CFPB’s Closing Disclosure Now In Effect

The New Closing Disclosure is now in effect as of October 3rd, 2015. The Closing Disclosure was implemented and launched by the Consumer Financial Protection Bureau ( CFPB ), mortgage lenders nationally are scrambling to get their softwares updated and getting accustomed to the new mortgage laws. Laws, by their very nature, can at times leave room for interpretation, which makes enforcement not only challenging, but inconsistent at times. The new closing disclosure rules for the mortgage industry have become just that.

Purpose Of Closing Disclosure

There never seems an end to new mortgage regulations . The intention and purpose of the creation of the Closing Disclosure was to give home buyers a full 3 days to look over final mortgage loan documents with all the costs and fees disclosed and the bottom line given to them for review. The creation of the Closing Disclosure and the mandatory 3 day waiting period means no more last minute closings and if there are changes after the mortgage loan borrower receives the Closing Disclosure, a new Closing Disclosure needs to be disclosed and there will be an additional 3 day mandatory waiting period which means more delays in the mortgage loan closing. Since the penalties for violations are so severe, the bigger the mortgage lender, the more conservative approach they are taking. It also means the more inept they are at handling the volume, since their own expectations become improbable to maintain and be met.

Mandatory Waiting Period With Closing Disclosure

Some mortgage lenders are using the longest time period possible 7-12 days from final clearing to close to the actual closing date. Since there is a 3 day delivery period for mail if you don’t email it (you need to have a read receipt that you have received your documents) and a 3 day waiting period, mortgage lenders are assuming the borrowers did not get those statements emailed to them. Here a couple scenarios: imagine your lease expired and you move out the 31st of a month. You receive your final closing disclosure for your new house the 30th, you would have to wait till the 6th-10th of the following month to move in(depending on lender).  You might have to stay in a hotel until then.

Closing Disclosure Creating Havoc On Simultaneous Closings

Here is another example with the same outcome: you are trying to sell your home in order to buy a new one. You need the proceeds from your current sale to put as a down payment on your new home. That home seller is also using their proceeds to buy another home. How will you be able to coordinate those transactions?

Closing Disclosure Causing Delays And More Harm To Consumers

I have seen ten different scenarios on what fees can change and cannot in order to be disclosed without delay or penalty. The lack of consistency makes knowing who is doing it right seem difficult. Every mortgage lender has their own legal staff, and many do not see it the same way. In the end the fees for compliance have all gone up. Appraisal fees are higher, closings costs are higher, credit reports, and in the end rates will increase to cover interest rate lock expirations. Refinancing with an interest rate lock expiration is its own issue, since they already have a 3 day free look to rescind. This now means they will have up to 9 days from final conditions to funding date, which make doing a 30 day lock an unlikely scenario, hence a higher rate for them. To finish on a high note, the forms are easier to read and comprehend, and the professionalism has stepped up in the industry across the board. No more part timers.

About The Author: Ron Granado

This article on Closing Disclosure was written by Ron Granado of Plymouth Guaranty Corporation. Mr.Ronald Granado is a guest financial writer for Gustan Cho Associates and a veteran real estate and mortgage market expert.  Ron Granado is sought by many real estate professionals such as real estate attorneys, real estate agents, mortgage professionals, consumers, and bankers for his extensive knowledge in compliance and industry regulations in the real estate and financial markets. Like to thank Mr. Ron Granado for writing for us with such informative information that is not just beneficial for our viewers but also to our team of loan processors, loan underwriters, and mortgage loan originators as well as support staff.

Ron Granado

Account Executive | Plymouth Title Guaranty Corp

1301 W. 22nd Street | Ste 505 | Oak Brook, IL 60523

630-300-3900 | 

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