Big Changes to Closing Process
After close collaboration with NAR, the Consumer Financial Protection Bureau (CFPB) has released a new toolkit to help Realtors® navigate the changes.
Explore the complete guide here.
New rules affecting the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) will go into effect on October 1. The changes will significantly change the closing process.
On November 20, 2013, the Consumer Financial Protection Bureau (CFPB) issued its final rule to integrate RESPA and TILA disclosures and regulations. The final rule integrates existing disclosures with new requirements from the Dodd-Frank Act to improve consumer understanding of the mortgage process, aid in comparison shopping and help to prevent surprises at the closing table.
The Good Faith Estimate will be combined with the Truth in Lending (TIL) disclosure now called the “loan estimate” and the HUD-1 settlement statement with the final TIL, now called the “closing disclosure.”
The changes will also affect the settlement process, requiring that the closing disclosure be in the hands of the consumer three days before closing.
Highlights of the new rule include:
- A new loan estimate document which replaces the Good Faith Estimate and the initial Truth in Lending disclosure.
- A new closing disclosure document which replaces and combines the HUD-1 and final Truth in Lending disclosures.
- Loan Estimates must now be given to consumers within 3 business days of applying for the loan.
- Types of loans covered include most closed-end consumer mortgage loans. The rule does not apply to Home equity lines of credit, reverse mortgages, mortgages secured by mobile homes or by dwellings not attached to the property and creditors who make five or fewer mortgage loans in one year.
- SCR suggests those who intend to buy or sell real estate after July should contact their law firm as soon as possible to discuss how the new federal laws, closing procedures and documents could potentially cause closing delays.
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