The Consumer Finance Protection Bureau (CFPB) has revised the disclosure requirements for anyone making a loan application after October 3, 2015. The TILA (Truth in Lending Act)-RESPA (Real Estate Settlement Procedures Act) Integrated Disclosure Rule is now in place and all lenders must ensure that these procedures are followed correctly.
To the buyer, this means that some of the disclosure forms have been consolidated into a single form and it will definitely make it easier to understand. It also means that the buyer will have all of the loan conditions in their possession well in advance of closing. The toughest part is probably going to be the timeline that must be followed. The lender MUST have everything done, including underwriting and final loan provisions to the title company and all other parties, such as real estate practitioner(s), at least 3 days prior to the closing date. While the thought behind this 3 day acceptance deadline of loan provisions makes a lot of sense, it’s going to make closings a bit more difficult.
Communication between all parties of the transaction will be key when there is a loan involved. Quick closings, such as closing a property in 30 days, will not necessarily be easily done. Between buyer making loan application, responding to requests from lender for additional information, timing and receipt of an appraisal, going through underwriting and then meeting that 3 day required disclosure deadline will be a bit tough. There tend to be digital/electronic options available for meeting this deadline but it will be best to discuss your options with your lender.
Inspections, amendments to the contract, home warranty services should all be done in a timely manner and lender will need to be notified immediately upon any price change to the contract. Obtaining home owner’s insurance and providing financial information to the lender as soon as possible upon loan application will help the process go very smoothly.
This new requirement will change the timing of obtaining a loan while purchasing a property but hopefully, it will give the buyer more disclosure and information on what they are accepting when they sign off at the closing.