The government has made some new rules about home purchases that involve a mortgage. (We probably lost some of you right after we used the word ‘government’—please hang in there, this is important).
Okay, first the mind-numbing acronyms. Feel free to gloss over them, but we need to include them for journalistic purposes.
In November 2013, the Consumer Financial Protection Bureau (CFPB) integrated the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures and regulations. Any transaction involving a mortgage will use new CFPB disclosure forms.
The short version: In an effort to ensure that consumers go into a transaction with full knowledge of the costs involved, there are new rules and new documents that will be used by EVERY LENDER. There are no exceptions.
What’s been happening in the industry: Lenders and title companies have been devoting enormous amounts of time and money getting ready for the change, and the original August deadline had to be moved to October to accommodate the difficulties. Additionally, there are HUGE (as in $million) penalties for non-compliance. Lenders and title companies will be strictly following the rules.
What we’ve been doing: Realtors and brokerages have been having lots and lots of meetings and workshops (some of them included lunch). We need to know how to best advise our clients on the process and help them navigate the now trickier waters. And by trickier we don’t mean there’s any trickery. It’s just that timelines will be lengthened and we will have to make it work within the needs of all parties.
What it means for you: Any home that goes under contract after October 3, 2015 is subject to the rules and we can expect closings to take an extra couple of weeks. We’ve been told that the standard 30 day close will now be 45 days, but we should be prepared for them to take up to 60. But it also means that you will know where every penny in the transaction is going, which is a good thing.
What you can do: Buy with cash. No, seriously, cash deals are exempt. But we know that’s not usually feasible so the other thing you can do is bear with us as we work through the new reality. As always our aim is to help you realize your dreams. It’s just going to take us a little longer.
If you want more information on all of this (and this would mean you’re having trouble falling asleep), Google TRID/RESPA.