2 ways to learn about upcoming changes to the closing process

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A man holds a set of silver keys in one hand and a small model house in the other.

03/06/2015 | Author: Editorial Staff

Have you heard about the new closing forms and procedures that will take effect Aug. 1? The Truth in Lending Act disclosures, the Good Faith Estimate, and the HUD-1 settlement statement will be replaced by the new Loan Estimate and the new Closing Disclosure. 

Dawn Moore, president of the Texas Land Title Association and CEO of Allegiance Title Company, discussed these upcoming changes last month during the Risk Reduction Forum at the 2015 Texas REALTORS® Winter Meeting. You can view slides from Moore's presentation here, and see examples of the forms on the Consumer Financial Protection Bureau's website.

In addition, NAR has produced a short video to help you understand the new closing forms and procedures. 

Categories: Forms, Legal
Tags: legal, closing, buyers, sellers, forms, winter meeting


Jett Bean on 02/19/2016

Collapse a perspiration whereas pulling sole of these composed. I but sense that hellos finesse is reality cadaverous by penmanship these for our classmates sole.

Sid Leake on 04/01/2015

All the “hating” I see toward “lenders” in these comments tells me you must look beyond a slick presentation from a haute-coutured LO, or worse, an Internet lender, and look for experienced LO’s who aren’t brokers.  Brokers don’t have sufficient leverage with the institutional lenders who table fund.  Get a RMLO with a NMLS who is a mortgage banker (funds their own loans), therefore has a co-worker, personal, working relationship with his underwriters, closers & funders.  In other words, leverage.  Make sure he attends the closing, where the rubber hits the road, and that he keeps you up to date with each step of the process and answers your calls directly, doesn’t refer you to a processor.  That’s a red flag that the processor is perhaps more knowledgeable than the LO.  A good RMLO will never let you or your clients be disappointed nor stranded at the closing table.  I know, I’ve been doing this for several decades.  P.S.  If you allow an extra 15 days on your offer, someone will steal the sale from you.  Make sure your lender can deliver!

Brian Peterson on 03/29/2015

It seems that NAR singlehandedly is trying to obsolete Realtors.

I feel so betrayed.  I wonder who is lining the board’s pockets?

John Morris on 03/27/2015

It seems that while representing a party in a transaction if a Realtor was to steer a buyer to any particular lender based upon a percieved positive outcome for all parties involved… If for any unforseen circumstances out of control that caused the transaction to fail… A buyer or seller might be able to seek legal council holding the Realtor accountable for damages, expenses, and penalties for leading/steering the buyer to a lender who couldn’t close the buyer for whatever reason.  Realtors have plenty of responsibilities without adding extra burdens and stumbling stones.  Hold the lenders accountable, and if the lender fails for whatever reason… Make the lender reimburse the seller for any expenses incurred, make the lender reimburse the buyer for inspection, and appraisal fees, etc,  and make the lender pay the commissions that were owed to all Realtor’s involved.  Also make the lenders pay escrow fees for title seaches, etc. If there are accountability penalties involved for the lenders they will do a better job of qualifying buyers, and meeting contractual time lines.  Banks receive Government bailouts for failing. Realtor’s do not.

Sadie Bell on 03/26/2015

The fact that Lenders are not accountable for their actions is the #1 blood-boiling issue I have as a REALTOR(R) without a doubt.  As many have stated above agents, buyers, sellers, everyone has to tow the line on contract dates with extreme due diligence except lenders. Contract dates appear to be “suggested closing dates” judging by their business practices. How is this right that they are allowed to do business so unethically? Many will give a hopeful buyer a “preapproval letter” without doing more than a credit check and asking a few questions, that’s not doing anyone a service. How many times have buyers been led to believe they could qualify to buy a home and gone through all the pain-staking hoops they have to jump through to get to closing only to be told a few days….or THE day of closing (after countless excuses and flat-out lies from the loan officer) that they have been denied the loan! Denied not because the buyer did something they shouldn’t have done but because the lender/loan officer/processor did not actually look at all the docs they requested and received from the buyer until just days before closing. It’s insanity! I have an extensive buyer consultation with every buyer and do my best to educate them as to the inept manner in which many lenders work and try to get them to make application with a local lender that I know does perform the due diligence on buyers as they should in the beginning. It is an injustice to allow buyers to spend money on inspections, appraisals, etc. when they are not going to be able to buy the home and it really upsets me that lenders are not held accountable for their inept business practices. Accountability is sorely needed and should be required of lenders to not give out a pre-approval letter until the buyer has really been PRE-approved, provided all required documents AND the lender has reviewed the documents. Once a contract is received by the lender it’s time for them to go to work in a pre-underwriting fashion and get that file processed prior to final underwriting which should be done in a timely fashion so that the loan is ready and waiting to close ON TIME! I agree that just “adding 15 days to close” is not the answer and we all know the lenders process based on closing date so I for one like the idea of having the buyer and seller agree to close on a certain date…..but put a different date on the contract to increase the chance that the lender will close on time!

