{"id":16578,"date":"2015-04-08T20:15:05","date_gmt":"2015-04-09T00:15:05","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/04\/business-report-real-estate-industry-changes-are-coming.html"},"modified":"2015-04-08T20:15:05","modified_gmt":"2015-04-09T00:15:05","slug":"business-report-real-estate-industry-changes-are-coming","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/04\/business-report-real-estate-industry-changes-are-coming\/","title":{"rendered":"Business Report: Real Estate Industry Changes Are Coming"},"content":{"rendered":"\n
\n
\"kim\n<\/div>\n
Kim Salerno, Salerno Law PC, and licensed agent for Stewart Title Insurance Co\n<\/div>\n<\/div>\n

KIMBERLY A. SALERNO, ESQ.<\/p>\n

On Nov. 20, 2013, the Consumer Financial
\nProtection Bureau (CFPB) released their
\n“final rule” regarding the integration, simplification
\nand improvement of consumer
\ndisclosures given in a mortgage transaction
\n(with an effective date of Aug. 1, 2015).<\/p>\n

The changes will affect not only lenders,
\nbut also every third-party service provider
\na lender deals with (i.e. settlement agents,
\nreal estate agents, title companies, appraisers)
\nbecause if the third-party provider
\nis not compliant with the regulations, the
\nlender is held responsible for their mistakes.<\/p>\n

What is the CFPB? It was created to watch
\nover the interests of American consumers in
\nfinancial products and services of all kinds.<\/p>\n

The “final rule” was enacted to make it easier
\nfor consumers to shop for mortgages and
\nprotect them from costly surprises at their
\nclosing by integrating consumer disclosures.
\nMany of us in the real estate industry have
\nbeen preparing for these changes for several
\nyears…Are you prepared?<\/p>\n

So what are the changes? First, let’s take
\na look at the five primary changes we can
\nexpect from Lenders:<\/p>\n

1. Loan Estimate Form (or LE): This form
\nwill be provided to consumers within three
\nbusiness days after they submit a loan application.<\/p>\n

It replaces the early Truth in Lending
\nstatement and the Good Faith Estimate, and
\nprovides a summary of the key loan terms
\nand estimated loan and closing costs. Consumers
\ncan use this new form to compare the
\ncosts and features of different loans.<\/p>\n

2. Closing Disclosure Form (or CD): This
\nform integrates the HUD-1 and the “final
\nTIL”.<\/p>\n

There are multiple versions of the form
\nto account for different transaction types,
\nsuch as a refinance and a purchase. There
\nalso is a seller-only form. Because the form
\nis a mixture of loan information and settlement
\ncosts, communication and cooperation
\nbetween the lender and closing agent will be
\nnecessary to complete the Closing Disclosure.<\/p>\n

If the settlement agent completes the
\nClosing Disclosure form, the lender will need
\nto provide a copy of the Loan Estimate form,
\nas the information it provides will be necessary
\nto complete the Closing Disclosure form.<\/p>\n

3. Three-day Rule: Consumers will receive
\nthis form three business days before closing
\non a loan.<\/p>\n

The CFPB conducted more than two years
\nof extensive research, testing, and review to
\nfind out how to create mortgage disclosures
\nthat do what the law intended them to do:
\ndisclose information in a way that consumers
\ncan understand. A good disclosure helps
\nconsumers know if they want to commit to the loan being offered, and it enables them
\nto make meaningful comparisons between
\nloan products for better shopping. If any
\nchanges are needed on the CD during that
\nthree-day period, the customers’ closing
\nlikely will be delayed.<\/p>\n

4. Delivery of Forms: Under the rule,
\neither the creditor or a mortgage broker
\nacting on their behalf may provide the Loan
\nEstimate Form to the consumer. However,
\nin either situation it is the creditor who is
\nultimately responsible for complying with
\nall requirements concerning the information
\nprovided in the form and its provision
\nto the consumer.<\/p>\n

5. Tolerance Levels: The concept of “tolerance
\nlevels” was introduced with the 2010
\nGFE and HUD-1. Under the CFPB rule, this
\nconcept is carried forward but some of the
\nitems will fall under more stringent tolerance
\nlevels.<\/p>\n

Second, how will the changes affect
\nreal estate agents? Realtors will need to
\nbe able to talk their clients through the
\nnew forms. Realtors will also need to be
\ncognizant of the mandatory three-day notification
\nfor both the Loan Estimate form
\nand the Closing Disclosure form, since it
\nwill affect the timing of the transaction.<\/p>\n

Lastly, realtors will need to be prepared
\nfor clients having to qualify for a mortgage
\nunder the more stringent underwriting
\nrequirements of the Ability-to-Repay\/
\nQualifying Mortgage rule.<\/p>\n

Third, how will the changes affect the
\nhome buyer and seller?
\n“Taking out a mortgage is one of the
\nbiggest financial decisions a consumer
\nwill ever make. Our new ‘Know Before You
\nOwe’ mortgage forms improve consumer
\nunderstanding, aid comparison shopping,
\nand help prevent closing table surprises
\nfor consumers,” said CFPB Director Richard
\nCordray. “Today’s rule is an important
\nstep toward the consumer having greater
\ncontrol over the mortgage loan process.”<\/p>\n

The CFPB’s whole purpose is to ensure
\nthat consumers get the information they
\nneed to make the financial decisions they
\nbelieve are best for themselves and their
\nfamilies. However, as with any industry
\nwide change, there will be a learning curve
\nfor all of us in the r eal estate field.<\/p>\n

That being said, it is more important
\nthan ever that a lender, realtor, home buyer
\nor seller use an attorney that focuses their
\npractice in real estate.<\/p>\n

Salerno is the principal in Salerno Law
\nPC and a licensed agent for Stewart Title
\nInsurance Co.<\/em><\/p>\n

Photo Courtesy Salerno Law PC<\/p>\n","protected":false},"excerpt":{"rendered":"

Kim Salerno, Salerno Law PC, and licensed agent for Stewart Title Insurance Co KIMBERLY A. SALERNO, ESQ. On Nov. 20, 2013, the Consumer Financial Protection Bureau (CFPB) released their “final rule” regarding the integration, simplification and improvement of consumer…<\/p>\n","protected":false},"author":121,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[58,70,108],"class_list":["post-16578","post","type-post","status-publish","format-standard","hentry","category-business-reports","tag-business-reports","tag-financial","tag-real-estate"],"yoast_head":"\r\nBusiness Report: Real Estate Industry Changes Are Coming - Saratoga Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/04\/business-report-real-estate-industry-changes-are-coming\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Business Report: Real Estate Industry Changes Are Coming - Saratoga Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"Kim Salerno, Salerno Law PC, and licensed agent for Stewart Title Insurance Co KIMBERLY A. 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