6 things you may not know about new closing rules

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11/04/2015 | Author: Editorial Staff

The real estate industry experienced some big changes last month when the Consumer Financial Protection Bureau implemented new rules significantly changing the forms and procedures used in most mortgage loan transactions.

Last week, TAR’s Housing Initiatives Committee hosted a webinar featuring Tamara Tapman of SWBC Mortgage Corporation, who reviewed the new requirements. Here are six important takeaways from her presentation:

  1. The changes don’t apply to all loans. Certain transactions aren’t covered by the new rules. These exemptions include commercial loans, reverse mortgages, and home equity lines of credit.
  2. Your clients are getting two new documents that are easier to understand: a Loan Estimate, which borrowers must receive no later than the third business day after the lender receives the borrower’s loan application, and the Closing Disclosure, which borrowers must receive no later than three business days before consummation.
  3. Certain info comprises a loan application. A lender is required to provide the Loan Estimate after receiving six pieces of information from the consumer: his name, Social Security number, and income; the property address; an estimate of the property value; and the amount of the mortgage loan the consumer wants.
  4. Saturdays count, too. For the Closing Disclosure, “business days” means all calendar days except Sundays and legal public holidays.
  5. Sellers don’t have a three-day requirement. There is no three-business-day waiting period for the seller’s Closing Disclosure. This can be delivered the day of consummation.
  6. Your client may have to extend closing. A lender must provide a corrected Closing Disclosure and ensure the borrower receives it no later than three business days from consummation  in three situations: The annual percentage rate (APR) increases by more than an eighth of a percent; the loan product changes; or a prepayment penalty is added.

Visit texasrealestate.com/closings to find a recording of this webinar and several other helpful resources that explain the changes. 

Categories: Forms, Buyers, Sellers
Tags: closing, cfpb, consumers, forms


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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.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

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