CFPB proposes effective date of Oct. 1 for new mortgage disclosure rules

Title companies and lenders who are bracing for one of the biggest shake-ups of the mortgage industry in decades may have a couple more months to prepare. 

The director of the Consumer Financial Protection Bureau announced a proposed amendment to push the effective date of the new mortgage disclosure rules from August 1, 2015 to October 1, 2015

The proposed amendment is up for public comment, and a final decision will be made afterwards; however, for all intents and purposes the new effective date is now October 1, 2015.

The CFPB discovered an "administrative error" in meeting the requirements of federal law, which ultimately resulted in the effective date being pushed into the fall. 

In a statement issued yesterday regarding the Know Before You Owe mortgage disclosure rule, Director Richard Cordray said:

"The CFPB will be issuing a proposed amendment to delay the effective date of the Know Before You Owe rule until October 1, 2015. We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks. We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time." 

Implementation of the new mortgage disclosure rules is expected to cost settlement service providers $67.8 million and lenders $207 million over the next five years, bringing the total cost to $1.3 billion.

Representatives from the American Land Title Association, American Bankers Association and Finance Policy Center for the Urban Institute testified before Congress last May, asking for a "hold harmless" period through the end of this year. 

So far efforts to establish a hold harmless period have been unsuccessful, while the proposed amendment is expected to go final shortly. 

Best Practices policy safeguards our clients

Best Practices policy safeguards our clients

Federal Title & Escrow Company was one of the first title companies in the country to implement a series of business procedures with the best interest of consumers – homebuyers and sellers – in mind.

The procedures are known as "Best Practices," and consumers, financial institutions, and real estate agents who work with us can rest easy knowing that each settlement is fully compliant with federal and state regulatory requirements.

What is your title company doing to ensure consumers are protected and treated fairly?

  Federal Title Other title companies
Provides Online Guaranteed Pricing   √   ?
Provides clear, up-front options in choice of owner's title insurance coverage   √   ?
Procedures in place to protect consumers' non-public personal information (NPI)   √   ?
Ongoing training and annual background check requirement for all employees   √   ?
Cyber Privacy and Data Breach Protection Insurance – Up to $1 million of coverage per claim   √   ?
Errors & Omissions (E&O) Insurance – Up to $2 million of coverage per claim   √  ?
Fidelity and Surety Bonded – Up to $250,000 of coverage per claim   √   ?
Meets federal regulatory requirements having completed a standardized risk management process   √   ?
Provides avenue for clients to submit complaints, compliments and other feedback  √   ?
Procedures in place for tracking and resolving customer feedback   √   ?
On-staff Chief Compliance Officer to ensure licenses, insurance, ongoing training and customer feedback log stay current   √   ?

Close It!™ House of the Week: Just listed in the West End

This week we're headed down Wisconsin Avenue from our own office to check out a 2-bedroom, 2-bathroom high rise condo with an open floor plan and nearly 1200 square feet of space. It's listed at $929,000.

This unit has an oversized balcony with southern views. It has a gas fireplace as well as a kitchen will granite counter tops and stainless steel appliances. The building is located just north of the George Washington Hospital and west of the shops and restaurants in Georgetown.

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $214,148.73. Monthly payments will then be around $5,725.66 per month, including the HOA payment. For a complete picture of the cash to close, or for a run-down of the seller's side of the deal, plug the numbers into the Web version of Close It™ or download the free iOS app.

Headlines: The studio stigma; top DC suburbs for young workers

Here is a look at what's happening in real estate in and around the District of Columbia.

What you should know before buying a newly constructed home

Plan the details of your new home’s infrastructure and finishes, allocate your budget for the features and amenities that will make it uniquely yours, and monitor its construction with a builder who stands behind their work. -Washington Post

Title insurance: A friend in deed

After a house goes into contract, a title company searches public records, typically going back a number of years, to look for any problems with the home’s title. More than a third of all title searches reveal a problem, according to the American Land Title Association (ALTA). -Wall Street Journal

The studio stigma

Those who live in studios are staying in them longer and learning to make their peace with it and those newly entering the market, regardless of their age and status, are becoming more open to the idea of living in a studio. -New York Observer

