After steady improvements this spring, the average time-to-close, the time from contract to settlement, edged upward in May of 2016 relative to the same time a year earlier. On average, sales took 3.6 days longer to close compared to May of 2015. Last month’s disappointing reading is still well below the market peak of 5.7 set back in December.
Until May, the average time-to-close a home sale compared to the same month a year earlier, a means of adjusting for seasonal patterns, had fallen steadily suggesting that the market was adjusting to TRID-related delays. However, the May reading implies that fine-tunning of TRID closings, either on the front end or investor take-out, continues. The average delay is nearly three and a half times higher than pre-TRID levels, but lenders indicated no cancelled settlements in the 1st quarter, down sharply from the 4th quarter of 2015.
TRID or Know Before You Owe is a new set of rules governing the closing process. These rules are intended to help make consumers more aware of their financial liability, while streamlining the process. Settlement delays are likely to continue to ease as successful originators gain market share, vendor software improves, and demand from mortgage investors recovers. The CFPB has announced that it will address some of the issues raised about Know Before You Owe later this year.