New Changes to the Real Estate Industry
The long standing, HUD-1 settlement statement and Good Faith Estimate forms that have been a part of a real estate transaction are going away on August 1st. The Truth in Lending Act disclosure is going away as well. In their place will be a new closing disclosure and a new loan estimate. In addition, there will be changes to the closing process, including a new rule requiring everything to be in place three days prior to closing. Any last-minute changes to a transaction face new hurdles to jump through.
The Consumer Financial Protection Bureau (CFPB) was formed and has the oversight authority to make credit products safer and easier for consumers to understand. It’s designed to:
- Remove hidden costs or catches
- Make prices and risks clear so you can comparison shop
- Make sure all lenders are following the same rules
With the CFPB in place, it will fix the broken credit market and help prevent future economic problems. This is a huge change for the mortgage industry and will require Realtors to make some changes as well:
- All clients in the transaction will need to be ready for closing 7 days prior to the actual date
- Realtors will need to make sure their clients are abiding by their agreements
- Communication must be tight between the client, Realtor and everyone involved in the closing process
- 15 days should be added to all closings just to make sure things are in order
- With many final walk throughs being done a day or two before closing, as of August 1st, they will need to be completed early to allow for any changes.
While these changes will be good for the economy, there is always a huge learning curve to adjust to major changes. This change will be where the rubber meets the road with seller and buyer closing dates. Changes will affect closing dates as well as when the buyer can take possession. As in everything else, it’s a domino effect and if one thing gets screwed up along the way, it will affect everything else that’s in the process.
Stay tuned as we all learn more about this new law. There will obviously be some problems and delays with closings after August 1st. To avoid closing delays, buy now and close by August 1st. Sign up for our next Home Buyer Workshop on Tuesday, April 28th and start your local home search here. If you have any questions, please call me direct at (913) 515-3250 or contact me here.