{"id":16667,"date":"2015-04-15T20:38:05","date_gmt":"2015-04-16T00:38:05","guid":{"rendered":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/04\/business-report-real-estate-industry-changes-coming.html"},"modified":"2015-04-15T20:38:05","modified_gmt":"2015-04-16T00:38:05","slug":"business-report-real-estate-industry-changes-coming","status":"publish","type":"post","link":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/04\/business-report-real-estate-industry-changes-coming\/","title":{"rendered":"Business Report: Real Estate Industry Changes Coming"},"content":{"rendered":"
\n
\n\"salerno.jpg\"\n<\/div>\n
Kim Salerno, Salerno Law PC, and licensed agent for Stewart Title Insurance Co.\n<\/div>\n<\/div>\n

KIMBERLY A. SALERNO, ESQ.<\/p>\n

On Nov. 20, 2013, the Consumer Financial
\nProtection Bureau (CFPB) released their “final
\nrule” regarding the integration, simplification
\nand improvement of consumer disclosures given
\nin a mortgage transaction (with an effective date
\nof Aug. 1, 2015).<\/p>\n

The changes will affect not only lenders, but
\nalso every third-party service provider a lender
\ndeals with (i.e. settlement agents, real estate
\nagents, title companies, appraisers) because if
\nthe third-party provider is not compliant with
\nthe regulations, the lender is held responsible
\nfor their mistakes.<\/p>\n

What is the CFPB? It was created to watch
\nover the interests of American consumers in
\nfinancial products and services of all kinds. The
\n“final rule” was enacted to make it easier for
\nconsumers to shop for mortgages and protect
\nthem from costly surprises at their closing by
\nintegrating consumer disclosures. Many of us
\nin the real estate industry have been preparing
\nfor these changes for several years…Are you
\nprepared?
\nSo what are the changes? First, let’s take a
\nlook at the five primary changes we can expect
\nfrom Lenders:<\/p>\n

1. Loan Estimate Form (or LE): This form will be provided to consumers within three business
\ndays after they submit a loan application. It
\nreplaces the early Truth in Lending statement
\nand the Good Faith Estimate, and provides a
\nsummary of the key loan terms and estimated
\nloan and closing costs. Consumers can use this new form to compare the costs and features of
\ndifferent loans.<\/p>\n

2. Closing Disclosure Form (or CD): This form
\nintegrates the HUD-1 and the “final TIL”.<\/p>\n

There are multiple versions of the form to
\naccount for different transaction types, such
\nas a refinance and a purchase. There also is a
\nseller-only form. Because the form is a mixture
\nof loan information and settlement costs, communication
\nand cooperation between the lender
\nand closing agent will be necessary to complete
\nthe Closing Disclosure. If the settlement agent
\ncompletes the Closing Disclosure form, the
\nlender will need to provide a copy of the Loan
\nEstimate form, as the information it provides
\nwill be necessary to complete the Closing Disclosure
\nform.<\/p>\n

3. Three-day Rule: Consumers will receive this
\nform three business days before closing on a loan.<\/p>\n

The CFPB conducted more than two years of
\nextensive research, testing, and review to find
\nout how to create mortgage disclosures that do
\nwhat the law intended them to do: disclose information
\nin a way that consumers can understand.<\/p>\n

A good disclosure helps consumers know if they
\nwant to commit to the loan being offered, and it
\nenables them to make meaningful comparisons
\nbetween loan products for better shopping. If
\nany changes are needed on the CD during that
\nthree-day period, the customers’ closing likely
\nwill be delayed.<\/p>\n

4. Delivery of Forms: Under the rule, either
\nthe creditor or a mortgage broker acting on their
\nbehalf may provide the Loan Estimate Form to
\nthe consumer. However, in either situation it is
\nthe creditor who is ultimately responsible for
\ncomplying with all requirements concerning
\nthe information provided in the form and its provision to the consumer.<\/p>\n

5. Tolerance Levels: The concept of “tolerance
\nlevels” was introduced with the 2010 GFE and
\nHUD-1. Under the CFPB rule, this concept is
\ncarried forward but some of the items will fall
\nunder more stringent tolerance levels.<\/p>\n

Second, how will the changes affect real
\nestate agents? Realtors will need to be able
\nto talk their clients through the new forms.<\/p>\n

Realtors will also need to be cognizant of the
\nmandatory three-day notification for both the
\nLoan Estimate form and the Closing Disclosure
\nform, since it will affect the timing of the transaction.<\/p>\n

Lastly, realtors will need to be prepared
\nfor clients having to qualify for a mortgage under
\nthe more stringent underwriting requirements
\nof the Ability-to-Repay\/Qualifying Mortgage rule.<\/p>\n

Third, how will the changes affect the home
\nbuyer and seller?<\/p>\n

“Taking out a mortgage is one of the biggest
\nfinancial decisions a consumer will ever make.
\nOur new ‘Know Before You Owe’ mortgage forms
\nimprove consumer understanding, aid comparison
\nshopping, and help prevent closing table
\nsurprises for consumers,” said CFPB Director
\nRichard Cordray. “Today’s rule is an important
\nstep toward the consumer having greater control
\nover the mortgage loan process.”<\/p>\n

The CFPB’s whole purpose is to ensure that
\nconsumers get the information they need to
\nmake the financial decisions they believe are
\nbest for themselves and their families. However,
\nas with any industry wide change, there will be a
\nlearning curve for all of us in the real estate field.<\/p>\n

That being said, it is more important than
\never that a lender, realtor, home buyer or seller
\nuse an attorney that focuses their practice in
\nreal estate.<\/p>\n

Salerno is the principal in Salerno Law PC and a licensed agent for Stewart Title Insurance Co.<\/em><\/p>\n

Photo Courtesy Salerno Law PC.<\/p>\n","protected":false},"excerpt":{"rendered":"

Kim Salerno, Salerno Law PC, and licensed agent for Stewart Title Insurance Co. KIMBERLY A. SALERNO, ESQ. On Nov. 20, 2013, the Consumer Financial Protection Bureau (CFPB) released their “final rule” regarding the integration, simplification and improvement of consumer…<\/p>\n","protected":false},"author":88,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[67,84,107],"yoast_head":"\r\nBusiness Report: Real Estate Industry Changes Coming - Glens Falls Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/04\/business-report-real-estate-industry-changes-coming\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Business Report: Real Estate Industry Changes Coming - Glens Falls Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"Kim Salerno, Salerno Law PC, and licensed agent for Stewart Title Insurance Co. 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