Recent media reports have cited mortgage delays resulting from new federal home disclosure rules that went into effect on Oct. 3.
Under the new rules issued by the Consumer Financial Protection Bureau (CFPB), the Good Faith Estimate, the Truth in Lending and HUD-1 Settlement Statements have been replaced by the CFPB’s new integrated disclosure forms, the “Loan Estimate” and the “Closing Disclosure.”
The biggest change is that the Closing Disclosure must be provided to the consumer a full three days prior to closing, and if there are certain changes during that 72-hour period, the closing could be delayed. The three-day period is designed to give consumers more time to review their loan documents.
As lenders adjust to the new rules and sift through the technical and training challenges, industry survey groups have reported that loans on average were taking longer to close in November than in October. Delays can cause consumers to pay more for their loans because they have to spend more to pay for longer 45-day or 60-day rate locks as opposed to a more typical 30-day period.
The best way to avoid unnecessary delay to home closings is to work proactively with your lenders and settlement stakeholders and be sure to have all your paperwork done a week before your scheduled closing date to provide a time cushion in case any changes need to be made to the final documents.
Visit NAHB’s website or HBA of Greater Cincinnati's website to learn more about the new rules and download resources to help you comply.