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Thursday, September 3, 2015

New Mortgage Disclosure Rules Coming Soon

REALTORS® say they plan to change their purchase agreements to allow for a longer timeline for the closing process due to the upcoming changes from new mortgage disclosures rules.

Starting on Oct. 3, the TILA-RESPA Integrated Disclosure rule is to go into effect, which will merge the HUD-1 Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form into two new closing forms: a Loan Estimate and a Closing Disclosure. The new rule also aims to provide consumers with more time to review the total costs of their mortgage prior to closing. The Loan Estimate form is due to consumers three days after they apply for a loan, while the Closing Disclosure form is due three days prior to closing.

The current HUD-1 settlement form can be revised and delivered up to the day of settlement, but the new mortgage forms must be finalized and in the borrower’s possession three days prior to closing. If that deadline is not met, borrowers will receive another re-issuance of the closing disclosure and wait another three days.

As such, some real estate professionals are extending their contract timelines due to the uncertainties of dealing with the new regulations, says Ken Fears, NAR's director of regional economics and housing finance.

Eighty-two percent of real estate professionals say they've taken some training to prepare for the TRID rule.

Source: "Real Estate Agents to Extend Contracts for New Mortgage Disclosures," National Mortgage News (Sept. 1, 2015) and "REALTORS® Train for TRID," National Association of REALTORS®' Economists' Outlook

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