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Closing Delays Rise Unexpectedly

NAR Research began tracking closing delays following the implementation of the TRID or Know Before You Owe rules. These rules changed the settlement process adding new closing documents, tolerances for fees, and timelines.

The time-to-close a loan, the period from contract to settlement, fell 0.3 days in November relative to the same time in 2015, the first decline on a 12-month basis in nearly two years. However, the November reading was relative to high reading in November of 2015 following TRID’s implementation. Comparing this past November with the same period in 2014 yields an increase of 4.4 days, a surprise relative the recent easing pattern.

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Many of the loans that settled in November went under contract during the busy September and October period. More recently, mortgage rates rose nearly 50 basis points in November in the wake of the Presidential election. As a result, many fence-sitting home buyers and refinancers moved into the market. The extra demand may have exacerbated a bulge in early fall contracts.

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The time to close a loan remains elevated, though. As depicted above, the time-to-close averaged 40.5 days from November of 2015 to November of 2016 compared to 36.7 days in the prior 12-month period. 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.

Ken Fears, Director, Regional Economics and Housing Finance

Ken Fears is the Manager of Regional Economics and Housing Finance Policy. He focuses on regional and local market trends found in the Local Market Reports and the Market Watch Reports . He also writes on developments in the mortgage industry and foreclosures.

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