Changes to Residential Mortgage Forms in October 2015

Attention sales associates and homeowners! Major federal changes to residential mortgage forms are coming around the corner in October 2015. We’ve got you covered with what you need to know during this transition.

Changes to the residential mortgage forms:

Starting October 3rd, 2015 The Consumer Financial Protection Bureau (CFPB) will implement the New Rule.

What’s the New Rule?

The CFPB is changing the process by which you’ll receive your disclosure forms when you buy a home. Even better, the forms will have a new look and feel so it’s easier to understand.

What’s the new process?

Mortgage companies are now mandated to send consumers a “Loan Estimate” within three days of the consumer providing very basic information to them.

What’s in the Loan Estimate?

  • Name
  • Social security number
  • Income
  • Desired loan amount
  • Property value
  • Property address

The Loan Estimate will combine today’s Truth in Lending form and the initial Good Faith Estimate into one easy-to-read form that will help you understand all of the costs of the transaction.

Another new form that is introduced with the New Rule is The Closing Disclosure:

Built from the same principals as the Loan Estimate, the Closing Disclosure is simplified toward a consumer-friendly audience. It will also be sent out to you no later than three days prior to the consummation of the loan.

How do these changes affect me?

  • The goal is to give you time to compare the figures on the closing disclosure with those on the Loan Estimate that was provided upfront.
  • With the implementation of this law, certain fees cannot change, or can only change a certain amount.

Make note that the three days referenced above is a mandatory waiting period, so if there are any changes to the transaction fees that exceed the tolerances set by the New Rule, a new three day waiting period may be declared and closing dates could potentially be pushed back.

With so many parties coming together to meet mandatory deadlines, it’s important to choose a real estate team that works closely together (i.e. an attorney, a realtor, and a mortgage banker) for a smooth process.

The New Rule goes into effect for new loan applications as of October 3rd.  Be on the lookout for more pieces from William Raveis Mortgage and your Executive Mortgage Bankers as the date approaches with FAQs and best practices for conducting a real estate closing.

Want to learn more? Watch our video which breaks it down for you.

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