Why the December rebound in home sales?

Diana Olick | @DianaOlick

Sales of existing homes jumped 14.7 percent in December compared to November, according to the National Association of Realtors, but not because the housing market is suddenly outperforming all expectations. The jump in December had all to do with the nearly 11 percent monthly drop in home sales in November, and that drop in November had all to do with something in the mortgage market called “TRID.”

TRID is an acronym for TILA-RESPA Integrated Disclosure. It’s a new set of rules from federal regulators, deemed “Know Before You Owe,” designed to protect borrowers from hidden fees and costs in a home loan. It requires lenders to present borrowers with a simple disclosure form listing all facets of the loan three business days prior to closing. This is so borrowers can ask educated questions if they need to.

“(Friday’s) data just confirms that the November drop was due to delays in closings that were pushed to December,” said Lawrence Yun, chief economist for the NAR.

TRID went into effect in October, and first began to delay closings in November. Even though lenders had over a year to prepare, shifting their computer systems and adapting to the new protocol did cause problems. These delays, in addition to November having the Thanksgiving holiday, pushed a fair amount of closings to December.

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