Rick DeVoss on 03/16/2015

Thank you, Randolph.  It is good to hear from a loan originator, and someone who knows what they are talking about.

Every agent should know how to ‘pre-qualify’ a buyer.  If you don’t know how to do it, go and take a class on the topic right away.  Or, go spend an hour or two with your favorite loan officer.  Have them show you how they qualify a borrower.  Learn how to do a quick estimate of the factors involved.  Compare how it comes out for a $100,000 loan vs. a $300,000 loan.  We don’t have to do their job for them, but we should know how to estimate if a buyer is qualified for the price range they want to look at.

Agents should also know how to pull a credit report.  I mean, ...you should know how to tell a buyer how to pull their own credit report.  That way it does not count as an inquiry.  (It’s called a ‘soft pull’.)  Try sending them to CreditKarma.com, or AnnualCreditReport.com.

Learn how to read a credit report, so as to identify any problem areas, and decide in advance if this buyer is even ready to submit an application to a lender. Maybe they need to rent for a year before you let a lender pull the report and lower their score.  The Number #1 best way to raise a credit score is to pay all bills On Time every month!

I think it is irresponsible to submit a buyer to a loan officer until after you have “pre-qualified” them.  Many times I have found things on a buyer’s report that could be removed or dealt with before they go to the lender just to be denied.  We should be able to advise the buyer how to ‘package’ their application so that it looks as good as it can before they talk to a loan officer.  Mortgage companies don’t hire detectives.  So they only know what a borrower tells them and what is on the credit report.

~If you are thinking that all of this is totally unnecessary, then you haven’t worked with very many first-time home buyers.  We represent our clients.  Therefore, we owe them the best possible service and advice.  You can’t advise them about the process unless you know how it works.

Randolph Cirilo on 03/16/2015

Having been involved on both sides of this issue as a loan processor and an originator and now as a Realtor, I can tell you this.. its no walk in the park on the lending side. I can also tell you that this wait till the last second thing that I’m reading, only happens at big box lenders. Independent brokers are on commission just like the rest of us.. they don’t close, they don’t get paid. This new mess being rolled out in Aug .. this is just further failure on our law makers, I don’t know any buyer who is more clear on their closing expenses now than before the last time the GFE changed. Its easy for someone to say “just add 15 more days” when they are collecting a salary! You guys want avoid lender delays? Find yourself a Loan Officer who works with an independent Mortgage Broker/Originator, verify that they have been in business since before the sub prime idiocy, when even fido could qualify for a loan, and use that Originator! Take into account that one down fall of working with a broker is ...that they still have to work with big lenders, appraisal management companies and survey companies (the latter two that get paid up front for their work, so yeah) AND for good god sakes guys… Get your people qualified with a “Lender” that actually pre qualifies our buyers, not just pulls their credit and asks them how much they make and bam.. they get a “pre approval letter” in their hands and they feel like they just rule the world and we should just show them all the out of budget mansions they want.. its ultimately our responsibility guys.. this is a first step towards fixing our delay issues… Coming from one very tired and very St. Patricked… Guy. Sorry for the late night rant..

A. Jones on 03/13/2015

Adding another 15 days in a contract will still result in the the need of an amendment. The cycle will continue until lenders are held accountable to some degree.

