Beginning August 1, 2015 lenders, realtors, buyers & sellers will face new rules which govern how mortgages will be handled. Under the Real Estate Settlement Procedures Act and the Truth in Lending Act, new procedures and timelines will be implemented which could result in closing delays.
The Consumer Financial Protection Bureau will be implementing a mandatory 3-day waiting period requiring the closing disclosure be given to the buyer at least 3 days prior to closing to allow the borrower sufficient time to review loan costs associated with borrowing money to make a purchase.
Why is this new rule in place?
The CFPB wants to help buyers understand the costs and ensure they are not making split second decisions.
What can trigger a new 3-day waiting period?
- Changes to the loan product.
- Changes to the interest rate.
- Changes that require lender approval.
- Problems that arise during the final walk through.
- Items that are often negotiated very close to the closing date.
What happens when delays occur when there are certain contract dates that are set up and if these dates are missed then there are certain per diems that are going to have to be paid? Who is going to pay it?
The National Association of Realtors among other trade organizations have asked for a delay of enforcement until January 1st of 2016 so they obtain a better understanding of what it’s going to look like in practice; however, according to recent letter from the CFPB it appears the extension isn’t going to happen.
What can be done?
Realtors are going to need to work very closely with lenders that understand the rules and be on top of any changes and get the changes to the buyers immediately. Any changes will need to have been reviewed by the buyer at least a week before closing to avoid any delays.
Did I leave anything out or do you want to join the conversation? Let me know in the comments below.
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Thanks for reading,
Please read the update to the post below (6-18-2015).
As reported by NationalMortgageProfessional.com the CFPB has announced a 2 month delay in the new rule changing the start date to October 1, 2015.
Please read the update to the post below (8-6-2015).
The Consumer Financial Protection Bureau delayed the rule change one more time with the start date of October 3, 2015.