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Major changes are coming soon to the mortgage process…. | 06/05/2015

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Effective August 1, 2015 the mortgage loan process will be changing significantly thanks to new Federal rules created by the Consumer Financial Protection Bureau (CFPB). The CFPB was created in 2010 as a result of the Dodd-Frank Act. The purpose of the CFPB is to help protect consumers in the market for financial products including mortgages. The new rules are the Integrated Mortgage Disclosure Rules (or “know before you owe”). The goal of the new rules are to improve consumer understanding of the mortgage process, aid in comparison shopping, and help to prevent surprises at the closing table.

That’s all good. So how does it affect someone shopping for a loan? The answer is new forms and new deadlines. The Good Faith Estimate will be replaced by the Loan Estimate (LE). Under the new rules the Loan Estimate MUST be delivered to the consumer within 3 business days after applying for a loan. According to the CFPB a loan application constitutes the lender receiving 6 things:

1. The borrower’s name
2. The property address
3. The estimated value of the property
4. The borrower’s income
5. The requested loan amount
6. The borrower’s social security number

This relatively small amount of information obligates the lender to provide the borrower a Loan Estimate. The new rules require a 7 business day waiting period after delivery of the LE before a closing can occur.

The Closing Disclosure will replace the Settlement Statement or HUD1 and here’s where things get interesting. The Closing Disclosure must be delivered to the borrower at least 3 business days prior to the closing. In the past HUD 1’s were usually delivered just prior to closing (often the day before closing). There were many cases where the first time the HUD was seen was at the closing table. The good thing about the new rules is they allow time for the consumer to clearly digest everything on the Closing Disclosure, which eliminates confusion about financial obligations, type of loan, costs associated with the loan, etc.

Again, all good stuff. However, the new rules/deadlines may cause some closings to be delayed. Especially while lenders are initially implementing the new processes. Another twist is the switch to business days for the loan when every day counts regarding other deadlines associated with a real estate contract. The new deadlines will likely lengthen the loan processing period and the days of quick closings are gone. Therefore, it will be important for buyers, Realtors® and lenders to plan for more time to close when presenting offers; from the usual 30 days to 45 days. Choosing a lender who understands the new rules and is prepared to address them will be crucial to reach the closing table. Of course, I’ll gladly connect you with a lender who fills that bill. These are just a few highlights of the changes. As always, there are more details which we will be happy to share, all you have to do is ask.

Now that you are informed on the upcoming changes to the loan process, let’s begin the hunt for your perfect new home. Just call or email me today to launch the search. Can’t wait to get started? Just follow this link to find your dream home:
http://www.debbybraun.com/search_atlanta_mls_listings.asp

-Debby

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