Dec 11 2015 17170 1
It’s been six weeks since new closing rules took effect and aside from a few snags, the experience has been good. That’s the assessment of an industry panel at the 2015 Realtors® Conference & Expo in San Diego last week.
Anthony Lamacchia of Lamacchia Realty in Waltham, Mass., says the intent of the rule changes—to make it easier for home buyers to shop for and compare mortgage products—is a positive for the industry. And aside from the typical growing pains you would expect while real estate agents, lenders, and title agents familiarize themselves with what’s new, the transition has been smooth, with few instances of closings taking longer to complete. “I don’t have any issues with it,” he told several hundred real estate professionals attending the panel.
Dan Chiesa, vice president of national mortgage production at Quicken Loans, says his company has closed 3,800 loans since the changes took effect, Oct. 3. And in one day, on Nov. 12, it closed 444 loans. He said some were delayed but most closed no later than the typical loan prior to the new rules.
Under the changes, the Good Faith Estimate is replaced with a Loan estimate and the HUD-1 Settlement Form is replaced with a Closing Disclosure. The Closing Disclosure must be given to buyers at least three days before closing to give them a chance to review the final numbers. The rules also include other disclosure and timing changes. The new process stems from the TILA-RESPA Integrated Disclosure (TRID) rule, which came out of 2010 banking reform legislation. The Consumer Financial Protection Bureau, which wrote the rule, calls it “Know Before You Owe” and has created a website to help agents understand the new process. Go to consumerfinance.gov and search “Know before you owe” to find the information.
One recurring issue has to do with agents obtaining a copy of the Closing Disclosure. Some lenders, citing federal privacy rules, have been refusing to give a copy to agents, but panelists said there’s no reason agents can’t go to buyers directly and ask for a copy from them. Agents want the forms for their files and also use the information on them for inputting sold data in the MLS.
Another issue is confusion over which license number to put on the form. It asks for the “brokerage” number but it’s the agent’s license number that should be put on the form, the panelists said.
Overall, though, the transition to the new process has been relatively smooth, with only a few transactions facing delays.
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