Effective October 3, 2015, all financed real estate transactions will require two new consolidated forms, the new Loan Estimate (LE) and the new Closing Disclosure Form (CDF). This is the culmination of a complicated eight-year regulatory process where we have seen the creation of the Consumer Financial Protection Bureau (CFPB), new consumer enforcement and investigation powers, new mortgage regulations, forms, time frames, and industry work flow.

What does this mean for you as a Realtor®?

Dana Ward, Owner of Orlando title insurance company, RECS, has complied this list of important bullet points:

  • The new rules dynamically transform both the mortgage and settlement process:
    • The borrower/buyer MUST receive a Closing Disclosure Form three (3) days prior to closing or the transaction will not close on the assigned date.
    • This means that most lenders will want ALL loan and real estate specific fees and information to them TWO (2) WEEKS prior to closing to ensure they can compile and report all information to meet the “3 Days Prior” consumer delivery rule.
  • The financing process will now be of interest to all in the transaction with communication and collaboration between all parties being critical throughout the contract-to-closing process.
  • The National Association of Realtors® has recommended adding 15 to 30 days extra to “normal” market turn times when assigning the closing date after the October 3rd kickoff. Going forward, realize that changing closing dates will be much more difficult and could have a huge impact on lender requirements and their critical consumer delivery dates.
  • This now holds the buyer, their Realtor®, and loan officer accountable for understanding all financing time lines, meeting all critical milestones, and communicating loan status regularly.
  • Be proactive in clearing conditions that could cause delays and be sure to meet the lender’s request for ALL information and fees two weeks prior to closing, such as:
    • Appraisal – timing and ordering.
    • Title and municipal searches.
    • Where the borrower is in the loan application queue.
  • Have a plan for inspections, repairs, walk-through exceptions, and understand the potential impact new buyer-seller agreements and pricing adjustments would have on the loan process…and the requirement to have everything completed two (2) weeks prior to closing.
  • Buyers and Buyer’s Agent – Don’t expect to make any changes near or at closing.
  • Sellers and Seller’s Agent – Don’t do anything that would require changes.
  • Ensure ALL parties are clear as to the lender’s deadline and date for all information to be reported.
  • Ensure it is clear to the buyer/borrower HOW, WHEN, AND WHERE they will need to acknowledge receipt of the Closing Disclosure from the lender three days prior to closing. Again… No timely receipt…NO CLOSING.

This is a complicated rule with a lot of moving parts. On our web site, please go to “Realtor® Services” page, then click on “How New Government Consumer Protections Impact Real Estate Transactions.”  This is the complete 3 Hour Realtor® CE PowerPoint presentation that owner Dana Ward wrote, had approved by FREC, and has presented throughout Florida.  It is a comprehensive summary of all the regulatory changes and forms impacting real estate financing and closings over the last seven years. See also, CFPB’s excellent summary “The Real Estate Professional’s Guide” for more information. Please feel free to call anyone on our Orlando title insurance company team with your questions and suggestions! We are here to help and ensure your transactions close.