Updates for real estate closing process will roll-out on Saturday which is set to affect transactions and could cause unnecessary delays.
The Real Estate Settlement Procedures Act and Truth in Lending Act shall be revamped and changes will take effect this Saturday, according to The Post and Courier. The said updates are reportedly designed to aid buyers get the gist more easily of the mortgage process and help them compare prices so when they finally come down to closing, everything is taken care of.
There are several changes that will take effect but the most prominent ones are the following: the loan estimate document will now replace the Good Faith Estimate and the initial Truth in Lending disclosure. The HUD-1 and final Truth in Lending disclosure shall be combined and shall be replaced by a closing disclosure document. In addition, loan estimates should be in the hands of the consumer within three working days after loan application.
In the same report by The Post and Courier, the changes will affect closed-end consumer mortgage loans. There are exceptions to the new rules namely the home-equity line of credit, reverse mortgages and those secured for mobile homes and houses not attached to a property.
Meanwhile, The Washington Post reported that although the objective of the changes is clearly for the betterment of the closing process, there is still a big chance that confusion can lead to errors and unavoidable delays.
Local brokers were asked about their opinions on the new CFPB rules and according to Louis M. Pope of Century 21 Trademark Realty, the first few months of the implementation of the new rules are crucial. He said lenders and title companies are going to be very strict in implementing these new rules but later on everybody is going to figure out loopholes and ways to solve last minute problems.