Itell on 03/13/2015

Very well said Billie & Rick.  I know these comments are off subject but the point here, but also believe in my heart Lenders are a very big reason for all the “Dodd Frank” implemented rules and we are just seeing the back end of the results.  Instead of focusing comments by NAR of what WE should do, let all the Realtors make a stand and stop using lenders who do look at the closing date and put the file on the bottom of the “Next Month” stack and wait until the last minute to start working on it.  If they have too much work to do to work & complete our files then we should find other sources.  As a Realtor if we don’t do our job we would be fired without a second thought.  Maybe NAR & TAR should consider spending some of our dues on supporting our needs to close in a timely manner and find a way to educate and help the lenders make it happen.  Until then, you the Buyer Representative have the responsibility to keep your client informed of all things related to closing.  Sadly I don’t think the Texas Banking Commission has rules about slow processing and being stupid.

Linda Laycock on 03/13/2015

I agree with Billie.  It gets so frustrating when you end up the bad guy because of lender delays.  You have a buyer renting that has given notice as per their lease to enable them to get their deposit back,  a seller buying a new home in another town dealing with different lender and another Realtor plus their Realtor in existing town.  You now have 6 people you have to answer to, to be able to get the transaction done.  My buyers lender sees 30 or 45 days on the contract and they wait till the 20th day to get docs to underwriter and order appraisal-its not going to happen.  Luckily, our local lenders are staying on top of the game-I also, have a Good Lender in Dallas Area that stays ahead.  BUT its the internet lenders that hang us out to dry on time frames.  This happens when the buyers have already shopped and found lender before going/staying local.

Rick DeVoss on 03/12/2015

Thank you for bringing this issue to light.  For too long the mortgage companies have been ignoring the dates on contracts.  But since they are not a “party” to the contract, it is difficult to hold them liable for their actions.  Too many times a buyer will come to the table with a loan officer already picked out.  This means the Realtor has no input on the selection of the lender, and some of them are very sloppy.  I have begun to think that they look at the closing date and then put the file on the bottom of the stack until it gets unbearably close.  Why can’t they process the file in the order received?

I have wondered if we could somehow submit the file to the lender with an early closing date on it, and then when they come in with it ready to close a week or two late, both the buyer and the seller would be happy to be closing on the date they agreed to. 

We should interview the loan officer up front, and make sure that they will agree to communicate with the Realtor throughout the processing of the borrower’s file.  Get the buyer to sign a letter authorizing the lender to communicate all aspects of the file to the buyer’s agent.  I have “fired” some loan officers for failing to communicate with me, and they will never get another buyer referred to them.  It is time we let the lenders know that we won’t put up sloppy file processing.

I have found a few loan officers who don’t realize that the buyer is their customer, while he is my client.  And the next loan they get will not come from the last buyer, but it will come from the Realtor.

Billie Fowler on 03/12/2015

HEAR, HEAR!!! Yes, totally agree with this comment. In this day that we are living and working, it appears that more and more people, including the MYRIAD of lending institutions, seem to be less accountable for their actions. As a real estate community, our clients hold us accountable for every step of the process and beyond. As a professional, I respect that aspect but I also expect it from others. The lenders in this country, as a whole, are the least responsive in the entire process of buying and selling real estate. If real estate agents did our job in the same manner, we would not last in the business. I am in this business for over 35 years and have seen so many changes, many being good changes, yet the lenders continuously lag behind the standards set forth for the rest of this industry.  Please make sure your real estate clients understand what to look for in a great lender and make sure we continue to support those who are doing it right.

Itell on 03/12/2015

I think NAR has gotten the message all wrong when saying add another 15 days to your anticipated closing date.  Lenders need to be held accountable for the date specified in the contract.  We as realtors are dropping the ball.  We think we have to allow the lender dictate the closing dates.  A contract is a contract all the way through.  If the date is the 30th of the month the lender should be held accountable.  They should be responsible for getting all the information to the title company well ahead of the required disclosure time of three days.  If we continue to allow the lenders to delay closings we are at fault.  Stop doing business with these companies.  Everyone else involved with the transaction is held responsible for living up to the requirements of the contract.  I know this comment isn’t related to the change in the law and the requirement of the new disclosures, but I think this is where NAR’s comment of suggesting adding 15 days to time of closing.  Give the lender another 15 days and they will only delay even looking at the loan for another 15 days.  If you agree or disagree, please speak up.  I am curious if any other realtor is tired of lazy lenders and their disregard of the terms of the contract.

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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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