Advance planning under new compliance rules will be required for timely closings beginning Oct. 3.
The big day for real estate professionals is Oct. 3, 2015 when two new closing forms., a Loan Estimate and a Closing Disclosure-will replace the three forms we have been used to work with: The HUD-1Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form.
These changes were made to consolidate information and make it easier for consumers to compare how close their costs are to what was originally estimated by the lender. The closing disclosure is now to be given to the buyer three days before closing. That is to allow consumers time to look carefully at any deviations from the original estimates rather than make them consider the changes while the closing is underway. That is a good thing yet we all will have to plan ahead to accommodate the new rules.
Other changes: Any changes to the loan products or the interest rated once the closing disclosure has been given to the buyer could trigger a new three-day waiting period. The additional holding period can be waived in certain emergency situations, such as an impeding bankruptcy.
The National Association of Realtors (NAR) recommends you give yourself a seven-day cushion before closing to get everything done.
The walk-through should be scheduled well before the closing date so if anything is amiss the issues can be worked out to avoid delays.
Buyers need to see all paperwork at least a week before a scheduled closings and the sellers should not do anything at the last minute that could derail a transaction, like removing a light fixture, a tree, or other inclusion that was a part of the sales contract.
Given the possibility of changes triggering another waiting period or a last minute change requiring lender approval, it should be assumed NAR analysts indicate it may take an additional 15 days to complete a closing. That means if it usually taking 30 days to close, allow 45 days now.
We need to expect the best, yet prepare for the worst.
For more information, contact Gail Lilley Zawacki at Gail@SouthernCT.com or call her at 203-682-9444.
Update : The date of the change had originally been scheduled for Aug. 1. The Consumer Financial Protection Bureau announced that Oct. 3 is the new date.