all of the above will be greatly helpful to those you leave behind. Unless, of course, you have “ungrateful children” and want to make them work as hard as they can on purpose.  This is the last gift you can offer to your children, from the grave.

But I Don’t Like or Trust My Child’s Spouse! Trusts, part two

In the post immediately prior to this post, I discussed the use of a trust to prevent a spendthrift child from squandering his or her entire share of the parents estate.  This form of trust has another purpose as well.

Consider the situation where mom and dad really dislike or do not trust their child’s spouse (for fun, let’s call him or her the “evil spouse”).  They don’t want the evil spouse to have access to their child’s share, lest the evil spouse divert those assets and use them for purposes that Mom and Dad never intended.  Customarily the parents intend that the child’s share pass on to the next generation at the death of the child, but if the evil spouse can access the assets, he or she may have other ideas.  So what are Mom and Dad to do?

The answer again is to establish a trust for the benefit of their child.  Such a trust will be substantially the same as the one described in the last post.  While the purpose of a trust for a spendthrift child is to protect against inappropriate spending, the purpose of a trust in this case is to keep the evil spouse from getting access to the assets so long as they remain in the trust.  The evil spouse will have access only to those assets which have been distributed outright to the child.  The child has the option to maintain assets in trust to keep the assets beyond the reach of the evil spouse.   This will prevent the evil spouse from commandeering the assets meant for the child.  Mom and Dad will rest much easier knowing that the evil spouse only has access to the trust assets to the extent their child chooses to request outright distribution, and one can only hope that the child has the wherewithal to prevent the evil spouse from spending the assets in ways that were not intended.

The Spendthrift Child: Trusts Part One

I often work with clients who have adult children, and as is typical, wish to leave their estate to their children in equal shares.  Customarily, at the death of both parents, the shares for adult children will be distributed to each outright, free and clear of all trusts.  But sometimes one of the children is financially irresponsible, and the parents are uncomfortable simply handing over that child’s share of the estate outright.  There may be concern that the child will not manage his or her share responsibly or in the way that the parents intended.   So how do parents of such a child protect that child’s share of the estate and prevent such events from occurring?

The answer is  for the parents to create a trust, and maintain the share for the spendthrift child in that trust for the life of the spendthrift child as beneficiary of that trust.  Most often, the trust will be in the form of a testamentary trust contained in each parent’s Will.  Upon the death of  the second parent, the share for the spendthrift child will not pass outright, but instead will pass to the trust established for his or her benefit.  The trustee appointed to oversee the trust will have the authority to make distributions of income and principal to the beneficiary, in the trustee’s discretion for the “best interest and general welfare” of the beneficiary.  The trustee may release trust assets to the spendthrift child for purposes consistent with the language of the trust and has broad discretion to do so. 

The parents must appoint a trustee to manage and distribute trust assets according to the foregoing standards.  If the siblings have a good relationship, the parents may appoint one of their other children as trustee, knowing that the trust assets will be made available to the beneficiary for appropriate purposes without acrimony.  If the parents are concerned about straining the relationship among their children, however, naming one child to act as trustee for another may be a poor choice.  In that case, the parents might identify an independent person or corporate trustee to serve.  Such a trustee is likely to be more conservative about making distributions only according to the specific language of the trust.

Whatever the terms of the trust may be, the establishment of a trust to hold the share of a spendthrift child is an effective way to ensure that the spendthrift child will not fritter away the whole share in ways that are inconsistent with the parents’ intentions.

It's a Jungle Out There

Lots of buyers looking, not a lot of inventory.  Bidding wars, multiple offers, lost opportunities.  The March 20, 2016 Business section of the Sunday Boston Globe has much to say about this topic.  Take a look.  Home Buyers' Blues.

Home Inspections

You are looking to buy a house.  You find something you love, and to your pleasure and possible amazement, your Offer is accepted.  So what comes next?  The home inspection.  The buyer wants to know absolutely everything about the property and be informed of all possible defects.  The inspector wants to find everything and cover their tail so that the buyer doesn't come back to them later alleging negligence for missing something.  (This often leads to inspectors flagging small issues that turn into big issues during negotiations.)  The seller, of course, doesn't think there is anything wrong with the property, and questions the inspector's conclusions.  So what happens?  The parties (usually via the brokers) will enter into negotiations to try and resolve their differences and come to some agreement about what seller will repair and what seller will refuse to address.  In some cases, seller will agree to perform, or have performed by a hired worker, a specific task.  In other cases, when seller doesn't want to get involved in the actual work, the parties will negotiate a dollar amount which seller gives buyer as a credit at closing to cover the defect.

