Consumers, lenders, title companies, and real estate agents probably don’t all realize that big changes are coming down the pike and it will affect real estate closings in a big way later this year.
You’ll be hearing more about this issue this Spring and Summer as these new rules go into effect for closings starting August 1, 2015. The Consumer Financial Protection Bureau (CFPB) which is a new entity instituted by the Obama administration dictates that mortgage documents are locked in at least 3 days before closing.
Big Changes Coming to the Closing Table
Lenders will have to use the new TILA-RESPA Integrated Disclosure form and this form must be given to consumers three days before closing along with the Municipal Lien Search results. Any change to the form requires the clock to start over which means many closings will be delayed.
Some would argue this concept would change the common practice of lenders sending mortgage documents to the title company the day of closing which forces buyers to scramble to get a wire or cashiers check just before closing and this is a good thing. They’d be right, in part. That would be a good thing, however there will be some unintended consequences and perhaps some lawsuits arising out of the implications of implementation.
This new rule shifts the burden from title companies to lenders to disclose the TILA. Lenders have not been used to communicating with all sides of the transaction. Typically that’s been the role of the title agent. Lenders had a hard enough time getting a file from clear to close to their closing department and then on to title company. This now adds an extra layer, and if they weren’t great before, they’ll be less than average going forward.
Realtors and sellers will gripe because any change will change the closing statement, which could dictate postponing closing. How will a seller plan for a closing on a certain day when they must turn around and close on another property the same day? Any change to the first closing resets the clock and postpones it three days, which will postpone subsequent closings. I remember one day years ago where we had 5 simultaneous closings on the same day. We had the buyer and seller on all 5 properties and we ran into an issue on closing number 3 at the closing table. If #3 didn’t happen, 4 and 5 wouldn’t either and we had buyers and sellers with packed trucks all waiting to close.
Today this closing might not take place. We scrambled with the loan officer and made it happen, but that absolutely could not happen after August 1. The buyer has no say in the matter either. These are new Federal regulations and no matter how much a buyer or seller is impacted by the new rules, it won’t matter. Buyers and sellers will be sweating out closings hoping lenders have the disclosures in on time and all documents ready for closing. If you like going to Vegas, you can bet with certainty that many closings will not happen on the day they’re supposed to. It’s just a fact and Realtors, buyers, and sellers better load up on their chill pills now, because there will be high demand and short supply on those pills around Aug 2nd.
Don’t forget Bella Casa is having a close-out sale this weekend. Special incentives and financing are available on brand new 1, 2 and 3 bedroom luxury condos in South Fort Myers. Call our office for details 239-489-4042 or stop by the sales center located on Plantation Rd 1/4 mile North of Daniels. Open Saturday 10-6 and Sunday 11-6
Feel free to search the MLS at www.Topagent.com or call us to get your home sold. 239-489-4042
Don’t forget this weekend is the Big Bella Casa Luxury Condominium Close-Out Event