by Flint Adam, Nolensville resident & Realtor®
Friday, October 2, 2015
Saturday, October 3rd is the big day – mortgage disclosure laws are revamping and Realtors, lenders, and closing attorneys are expecting some growing pains. Buyers and sellers should, too.
Here is what changes: home buyers applying for loans will receive new rate and fee quote forms from their lenders. Oh, and there are new timing rules that are sure to make things interesting.
Up until Friday, buyers and sellers received federally-required consumer disclosures known as HUD-1 statements at closing. Well, they’re gone – replaced with TILA-RESPA Integrate Disclosures (or TRID) that are expected to make understanding rate and fee quotes simpler.
Sounds pretty inconsequential, right? Well, it’s a little more complicated than that… and it begins with those timing rules I just mentioned.
It’s been pretty typical to expect a 30-day closing process in residential real estate – that’s the window between binding agreement of a Purchase Offer and the actual closing and transfer of ownership.
We’re now being told to expect anywhere from a 45 to 60 day closing period, and that’s assuming everything goes smooth. A big change that can affect this timeline is the new Closing Disclosure (see an example by clicking here). This document will make it easier for buyers to review the closing terms and compare them with the original quote… but the lender must provide this document at least three days before closing.
That’s where things get sticky. The Closing Disclosure has to be locked 3 days before closing… and nothing can change. Real estate transactions are notorious for last-minute revisions. It’s not atypical for a lender to be issuing closing instructions and a final HUD the same day as closing. Under the new rules, that’s not going to fly.
If anything changes within that final 3 day window before closing, the clock resets, and a new 3 day “clear to close” period begins.
In principal, this all sounds really smart and good. In practice though… well, I’m not expecting smooth closings in October, November, and December.
How Can You Prepare?
Ask questions of your prospective lender and make sure your Realtor has a game-plan to keep things on track. Communication among lender, buyer, and Realtor will be paramount; and if you’re competing with other buyers in this competitive market, being able to close on time (and sooner than the next guy) can be a huge advantage.
Ask your prospective lender if they allow for electronic delivery of the Loan Estimate or will they mail it? The Consumer Financial Protection Bureau – who enforces the new TRID rules – says the Loan Estimate must be delivered within 3 days of you applying for a mortgage. Extra points go to the lenders who can deliver that to you fastest (and preferably electronically).
Everyone will have to adjust to the new rules, and there are bound to be bumps in the road, but working with folks who have a game-plan in place will help make the closing process faster and smoother for you.
I’m a Nolensville TN resident… I’m a Nolensville TN Realtor®… and I always offer a complimentary, no commitment, no pressure Comparative Market Analysis for my neighbors. Please let me know how I may assist you in the sale or purchase of a Nolensville property.