Often, the buyers will see the inspection as an opportunity to negotiate price reductions or free repairs from the seller.  In truth, that is not the purpose of the inspection.  Generally, a buyer should be worried about major issues, and not whether the faucet leaks.  I often counsel clients that the issues to be addressed should be only of the sort that seller would have to repair in order to sell the house to anyone.  This includes things like a defective boiler or HVAC system, a leaking roof, the presence of  asbestos, mold, radon or other such substances, substantial rotting, or structural defects.  The seller is likely to be uninterested in loose toilets or dryer hoses, missing screens on windows and small matters of that sort.  Buyers should pick and choose those issues that are most serious and most important.

In a seller's market (where we are now), the seller is less likely to agree to address any inspection issues at all, because there are probably four more offers in the wings.  In those cases, the purpose of the inspection is only to give the buyer information and not to use as a point of negotiation.  Based on the inspector's findings, is the property sound?  Are the repairs limited in scope and within budget for the buyer to repair?  Or are there hidden defects that make a buyer choose to walk away?

Except in cases of substantial defects, buyers are best served by examining the home inspection for informational purposes, and not for the opportunity to extract concessions from the seller.

End of Life Care: Part Three

I have written twice previously about the important topic of discussing the subject of end of life care with aging seniors, a significant concern for those approaching the end of life and and those who care for and love them.  The discussion of this subject has, apparently, "gone viral", and this is a positive thing.  The topic that previously we rarely heard about in the context of estate planning, medicine and other relevant places is now everywhere.  Why the sudden global interest?  Whatever the case, the issue is being discussed in many different contexts.  Things are changing for the better. 

Seniors age 65 and older are entitled to Medicare coverage, which provides health care insurance to the older population during the last years of life.  And as I have discussed, in addition to strictly medical concerns, several other factors contribute to an assessment of whether patients are getting the care they want or need as they approach the end of their lives.  In many cases, the wishes of those patients are unmet.

To the credit of the Centers for Medicare and Medicaid Services, as of 2016, Medicare will begin covering advanced care planning, including discussions between physicians and other health care professionals and their patients regarding end-of-life care and patient preferences.  

I am encouraged that the populations of seniors approaching the end of life are finally being afforded the consideration and respect they have long deserved but not always received.

We all die.  Wouldn't it be nice if we could all express our philosophies and our wishes in a meaningful way, and be heard, so we can die with dignity, just as we have lived?

Are Mortgage Opportunities Coming Back?

The mortgage industry has been in a challenging place for several years, and many very qualified borrowers have been unable to obtain a mortgage loan simply because they lacked sufficient funds to provide the required down payment.  The New York Times now reports that once again, it may be possible to obtain a mortgage with a smaller down payment and without incurring the obligation to pay mortgage insurance.  Read more at http://www.nytimes.com/2016/03/12/your-money/mortgages/a-smaller-down-payment-and-no-mortgage-insurance-required.html?emc=edit_tnt_20160311&nlid=10789246&tntemail0=y&_r=0.

Testamentary Trusts

A testamentary trust is an estate planning tool whereby a trust is established through a testator’s will, and comes into effect when the testator dies.  In the past, absent a particular circumstance, clients were advised to avoid testamentary trusts for several reasons.  The Will would have to be filed for probate in order for the trust to take effect.  The court would then have continuing oversight of the testamentary trust, and the trustee was required to provide the court with annual accounts.  In order to avoid the ongoing administrative obligations and costs of probating an estate and managing a testamentary trust, most often estate plans would avoid testamentary trusts and instead include a “pourover trust”.  The testator’s will would provide for the estate to “pour over” into a separate trust over which the court would have no authority or supervision.  The pourover trust might contain essentially the same provisions as would the testamentary trust, but would be administered privately without the court’s involvement. 

