New Closing Rules

The new settlement/closing rules by the Consumer Financial Protection Bureau (CFPB) on residential properties began on October 3, 2015.  Borrowers of residential real estate were given new disclosure forms after that date.  Prior to October 3, 2015, Truth-in-Lending Act-RESPA integrated disclosures (TRID) included the initial and final Truth-in-Lending Act forms, Good Faith Estimate (GFE) and the HUD-1 or Settlement Statement.  The CFPB has revised TRID to have new borrowers receive a “Loan Estimate” combining the initial Truth-in-Lending disclosure and the Good Faith Estimate at the start of the process by the borrower and a “Closing Disclosure” at settlement/closing time.  Previous disclosure rules still remain in effect for loans originated before October 3, 2015.  The new disclosures will provide borrowers a better explanation of how much they will pay on a loan over its course, as well as a breakdown of closing costs.

The major change to TRID rules is the requirement of a 3-day waiting period by borrowers prior to settlement/closing to receive hard copies of their closing documents in the mail. This waiting period is extended if closing documents are modified in certain areas.  Therefore, the expectation is for delays to occur, at least initially, while settlement/closing agents and lenders get used to the new 3-day waiting rule.  Borrowers should factor in this waiting period when executing new contracts that will require financing.  The new rules do not apply to cash deals or commercial transactions.

Ray Garcia, Esq.

Board Certified in Real Estate Law

By the Florida Bar

www.raygarcialaw.com