New lending rules

IOBA · ‎10-09-2015

I have heard, twice now, that new lending requirements went into effect on October 3, 2015.

The two main things being told to me (I have property for sale) that closing will take a minimum of 45-60 days now and that there is a minimum of a million dollar fine for non-compliance to/by the lender.

I called me previous lender, but have not heard back.

Can anyone explain the new lending requirements in easy to understand terms?

StartingOver10 · ‎10-09-2015

There are new disclosure rules regarding the loan estimate and closing disclosures. The forms have changed and the time periods for issuing the forms to the consumer are longer. Also the CFPB has decided that it didn't like the language used in previous forms for they have changed some of the words; for example, a closing is now called a 'consumation' according to the CFPB. The main changes include the loan summary (at the beginning of the loan process) and the closing statement. What changed was both the form format and the time periods to issue these forms to consumers.

The net effect is there will be a longer time period while everyone become accustomed to the new forms and time periods. This is all across the US so going to another lender or title company won't change matters. However, the big box banks are moving much more slowly so expect a 60 day close from a big box bank and approx 45 day close from a lender that only does mortgages (mortgage banker).

Here is a sample of a closing disclosure: http://files.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdf

Here is a sample of a loan estimate: http://files.consumerfinance.gov/f/201311_cfpb_kbyo_loan-estimate.pdf

Here is a link to one of the larger national title companies if you want to explore more about the changes: http://www.alta.org/cfpb/

IOBA · ‎10-09-2015

Thanks! I looked at the forms on the links. The information is easier to read/to understand than previous loan docs.

Do you know about the three "rounds"? The realtor said that the lender has to provide docs to the customer, wait for the customer to sign and return, before they [lender] can move to the next round of loan process. Once the lender does the paperwork for round two, they give it to the customer, customer must sign and return to lender before round three can begin.

The realtor also said that all new contracts have language in them to say the lender cannot be held to a deadline. So we set a closing date 60 days from ratified contract, and the lender doesn't meet that deadline, it's a "so what." Nothing the seller can do. Or the buyer. Have you heard anything about that? (I know, two different states, but wondering if that is becoming the standard sales contract language.)

StartingOver10 · ‎10-09-2015

@IOBA wrote:
Thanks! I looked at the forms on the links. The information is easier to read/to understand than previous loan docs.

Do you know about the three "rounds"? The realtor said that the lender has to provide docs to the customer, wait for the customer to sign and return, before they [lender] can move to the next round of loan process. Once the lender does the paperwork for round two, they give it to the customer, customer must sign and return to lender before round three can begin.

The realtor also said that all new contracts have language in them to say the lender cannot be held to a deadline. So we set a closing date 60 days from ratified contract, and the lender doesn't meet that deadline, it's a "so what." Nothing the seller can do. Or the buyer. Have you heard anything about that? (I know, two different states, but wondering if that is becoming the standard sales contract language.)

Our Purchase and Sale contracts changed to accomodate the TRID changes effective Oct 3 2015 too. Remember, this ONLY applies to buyers that have made loan application on or after October 3rd, 2015.

Yes, the buyer does have to give the lender a specific 'go ahead' to process the loan. Here is a link to a pdf by the mortgages bankers association to aid buyers in working through this process https://www.mba.org/Documents/KBYO/15223_MBA_KBYO_Flyer-ConsumerAlert.pdf

I had not heard of it referred to as "rounds" but that seems like a good description of the new process.

I don't know what remedies are allowed yet in our new contract forms, they changed quite a few things not just the TRID items - I have to review the new P&S agreement again.

I think the next couple of months will take longer so 45 to 60 days is a pretty safe amount of time to allow for closing. Once the process becomes normal to us I think we will be able to reduce closing times but there is always an adjustment period to new rules. These rules have specific time periods that can not be changed.