Monday, November 20, 2017 / by Meagan Henry
NEW FEDERAL REAL ESTATE REGULATIONS THIS SUMMER
Be Aware of How New Regulations Will Affect Georgetown Real Estate
Today’s guest industry blogger is Karan Knippa of Gracy Title. Gracy Title is one of our most trusted partners at the Russ Phillips Team; they are just as invested in our real estate clients as we are--and that's saying a lot! Often 'behind the scenes' of the real estate transaction, title companies represent a vast wealth of transactional knowledge that real estate agents and their clients benefit from greatly.
A lot of people have started talking about the new federal law which will change the home purchase/sale procedure this coming fall. Karan explains below.
There is a new federal law that goes into effect on August 1, 2015. The law will be focused on protecting the consumer and giving them opportunities to 1) understand the fees that they are paying in a financial transaction, 2) shop lenders without confusion and 3) ultimately understand the terms of the mortgages before the day of closing. Changing the mortgage and closing process will require lenders and title companies to work together even more than is done today to understand the overall process. Lenders will carry most of the liability for ensuring the new process is correctly implemented so all of the other parties involved, (title companies, realtors, sellers, appraisers, home warranty companies, insurance companies) will need to be flexible and ready to adapt to the requirements of each lender they are working with on each transaction.
Part of the change in rules also changes the terms in the transaction. The borrower is now referred to as the “consumer.” The lender is now referred to as the “creditor” and closing has become “consummation.”
CHANGING FORMS IN REAL ESTATE TRANSACTIONS
One of the main changes affecting borrowers and realtors is that the forms are changing. Instead of having a separate Good Faith Estimate and Truth-In-Lending form the borrower will now be presented with a Loan Estimate that combines the content from both forms. In accordance with the rules, this document must be submitted to the consumer by the creditor within 3 business days after submission of the loan application. Also, this Loan Estimate must be delivered or placed in the mail no later than the 7th day before consummation of the transaction. The HUD-1, final Good Faith Estimate, and final Truth-In-Lending are also being consolidated into a new form called the Closing Disclosure. The Closing Disclosure must be received by the consumer at least 3 business days before consummation. The sellers will be signing a separate seller closing statement.
Another important change is that the Closing Disclosure must be delivered to the consumer three business days prior to consummation. This rule requires physical delivery of the disclosure to the consumer. If the lender or title company elects to mail the disclosure then the consumer is deemed to have received the document three days from mailing and then has three days to review.
Lastly, once the Closing Disclosure is sent changes may not be permitted without a re-disclosure period. The lender will decide if re-disclosure is necessary but any monetary changes are likely to require a new 3 day waiting period. Examples of monetary changes would include the increase of the Annual Percentage Rate by more than 0.125% on most loans, increases in the consumer’s cash to close amounts, changes to the sales price and changes to the loan product. Prudent real estate licensees should be sure to inform the creditor and title of all changes immediately so that the creditor can determine if a re-disclosure period is necessary or not.
These changes are for the benefit of the consumer (borrower). A cash transaction will be handled in the same manner as before.
Gracy closing teams have had many hours of training about the new federal rules. They will soon have hands on training for the software changes that are coming. This internal training will ensure that all employees of Gracy Title, a Stewart Company, are the most educated associates in the industry. The employees of Gracy Title, a Stewart Company, are ready for the changes and are excited to help work with their clients to make this a smooth and seamless transition period.
Gracy Title representatives aren’t the only ones prepped to handle these new changes! We are also ready to help you through the new process – that’s what realtors are for! Don’t worry if this doesn’t make sense to you, it makes sense to us, and we are here to be your local real estate experts! Never hesitate to give our team a call if there is something we can help you with.
The Russ Phillips Team specializes in Georgetown TX Real Estate and real estate throughout the Greater Austin region.