When TRID finally went into effect in October, there were a few changes that we were able to predict and accommodate.
Unfortunately, there were many more that had to be played out in the lending world before PAR could address them. One example is a shift by lenders from using the term “mortgage commitment,” which is also used in paragraph 8 of the Standard Agreement for the Sale of Real Estate (PAR Form ASR).
Conversations with members went something like the following:
Members: Lenders aren’t giving mortgage commitments any longer.
PAR: Well what are they providing?
Members: They’re giving mortgage commitments, but the lenders aren’t calling them mortgage commitments.
PAR: Well what do the lenders call them?
Members: I don’t know. It varies.
Members were concerned that if their buyers were not given something specifically called a “mortgage commitment,” then their clients would be in default of the Agreement, specifically paragraph 8 which not only requires the buyer to secure a mortgage commitment by a certain date, but to also provide a copy of the mortgage commitment to the seller. But without an industry-wide term to substitute for “mortgage commitment,” it was not an easy change. Fortunately, I speak legalese.
On Jan. 1, a new ASR will be published with a noticeably different paragraph 8. What was once simply referred to as a “mortgage commitment” is now described as “documentation demonstrating lender’s approval, whether conditional or outright, of Buyer’s mortgage application.” The remainder of the language should look very familiar to you since it was not changed at all. The mechanics of the contingency are still the same; the buyer will have to apply for a mortgage and get approval of that application. However due to the change in language, what was previously Paragraph 8(G) – which addressed what happens if the seller does not receive a copy of the approval document – was moved up to Paragraph 8(B).
Guidelines for the 2017 ASR are available on the Standard Forms page of PAR’s website. You can familiarize yourself with this and other changes to the forms library before Jan. 1.