The rules for closings are changing August 1st
LEARN WHY THE HUD-1 IS DISAPPEARING AND ABOUT THE NEW TIMELINES THAT WILL AFFECT YOU
Melissa Tracey Realtor Associate
BUYING OR SELLING A HOME IS A HUGE DECISION, EMOTIONALLY AND FINANCIALLY. CHOOSING A REALTOR® WHO IS KNOWLEDGEABLE OF BOTH THE PROCESS AND THE HOUSTON MARKET IS A MUST. BORN AND RAISED IN HOUSTON, MELISSA TRACEY HAS A UNIQUE ADVANTAGE THROUGH HER KNOWLEDGE OF HOUSTON’S DISTINCT NEIGHBORHOODS, PROVIDING HER CLIENTS WITH A COMPETITIVE EDGE. RECENTLY PURCHASING HER FIRST HOME IN THE HOUSTON HEIGHTS, MELISSA IS ABLE TO RELATE FIRSTHAND TO HER CLIENTS AND ANTICIPATE THEIR NEEDS AND DESIRES. IN 2014, MELISSA JOINED BERKSHIRE HATHAWAY HOMESERVICES ANDERSON PROPERTIES AND IS THRILLED TO BE A PART OF A NATIONALLY RECOGNIZED AND FORTUNE 500 TOP 5 COMPANY. THROUGH HER CUTTINGEDGE KNOWLEDGE OF THE DIGITAL WORLD, MELISSA EARNED THE DESIRABLE E-CERTIFIED 2.0 CERTIFICATION, A DESIGNATION ESSENTIAL IN TODAY’S COMPETITIVE REAL ESTATE MARKET. WITH A BACKGROUND IN LAW, MELISSA HAS AN EXTENSIVE UNDERSTANDING OF LEGALITIES, CONTRACTS AND THE VERBIAGE USED IN REAL ESTATE. GUIDING HER CLIENTS COMPLETELY THROUGH THIS PROCESS IS A PRIORITY, WHILE ENSURING HER CLIENTS ARE PLEASED WITH HER CUSTOMER SERVICE AND ATTENTION TO DETAIL. OUTSIDE OF REAL ESTATE, MELISSA IS MARRIED AND ENJOYS TAKING ADVANTAGE OF WHAT HOUSTON HAS TO OFFER WITH HER HUSBAND AND CHOCOLATE LAB, COCO. THEY ENJOY DISCOVERING UNIQUE RESTAURANTS, ATTENDING CONCERTS, WALKING DOWN BUFFALO BAYOU, SPENDING TIME WITH FAMILY AND FRIENDS AND ON OCCASION SCUBA DIVING. IN ADDITION, MELISSA IS ALSO A FITNESS ENTHUSIAST AND AN AVID RUNNER, COMPLETING HER FIRST HALF MARATHON IN NOVEMBER 2013.
New Forms, New Terms, New Deadlines
The August 1, 2015, integration of the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures and regulations by the consumer Financial Protection Bureau (CFPB) means big changes for you and your transaction. Here is a guide to help you prepare.
Why is the closing process changing?
Tips to keep your closing on track To avoid delayed closings and frustration, NAR suggests; •
Adding 15 days to your closing period. If you would of done 30 days, make it 45.
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Be ready 7 days early. Finalize all details one week before the closing date.
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Avoid making changes at closing.
To help consumers. The CFPB, which was created by the DoddFrank Wall Street Reform and Consumer Protections Act in 2010, made these changes to improve consumers; understanding of mortgages and mortgage disclosures, to make it easier to compare loans, and to prevent surprises at the closing table.
When do the changes take effect? August 1, 2015.
What are the changes? The most important changes for you are two (2) new forms: The Loan Estimate The Closing Disclosure The Loan Estimate replaces the initial Truth in Lending disclosure and Good Faith Estimate. It is given to borrowers within three (3) business days of the receipts of the loan application and provides a summary of key loans terms and estimates of loan and closing costs. The Closing Disclosure replaces the final Truth in Lending disclosure and HUD-1. It is given to borrowers at least three (3) business days before closing and provides a detailed accounting of the transaction.
How is the Closing Disclosure different than the HUD-1? A major change is that the Closing Disclosure unbundles the closing services and separately itemizes each charge, so consumers see what they’re paying for. All fees are listed alphabetically, and there are no more uniform line numbers. Each Closing Disclosure will be unique, as different lenders charge different fees and may assign those fees different names (e.g. “pest inspection” instead of “termite inspection”).
Who Provides the Closing Disclosure? Either the lender or closing agent may provide the Closing Disclosure to the borrower. However, the lender is liable for any mistakes on the disclosure.
Toolkit The Know Before You Owe toolkit available at consumerfinance.gov/ knowbeforeyouowe explains the costs of real estate transactions and offers advice on shopping for mortgages. The Consumer Financial Protection Bureau launched this interactive resource in April.
What if the Closing Disclosure needs to be amended? Changes can be made to the Closing Disclosure – as long as the corrected version is provided to the borrower at least one (1) business day before closing. The only exceptions are the following changes, which trigger another mandatory three (3) day minimum disclosure period before closing can take place: The annual percentage rate of the loan changes by more than 1/8%. The loan product changes (e.g. a fixed rate loan changes to an adjustable-rate loan) A prepayment penalty is added to the loan.
Do you count the closing date as part of the three (3) business days? No. If the closing date is on Thursday, the buyer need the disclosure by Monday. For the Closing Disclosure, “business days” means all calendar days expect Sundays and legal public holidays.
What if you apply for a loan before August 1 but wont close until after August 1? If the loan application is submitted before August 1, the current rules and disclosures apply-even if the transaction closes after August 1.
Can a lender use the new disclosures for loan applications submitted before August 1? No.
Are there mortgage loans that these changes don’t affect? Yes. The changes do not apply to home equity lines of credit, reverse mortgages, mortgages secured by mobile homes or dwellings unattached to property, or mortgages by lenders that make fewer than five (5) loans per year.
Learn More Visit texasrealestate.com to learn more
What about the Sellers? When do they get the closing disclosure? Sellers will receive the Closing Disclosure no later than closing.
Can you waive the three (3) day waiting period Yes. After receiving the Loan Estimate, the buyer may waive or modify the three (3) day waiting period when: The extension of credit is needed to meet a bona fide personal financial emergency You have received the Closing Disclosure; and You gave the creditor a dated written statement that describes the emergency, specifically modifies or waives the waiting period, and bears the signature of all consumers who are primarily liable on the legal obligation For example, the imminent sale of the home at foreclosure, where the foreclosure sale will proceed unless loan proceeds are made available to the buyer during the waiting period.