Under the new Massachusetts Uniform Probate Code, testamentary trusts have come back into favor. The Court no longer has continued supervision over a testamentary trust, and the previous administrative obligations no longer exist.    With the relaxing of the former requirements, testamentary trusts will often be a more simple, direct and appropriate method for leaving estate assets in trust.

It should be noted, however, that although testamentary trusts may be a simpler yet equally effective method of trust planning, it will be necessary to file the will for probate in order for the provisions of the testamentary trust to be implemented.  If probate avoidance is an important component of a client’s wishes, a testamentary trust will not be the proper vehicle.  Rather, to avoid probate, all assets must be held in non-probate form, and the pourover trust will continue to play an important role in achieving the goal of probate avoidance.  Under the new MUPC, however, testamentary trusts have regained favor and are often the estate planning vehicle of choice.   

Postscript to January 7 Post "A Matter of Life and Death"

I recently wrote a long and heartfelt entry about the issues of end-of-life decisions and death with dignity.  Then I discovered that the topic, as often happens, has burst onto the scene, and discussions are everywhere.  

One resource I have recently learned about that I think is interesting is a website called The Conversation Project, www.theconversationproject.org.   According to their home page, their mission is "dedicated to helping people talk about their wishes for end-of-life-care". The Conversation Project began in 2010, when well-known and prolific writer Ellen Goodman and a group of colleagues, media, clergy and medical professionals realized the importance of initiating conversations about dying and encouraging people to discuss their wishes for what they want to happen when the time comes.  

I am certain there are many other organizations and websites which deal with the same topic, but The Conversation Project was called to my attention, and I thought it was worth sharing.  Let me know what you think.

Big Changes in the Mortgage Industry

The Consumer Finance Protection Bureau has substantially overhauled the compliance and disclosure requirements imposed on mortgage lenders, and established a new and more comprehensive set of requirements designed to better protect the consumer as they go through the mortgage process.  These new regulations went into effect in October, 2015.

There are two important components to the new regulations, known colloquially as “TRID” (TILA-RESPA Integrated Disclosure).  The new rules integrate the former separate disclosure requirements into one complete process.  These rules do not apply to all loan transactions, but generally they will apply to a conventional residential purchase money or refinance loan.

Under TRID, you will find that you will no longer receive a sheath of paper from the lender to wade through once you submit your loan application.  Instead, just two disclosure forms are involved.  The first is the Loan Estimate, which integrates the former Good Faith Estimate and the early Truth in Lending forms given to the borrower following application.  The new Loan Estimate combines the information on all prior forms into one more detailed and complete document, including an accurate disclosure of all closing costs.  The Loan Estimate must be provided to the applicant no later than three business days after a loan application is submitted. 

The second document is the Closing Disclosure (CD). This document integrates the former final Truth In Lending statement and the RESPA-required HUD-1 settlement statement.  The CD, in one comprehensive document, not only itemizes the final closing costs formerly shown on the HUD-1 form, but also states all of the other loan terms, rights and obligations in easy-to-understand language. The CD must also be provided to the applicant three business days before the loan closing.  If the final figures on the CD diverge from those on the Loan Estimate, the lender must explain why, and in some cases the divergence will require the lender to prepare and provide a new CD, also subject to an additional three day rule.  This gives the lender and other parties in the transaction incentive to get it right the first time.  And thankfully, gone are the days when an overworked and understaffed lender is scrambling to provide closing figures to a borrower just hours before a closing is to take place.   The new rule means the lender must be more organized ahead of time in order to meet the three-day rule requirement.

These are big changes, and there is a substantial learning curve still in process.  In my view, however, these rules will result in far better consumer protection, truth and transparency in the mortgage industry. 

And a (somewhat self-serving) P.S.:  TRID clearly states that the borrower may choose the attorney who will close the loan transaction; the lender may no longer refuse to work with the attorney of borrower’s choosing.  This means that if you are working with an attorney you like and trust, you may require that your attorney also close your loan.  I have written previously about the benefit to a buyer of using the same attorney for both the purchase and sale phase and the loan closing phase of the transaction. TRID now ensures that the consumer is entitled to that benefit, so you will be sure the entire transaction is handled by the attentive and competent lawyer you have selected.  Like me.