WHAT
Changes to the Good Faith Estimate and HUD-1 forms and closings processes are coming soon.
WHEN
The changes will be effective for transactions where a loan application is taken by a lender on or after August 1, 2015.
HOW
The Consumer Financial Protection Bureau (CFPB), an entity created by the Dodd-Frank Act, issued a new TILA final regulation that, among other things, created two new forms (each with many variations) and new 3 business day delivery requirements.
- Loan Estimate – 3 business days after application
- Closing Disclosure – 3 business days before Consummation
WHO WILL WILL ISSUE THE FORMS
Loan Estimate – Lender or Mortgage Lender
Closing Disclosure – Lender or Settlement Agent (Escrow), Lender may delegate responsibility to the Settlement Agent (Escrow).
IMPACT ON REAL ESTATE PROFESSIONALS
- Closings may take longer because of the 3 business day review periods.
- You’ll be seeing different forms for most transactions.
- Your contact information and license number must appear on the Closing Disclosure form. (see page 5 of the Closing Disclosure Form)
- Your clients may receive multiple Loan Estimates due to:
“Changed circumstances” – certain defined circumstances that cause the estimated charges to increase by more than the variance allowed under the Final Rule;
Multiple applications with different lenders;
or Multiple applications for different loan products with the same lender. - Your clients may receive multiple Closing Disclosures:
Some with a 3 day business day waiting period and some without; and
Some before closing and some after. - Buyers loan policy will show full loan policy amount
- Simultaneous discount rates need to be negotiated.
- Last minute changes will impact Closing Disclosure delivery time.
