On August 1 2015, the real estate industry should be prepared for important changes in the way closings are handled. If any changes are attempted to be made within three days of closing, it’s going to be much more difficult to actually make the changes closings, and includes a greater risk of the closing date being set back.
The Consumer Financial Protection Bureau (CFPB) will be combining mortgage forms and disclosure documents. In order to prevent an issue with the new strict three day window, the forms will be given earlier in advance.
In addition to combing mortgage forms and disclosure docs the CFPB will also combine the Good Faith Estimates and Truth in Lending disclosures into one form called the “Loan Estimate” or “LE” for short. The Loan Estimate must be given to applicants within the 3 day timetable if the lender has received sufficient information on the applicant: their name, income, estimated value of property, loan amount, etc. As a security for the potential borrower, lenders are going to be held liable for exact charges and to must be within 10 percent of actual cost listed in the Loan Estimate.
The HUD-1 Settlement Statement will then be referred to as the “Closing Disclosure” or “CD” and given to the consumer three days prior to the closing date. The CD will serve the same purpose as the HUD-1 and summarize the terms and charges of the loan.
Any changes to these “new documents” within three days will most likely set back the closing date. However, there is a bona fide emergency exception. This exception must be a serious issue, given in writing in their own words. If approved for the exception, it does not guarantee you will close on time or at all. Starting August 1, 2015 it’s just better to be on top of these documents, in regards to accuracy and execution to prevent closing delays, due to the new strict “three day timetable“.
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