The way that residential real estate closings happen is in for a big change on August 1 and it will affect anyone who is involved in the purchase, sale or refinance of a home. The Consumer Financial Protection Bureau (CFPB) is requiring mortgage lenders ensure the competency of all of the businesses with which they work to originate and close a mortgage loan. That includes the appraisers, the credit reporting agencies, the attorneys, etc…. It also is requiring that the disclosure forms which currently consist of a Truth in Lending and Good Faith Estimate be combined and given to the borrower within five days of making the application. The other major change is that the borrower has to be given the final closing document at least three business days before the closing.
While these changes may seem simple and not considered a big deal, the reality is that there are going to be some bumps in the road as the industry transitions to the new system. For example, in almost every closing, the buyers do a walk-through the new house either the night before of the morning of the closing. If there are issues, they are usually resolved either prior to the closing or at the closing table. Because of the new three day rule, if any of these issues affect any part of the loan, the closing will have to be postponed and a new closing document has to be issued to the borrower.
So, imagine the effect this is going to have on not just the buyers but also the sellers who may be buying a house of their own immediately following their sale. My advice to you is to make sure you work with a real estate agent and an attorney who is familiar with the changes which are coming on August 1. While this may not guarantee a problem-free transaction, it will be more likely than not. All of us here at the Hamzy Law Firm are working hard to familiarize ourselves with the new laws and regulations and will continue to do so in order to be able to represent our clients to the best of our ability.
William A. Hamzy, Esq.