The 30 Day CFPB Countdown Begins: Are You Ready?
So you have been hearing about the upcoming CFPB changes for a while now and starting October 3rd they will become a reality. So what does this really mean for you as a Realtor? For those of you who currently work with great closing attorneys and lenders there should not be a significant impact. Those closing attorneys and lenders should be ready for the new changes – we are! Remember, the new rules apply to loan applications taken on or after October 3rd (for most residential loan closings). Below are a few items to note in connection with the changes taking place.
- As always, explain to your buyers early on that when asked for information from you, their lender or the closing attorney that they respond as timely as possible as to not delay the closing process.
- Be proactive and send the closing attorney information you know they will need for the closing (i.e., your real estate license number, HOA contact information, that your client will not be at closing and will be a mail away, home warranty, commission splits, repair invoices, etc.). The days of sending this information the day of closing or even just a few days before closing cannot happen under the new regulations.
- Open lines of communication between the Realtors will be critical. Make sure that you are responsive to requests from the other Realtor in your transaction. Whether you are the selling or listing agent, open lines of communication will be vital in ensuring a smooth and on time closing.
- Lenders are going to use the 3 or 7 business day rule when sending the borrowers the Closing Disclosure (CD). Each lender will decide which rule they will use. Those using the 3 business day rule will send the CD by email or hand delivery and those using the 7 business day rule will use the mail (and possibly email as well). This means that the CD will be mailed to the borrower at least 3 or 7 business days before the scheduled closing date. If that time frame is not met (meaning the lender is not able to send it out in time) the closing date will slide.
- Many lenders are recommending that you include a 45-60 days closing date in your contracts. If you know the lender that will be working with your client prior to drafting the offer I would strongly suggest contacting them to inquire about the closing date.
- You might want to require the seller to have any “repairs” completed 10 days prior to the scheduled closing date and perform a pre-pre closing walk though inspection. This hopefully will eliminate the issue of repairs not being completed when you go to conduct the final walk through. The CD will be going out to the buyer well in advance of the closing date and repairs not completed may cause a delay in the closing.
- Due to the CD containing non-public information, most lenders will not be providing the Realtor a copy of the CD. Your client will have to provide you a copy of the CD if they so choose. The plan is to provide all parties a copy of something called a Settlement Sheet which will be similar to the HUD-1 Settlement Statement you are accustomed to seeing at the closing table.
While the upcoming changes are different, they are real and will impact closings as we know it going forward. Embrace the changes and enjoy the fact that the days of waiting around the closing table for a loan package should be in the past. The changes should make the closing itself more enjoyable and less stressful for you and your clients.
As always, if you need help with anything at all, please do not hesitate to contact me anytime at (912) 484-1996 (even nights and weekends) or email me at jgerber@brannenlaw.com.