New mortgage disclosures have been coming for some time but it finally looks like they will actually implement them. These new disclosure combine some of the old ones and place responsibility for their delivery to the customer on the Lender. These forms are part of a ‘Know before you owe’ campaign from the newly created Consumer Financial Protection Bureau.
The new forms are:
- The Loan Estimate which will replace and combine the Truth in Lending disclosure and the Good Faith Estimate.
- The Closing Disclosure which will replace and combine the HUD-1 settlement statement and the Final Truth in Lending disclosure.
Note that these will ONLY be required if the Buyer is obtaining a loan. This will make cash offers much more appealing to the Seller. Also, please note that the new FAR BAR Contract will only allow for a delay in the Closing to accommodate these laws IF THE CONTRACT IN CONTINGENT UPON THE BUYER OBTAINING FINANCING.
So, what does this do for me, the Buyer? Well for starters with all these new disclosures and timelines, and the fact that they are coming from the Lender, get ready for a Loan Approval taking 45+ days and Closings in 60. It will also place the Lender in the primary position of coordinating the Closing with the Buyer and the Closing Agent and NOT the Closing Agent coordinating the Closing with the help of the Realtors, Lender, and Buyers. In fact, the Lenders will probably need the explicit OK from the Buyer before they can get or give any information to/from the Realtors. The good news in this is that the Buyer will no longer first see how much they are being asked to spend on the day before closing where any errors they or their agent point out are quickly rebuffed by the Closing Agent as “well, this is the Lender approved HUD and if we change anything then we will need to get it re-approved and this will delay the Closing”. The bottom line here is that the LENDER will now be the originator of the Closing Disclosure. They will be sending you, the Buyer, this information and you will be expected to read, understand and if necessary object to it in a timely manner.