New Mortgage Closing Guidelines Explained

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Mortgage closing

The CFPB (Consumer Financial Protection Bureau) is an agency that sole responsibility is to protect consumers as it relates to financial transactions while enforcing TRID (Truth in Lending Act/Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures. There are two new documents that a consumer will receive after applying for a home mortgage; LE- Loan Estimate and CD- Closing Estimate. Below is a brief description of each and the documents they are replacing.

Loan Estimate (LE): Replaces the Good Faith Estimate and initial TILA. This document MUST be given to the consumer within 3 business days (excluding Sundays and Federal holidays) after the loan application is received.

Closing Disclosure (CD): Replaces the HUD-1 and final TILA. This document MUST be given to the consumer 3 business days prior to loan consummation (closing).

Intent to Proceed (I.T.P): Before the lender can collect any fees from the consumer, this document MUST be wet signed (no electronic signatures allowed) and faxed, emailed or mailed back to the lender. Prior to these changes, the consumer would be asked to pay for a home appraisal. This will no longer happen until the I.T.P. form is returned to the lender.

There are also a couple of terms that have changed:

Closing/Settlement is now defined as the process of executing legally binding documents regarding a lien on a property that is subject to federally related mortgage loan.

Consummation is a new term and is defined as the time that a consumer becomes contractually obligated to the lender on a credit transaction. This is what we in the past called “the closing”.

My overall opinion of these changes are favorable. Nothing really has changed other than timeframes of when forms need to be collected from the consumer and received by the lender. This simply means that if the consumer would like to close sooner, all required documents the lender requests from the consumer, will need to be returned promptly. These two new documents, LE and CD are much easier for the consumer to understand, which removes the guessing out of costs associated with the loan.

I understand that outside of my regular duties as a real estate agent, I now need to assist my client in any way possible by helping to get documents returned to the lender; time is of the essence. The new procedures is simply a layer of protection for the consumer which helps to eliminate deception from the banks. I also understand more than ever how important E-signing will be. Besides who wants to wait on the Postal Service to deliver docs; you could be waiting forever.

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Angelia Bynum, Real Estate professional serving all of Atlanta.
Real Estate Agent / Atlanta, GA
Maximum One Realty
Office 770.695.2273

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