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Chrisman's Corner: Change Is in the Wind

JMAC’s brokers are very aware that the changes to RESPA-TILA are happening this weekend. Monday morning the sun will come up, however, and borrowers will still need home loans. And our brokers have plenty of borrowers who have read that home loan offers should be easier to decipher come Oct. 3, when mortgage lenders such as JMAC must begin using new consumer disclosure forms that explicitly break down the costs and terms associated with a loan.
With all the hoopla let’s keep the basics in mind. Instead of receiving four different disclosures in various formats, as currently required under the Truth in Lending and Real Estate Settlement Procedures Acts, JMAC’s broker’s borrowers will receive just two. Intended to make the loan process more transparent, the new forms, created by the Consumer Financial Protection Bureau, look similar and some say are much easier to understand.
According to the new rules, disclosures must be delivered on a timely schedule. The initial Loan Estimate must be provided to borrowers no later than the third business day after they submit a loan application. Its first page shows the loan amount and interest rate, what the borrower’s monthly payment would be, estimated taxes and insurance, and how much cash is required to close. The Closing Disclosure, outlining the final transaction, must be provided to borrowers at least three business days before the closing date. This is a major change, as borrowers typically don’t see the closing documents until they are ready to sign.
Borrowers should be aware that under the new rules, if they decide to change loan products at the last minute — for example, switch from a fixed to an adjustable-rate loan — the closing date must be extended by an additional three days to allow for review of a new Closing Disclosure. Borrowers may not waive that three-day window.
Consumers should be prepared for longer closing times as the industry adjusts to the new process. Under the rules, lenders, title companies, real estate agents and insurance representatives will have to come together much sooner in the process to get disclosures out in time. Our brokers are telling borrowers that they can help things along by getting their documents in quickly and scheduling inspections early on.