New rules take effect in the residential mortgage industry. These rules change the disclosures and estimates home buyers will get when shopping for a loan and prior to closing a loan. There is a new Closing Estimate (replacing the Good Faith Estimate) and a new Closing Disclosure. These rules start October 3 for all new loan applications.
CCIAOR offered nine educational seminars on the new rules and we hope you took advantage of one of these member benefit opportunities. If you did not, we have an additional education class scheduled in October as part of a Fall Back Into Business Series with, “Don’t Be Tripped up by TILA/RESPA” Class, October 27 from 10 a.m. to Noon at CCIAOR.
Also, CCIAOR spent the last several months conferring with REALTORS®, attorneys and local mortgage lenders to get a primer for what REALTORS® need to be aware of, specifically on Cape Cod, Nantucket and Martha’s Vineyard.
Here are the takeaways:
- A New Integrated Disclosure Addendum Added to MAR Forms Library
The Massachusetts Association of REALTORS® (MAR) has made available a new addendum to add to the MAR Purchase and Sales agreement, outlining many specific issues that are affected by the new Truth in Lending guidelines. The forms have been added to the form library on all of the transaction software offered as a REALTOR® benefit, including Zipforms which continues to be a free REALTOR® benefit available to you. For more information on the new Integrated Disclosure Addendum, click here.
- Ask for a Copy of the Sellers Settlement Statement
Only buyers will be receiving the new Closing Disclosure at a closing. Settlement agents will be producing a separate statement for sellers. REALTORS® who used to need a copy of the HUD-1 at closing for their record purposes need to request a copy of the sellers statement as that will contain all the information you typically need.
- Put the Closing Team Together Early
For buyers’ agents, it’s important to know who your client is going through for their loan. Many lenders have now fixed the list of attorneys that represent the bank in the transaction and, as such, the settlement agent will be chosen off a specific list of attorneys with fixed fees. Not all lenders are going this route, but many are, so we encourage you to have a conversation with the local lenders your clients do business with on a regular basis.
- Closing Process Starts Earlier
REALTORS® should start confirming that everything is on track for a closing at least 14 days prior to closing. This includes handling utility proration in the Purchase and Sales agreement and making sure all satisfactions of utility proration are done at least one week prior to closing. In addition, listing agents should get contact information for any homeowner associations, road maintenance agreements or any other fees that will be listed on the Closing Disclosure as early as possible as the appraisers and lenders will need this information sooner.
- Talk to the Lender when Completing the Offer
For the first several months, lenders will be pushing back timelines and commitment dates. It is important that the buyer’s agent is communicating with the lender when filling out closing dates and mortgage commitment dates on the offer to purchase. As a rule of thumb, many lenders are suggesting a minimum of 45 days from offer to closing at least at the beginning of this implementation.
Here are a few more resources for you:
NAR’s Field Guide to the TILA-RESPA Integrated Disclosure Rule (TRID)
Consumer Financial Protection Bureau’s Know Before You Owe Real Estate Professional’s Guide