About The Real Estate Group

The Real Estate Group (TREG) "Partners in Excellence"

The mission of The Real Estate Group, LLC is to be Hampton Roads finest provider of real estate services. Our goal is to create a company that provides absolutely the best service for our customers by fostering an environment of teamwork and a common vision. The Real Estate Group, LLC consists of an accomplished team of skilled professionals who take pride in their work and their company. We work hard to go beyond the expectations of our customers, agents, and employees.

What The New TILA-RESPA Rules Mean For The Buyers Or Sellers

We’ve got you covered on all the latest changes!

When any major changes occur within industries that impact their current systems there is always a bit of “the sky is falling” reaction to them. The changes to the disclosure and closing documentation requirements for real estate transactions are no different. You have likely already seem newspaper stories about the coming TILA-RESPA changes. You may hear your Realtor® talking about it, but it primarily impacts the mortgage lenders and the title companies. Your Realtor should be able to explain things to you as well, but the primary source for information about how this might impact you should be your mortgage agent.

Here’s the gist of these rule and documentation changes.  The Consumer Financial Protection Bureau (CFPB) was created under the Frank-Dodd legislation that was aimed at cleaning up the financial industry mess after the housing industry collapse that brought on the Great Recession. One of the actions that the CFPB took on was to clear up the confusion caused in real estate transactions by the differences in the Good Faith Estimate that the buyer got from their mortgage rep at the front end of a real estate transaction and the closing documents, including the Buyers’ and Sellers’ Closing Statements and the HUD-1 document, that the buyers and sellers got at the closing table.

Buyers often noticed differences in what they expected their costs to be and the actual costs at closing. In addition, the mortgage industry fell into a practice of not getting the closing information to the buyers in a timely fashion before closing (many times buyers saw the closing docs for the first time at closing). It was sometimes very difficult for the buyer to even determine how much he should bring to closing, since he did not have the final documents.  There was a need identified to standardize the information that was presented to the buyer at the front end and what they eventually see at the closing table, as well as controlling the changes that might be allowed between those two times. There was also a need to get the final closing information to the buyer well in advance of the closing date, so that they could react to any changes and know how much to bring to closing.

Based upon those needs the CFPB produced the new, consolidated TILA-RESPA documents. TILA stands for Truth in Lending Act, which was the original law that set up the requirement for the Good Faith Estimate at the front end of the deal. RESPA stands for Real Estate Settlement Procedures Act, which defines the rules and documentation requirement for the closing of the sale. The CFPB decided to create new rules and documents for both ends of the sale and initially stated that they would impose those rules in August of 2015. The new document that the lender will give you at the front end is called the Loan Estimate. The new closing document packet is called the Closing Disclosure and clearly presents all of the information that used to be on the Closing Statements and the HUD-1. Best of all the Loan Estimate and the Closing Disclosure use all of the same terms and data fields (although the Closing Disclosure has some data fields concerning the cost of the sale and tax rebates on it that the loan officer would not have known at the front end) and they look very much the same. It is possible to lay them side by side and see what, if anything changed from the front to the back ends of the sale.

To read the rest of this article and find links for more info on the TILA-RESPA toolkit, click HERE.

Article courtesy of Realtytimes.com and Norm Werner.

 

 

About The Real Estate Group

The Real Estate Group (TREG) "Partners in Excellence"

The mission of The Real Estate Group, LLC is to be Hampton Roads finest provider of real estate services. Our goal is to create a company that provides absolutely the best service for our customers by fostering an environment of teamwork and a common vision. The Real Estate Group, LLC consists of an accomplished team of skilled professionals who take pride in their work and their company. We work hard to go beyond the expectations of our customers, agents, and employees.