- Episode 35 -
While most of us are still thawing out from the winter, or catching our breath from the surge of sales from snowbirds that bought up anything and everything in the warmer climates, the “dreaded August 1st deadline” is beginning to cast a dark shadow over the entire real estate industry.
For those who aren’t aware, August 1st is the date when the new RESPA/TILA changes go into effect and these changes will certainly cause chaos in the entire real estate community if you aren’t prepared. Our staff meeting this week included the folks from our partner title company who explained that these amendments will actually make Realtors want to change their way of thinking when it comes to the closing and timeframes surrounding that glorious day.
There will no longer be the Good Faith Estimate (GFE) or Truth in Lending disclosures. These two forms will be combined into one titled “Loan Estimate” or “LE” and these documents will actually be the charges that lenders will be held accountable for in most cases. This estimate is now coming from the lenders and is not being prepared any longer by title companies or attorneys.
The next big change is that the famous HUD 1 we have all come to know and love is being replaced with the “Closing Disclosure” or “CD”. This document will reiterate and reconfirm most of the items on the Loan Estimate so that the buyer, which will now be called the “consumer”, can compare the two. Now for the kicker to this fancy new form…it has to be delivered a full three days prior to closing, and if there are changes after it’s received, then your closing could be delayed. There will be no more flattering the title agents or sucking up to the attorneys to get any changes done on the spot. These changes will have to go back through the channels to the lender who prepared the forms and we all know how fast lenders are to get paperwork complete let alone revised.
Our title folks suggested as a good rule of thumb, if you are closing on September 30th, you should make sure everything is ready to go by the 23rd of September to avoid any delays. While that all sounds great on paper what happens when you do the final walk thru a day or two before closing and the washer and dryer that your “consumer” purchased with the home has been moved out and the seller now owes that “consumer” a credit for it? Or an outstanding estoppel letter comes in last minute with back-owed condo dues that need to be adjusted on the “Closing Disclosure” a day before you are heading to the closing table?
I always wondered why if something wasn’t broken, why try to fix it?? Our industry isn’t perfect but we sure have been doing OK for many decades. And were any Realtors truly consulted when the “big banks” thought to make these changes? Are we heading into another cluster chaotic mess made by Wall Street to make our industry less efficient? Only time will tell.
Oh, one final change with our new list of vocabulary words – a closing will no longer be called “a closing” but instead it will be termed as a “consummation”. So does that mean if the deal falls apart do the “consumers” file for divorce, or is it just annulled? And who gets the alimony? Bet the folks sitting in their offices in the large banking institutions never thought that far…did they?
Kay Conageski is a professional Realtor® with The Keyes Company based in Plantation, Florida. Check out her RESAAS profile ›