10 best DC suburbs for young professionals

So, you're in your 20s and have a great job. The next question is: Where do you want to live? If big-city life isn't for you, there are plenty of suburban offerings surrounding the District. -Washington Business Journal

The essential guide to being an amateur landord in DC

We recommend consulting directly with DC’s Department of Consumer and Regulatory Affairs (DCRA) if you’re confused or unsure whether your unit needs a particular certification. -Urban Turf

Top 10 things real estate agents should know about the new TILA-RESPA integrated disclosures

Top 10 things real estate agents should know about the new TILA-RESPA integrated disclosures
Editor's note: The director of the Consumer Financial Protection Bureau issued a statement announcing a delay in the implementation of the new TILA-RESPA integrated disclosures until October 1, 2015.
Big changes are on the way that will impact real estate agents, lenders, buyers and sellers alike. The HUD-1 is out come August 1, and the Closing Disclosure form (CDF) is in. 

A new form inevitably means new procedures and deadlines to observe, which is why we've put together this list of things we think are most important to know about the new regulations. 

1.  The lender – not the settlement agent – will in most cases be preparing and delivering the CDF, which will be used to most loan applications taken for new mortgages after August 1, 2015.

2. The CDF must be delivered to the buyer/consumer at least three business days prior to the scheduled closing date.

3. The settlement agent must deliver information to the lender approximately 10 to 14 days prior to the closing date for completion of CDF to meet the delivery requirement. 

• You will need to communicate to the closing agent all your buyer charges and credits 10 to 14 days prior to the closing date. (Federal Title has simplified this communication by emailing you and your homebuyer a link to an easy-to-complete online form as soon as we receive the new transaction order.)

4. The settlement agent will need your real estate broker’s state license number and your individual real estate license number for the new CDF.

• Federal Title stores license numbers for most brokers and agents in their respective profiles within our WorkFlow system, saving agents time and effort involved in communicating this information each time Federal Title receives a new transaction order.

5. The CDF sent to the buyer/consumer won’t include the seller’s side of the transaction. 

• The settlement agent (not the lender) is responsible for completing and delivering the seller’s side of the CDF. (Federal Title will prepare and deliver a separate CDF and/or settlement statement to the seller well in advance of the closing date.)

6. You likely won't receive an advance copy of the CDF from the lender before it’s delivered to the buyer/consumer. 

• The lender will likely send the CDF to the settlement agent when it’s sent to the buyer/consumer.

• The settlement agent will probably not be permitted to send a copy to real estate agents; you will need to obtain a copy from the borrower.

7. Changes to the CDF after delivery to the buyer/consumer MAY trigger a new three-day waiting period if changes cause the Annual Percentage Rate (APR) to be inaccurate, the buyer changes loan product or a prepayment penalty is added.

• Changes and adjustments affecting the value of the property (as determined by the lender) may trigger additional disclosure and review periods under the Equal Credit Opportunity Act (ECOA) controlling the delivery of the appraisals.

• You may want to consider two pre-settlement inspections or walk-throughs (e.g., first inspection 7 to 10 days in advance of closing and a second inspection on the day of the closing).

8. Review and become familiar with the CDF so that you can answer buyer and seller questions. Note the CDF refers to Owner’s Title Insurance as optional in some circumstances. Obtain appropriate advice for the buyer/consumer on the protections given to them through owner’s title insurance.

• Federal Title’s Close It! calculator application is a perfect resource for gaining familiarity with the new CDF.

• Please point your prospective homebuyers toward Federal Title's articles on title insurance and title claims. share Federal Title’s Guide to Owner’s Title Insurance with prospective home buyers.

9. The new TILA-RESPA Integrated Disclosure (TRID) rules may affect the contract terms that you help negotiate for either the buyer or the seller. It’s important to communicate with the lender and closing agent to determine a realistic time frame for closings under these new rules.

• For example, a closing 20 days out or less may no longer be realistic.

• When specifying the closing date, take additional time into consideration.

10. What system do you have in place to communicate changes to the contract (after it’s been signed) to the lender? Consider having a conversation with buyers about the high importance of timely responses to lender requests, and remind sellers they must follow the contract to the letter because not doing so may delay the closing.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.