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2015-06-13 13:23:08
New mortgage loan rules from CFPB

Change is good!  Right?  The Consumer Finance Protection Bureau (CFPB) has new rules that go into effect for loans originated August 1, 2015 or later.  It combines the TIL (Truth in Lending) form and the GFE (Good Faith Estimate).  Meaning that we are going from 2 forms to 1.  I suppose that this could be classified as a reduction in paperwork.

There has been a lot of comment in the industry about how long it will take to close a mortgage.  It would appear that the only significant change might be the requirement that the final numbers must be received by all parties 3 DAYS PRIOR TO CLOSING.  As I see it, this might be the ONLY change that the client might see.  It is common now for the final numbers to be sent out the day before the day of closing.  Until we get a little track record, it is suggested that closings be scheduled 45 days from the date of the signed contract.  (This is about 2 weeks longer than in the 'old days'.)

There has been mis-information put out about the 3 day notice rule.  In addition to the written notice 3 days prior to closing, there is a requirement for 3 days notice to all parties for 3 other scenarios: a change of more than 1/8% percent in the rate, a change of lenders to another lender, or a change on the loan to include a prepayment penalty.  No other changes to the loan require the 3 day notice.

Some clarification might be in order.  The 3 day notice is for full workdays (non weekend non holiday).  For example, if the closing was scheduled on Tuesday, the final numbers must be provided on the Wednesday before.  This allows the three days (Thursday, Friday, and Monday).  Also, the three day notice begins AFTER receipt of the notice is acknowledged by the client.  (The client needs to acknowledge that they received the final numbers (or one of the other 3 notices) and THEN 3 days must pass before the closing can occur.)  If the client doesn't acknowledge receipt of the notice, 3 days must pass BEFORE the 3 day waiting period goes into effect.  In Colorado, these CFPB rule changes will mean that the Loan Conditions Deadline on the Contract to Buy and Sell should be written as being 6 days prior to closing (to allow for the full 3 days notice and the weekend).

This change puts a great deal of pressure on both lenders and title companies.  In the 'old days' (today) if there was a delay, there was not much recourse available to the client.  As of August 1, 2015, if a complaint is filed with the CFPB, SIGNIFICANT fines can be levied against the lender or title company (these fines might be waived for the first 6 months).

Follow-up is key.  The lender and the title company are going to have to pay close attention to their communications with the client.  If they do, this CFPB change should not be a big deal..... 

Blog Archive
2015-06-13 13:23:08
New mortgage loan rules from CFPB

2015-05-09 12:16:24
Altisource and Hubzu.com

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