CFPB

Is Consummation the Same Thing as Closing?

Posted on by khaniauerbach

Waterway On October 3rd 2015, the Consumer Finance Protection Bureau (CFPB) implemented new regulations with respect to consumer financing. These regulations affect anyone who purchases real estate and obtains a loan (whether through a bank, mortgage broker or private lender). This video explores a few of those changes and how some of the terms we have been used to hearing for so many years in the title insurance industry are going to change.

One of the most interesting changes comes with terminology used in the process. As title agents that issue title insurance, we are well acquainted with these new terms and are sharing them with you. Something new that is explored in this video below, produced by one of our underwriters, Old Republic Title, is the use of the word “consummation.” In Florida, we are using the word Consummation in place of Closing. Additionally, while we were all used to the word “HUD” or “Closing Statement,” that term has also been replaced with the “Closing Disclosure”. While the HUD or Closing Statement might not necessarily be completed until moments before the closing, under the new regulations, the Closing Disclosure must be received by the Borrower at least three business days prior to the Consummation.

At Khani & Auerbach, it is our goal to educate the public as much as possible about these changes. We hope to provide you with useful videos over the next few months that will assist you in your understanding of these changes so that when you are ready to undertake the purchase of residential real estate, you are armed with all the knowledge to get through the transaction as smoothly as possible. We are here to help.

New Mortgage Disclosures Expected to Delay Real Estate Closings

Posted on by khaniauerbach

Our sincerest apologies for not having provided you with new content in such a long time, but we have been working tirelessly on becoming prepared for the changes ahead! In just a few short days, federal laws will be implemented that will affect the way homebuyers finance their mortgages in real estate transactions. The Consumer Financial Protection Bureau created “TILA RESPA Integrated Disclosure,” known in the industry as TRID, and TRID implementation begins on Saturday, October 3, 2015. Most, if not all, of the experts in our industry agree that these changes could increase the time to close on purchases by at least double. Take note, these changes do NOT affect all-cash or commercial transactions. Furthermore, the implementation of TRID will only affect loan applications that are taken on residential purchases that are financed ON or AFTER Saturday, October 3rd. So, if you are able to squeeze in a loan application before that date, you will avoid being subject to these changes. Our local colleague, Gary M. Singer, outlines all these changes and we have reposted his article originally published in the Sun Sentinel, below:

Sept. 25, 2015

By GARY M. SINGER Sun Sentinel – Tribune News Service

Big changes are planned for how homebuyers finance their mortgages, and that almost certainly means that closings will take longer. In some cases, closings that now speed through in 30 days probably will require at least 60 days.

The changes had been expected to begin in August, but the effective date was pushed back to Oct. 3.

After the housing crash, Congress felt that we needed a better system of mortgage disclosures and procedures so that Americans can better protect themselves and make the best choices when getting home loans.

The Consumer Financial Protection Bureau was created and charged with accomplishing this.

The bureau decided that the four existing disclosure forms required under federal law would be changed into two new, more comprehensive documents — a Loan Estimate and a Closing Disclosure.

These forms are known as the “TILA RESPA Integrated Disclosure,” or more commonly, TRID.

In addition, the closing process was unified so that all 50 states use the same forms and procedures.

Who Do These New Rules Apply To?
They apply to residential properties that include a mortgage as part of the transaction — both sales and refinances.

The rules are designed to protect the buyer/borrower, but they will affect all parties to the transaction.

Lenders are bearing the brunt of ensuring compliance with the new rules, making the lender responsible for getting all of the other parties on board. The rules do not apply to commercial transactions or all-cash deals.

What is Changing?
Buyers applying for loans will get a Loan Estimate (instead of the current Good Faith Estimate) within three days of applying for the loans.

The new form is designed to highlight key terms to enable borrowers to shop around for the best deals. It’s supposed to be user-friendly and almost certainly will be, considering how confusing the current form is.

The Closing Disclosure must be received by the borrower three business days before the closing. If the form is mailed, couriered or emailed, the lender must allow an extra three business days on top of that.

This means that the closing can’t occur for at least six business days after the lender sends out the completed Closing Disclosure.

This is a massive change from the way it is now, when some of the information is still being filled in on the closing day, sometimes even while the parties are sitting at the closing table.

The biggest issue I have with these new forms is that they significantly downplay the importance of getting owner’s title insurance policies, which is money well spent. I can’t think of any situation in which not getting this very important coverage would be a good idea. And I’ve seen many instances in which not having title insurance costs a buyer the home.

K&A note: There are many ways a person can lose their home as a result of not having an Owner’s Policy for Title Insurance. Should you wish to learn what they are, contact us and we’ll share that information with you. It’s certainly not a short list and being uninsured can definitely result in the loss of property.

What do Buyers and Sellers Need to Do?
Closing agents — used to finalizing the process at the last minute to accomplish everyones’ rush to close — now will need to get the final closing information to the mortgage lender at least 10 days before the closing date so that the lender can complete the Closing Disclosure in time to get it out six days before the scheduled closing.

Realistically, to accomplish this, buyers and sellers will need to add three to four weeks to their closing time lines.

To make matters even more confusing, all of the standard purchase contract forms have been recently changed to address the new rules.

That’s causing real estate professionals to learn the new forms.

K&A note: If you are a real estate professional, please reach out to us for guidance on the new forms. We are all in this together and are looking forward to making all future transactions go as smoothly as possible.

Be sure your real estate agents and others on your team are aware of the new information and have been trained on how to deal with it.

Fortunately, the industry seems ready for this change, and there is plenty of training available for those in the business.

About the Writer
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.

The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

This article, originally dated 9/25/15, was re-posted from the Sun-Sentinel, distributed by Tribune News Service.

CFPB Fails to Comply with Congressional Review Act Moving TRID date to Oct. 3rd

Posted on by khaniauerbach

CourthouseIn a statement made June 17th, the Consumer Financial Protection Bureau (CFPB) announced a proposal to delay implementation of the TILA-RESPA Integrated Disclosures (TRID) rule until Oct. 1st. The CFPB’s original implementation date of Aug. 1st had been been pushed to Oct. 1st, as they claim an “administrative error” caused the delay of Know Before You Owe rule. On June 24, 2015, the Bureau announced in a new Press Release, the selection of Saturday, October 3, 2015, rather than October 1, 2015, as the proposed implementation date. 

Under the Congressional Review Act, the CFPB failed to timely notify Congress, which requires agencies to submit the rule to Congress and the Government Accountability Office 60 days before the effective date. The agency’s submission should include (1) a copy of the rule; (2) a concise general statement relating to the rule, including whether it is a major rule; and (3) the proposed effective date of the rule.

According to CFPB Director Richard Cordray, the bureau “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.”

At Khani & Auerbach, we were already well on our way to being prepared to implement these new procedures into our real estate practice, however, the CFPB’s decision to delay the deadline for their implementation is great news for everyone. The consumers, the vendors and the industry in general are all not exactly “ready” and there are aspects of TRID that simply made no sense, further confusing the consumer. This push to Oct. 3rdst was definitely something we expected and comes as no surprise. The CFPB listened to the industry and its concern for consumers.

With that said, Khani & Auerbach highly recommends that you initiate your real estate transactions before the implementation date expected for October 1st.

Call the attorneys at Khani & Auerbach (954) 921-1517 if you have any questions about this or any real estate matters.

CFPB releases ‘Know Before You Owe’ Shopping Tool Kit

Posted on by khaniauerbach

real estate, real estate closings, real estate transactionsThe Consumer Financial Protection Bureaus a/k/a the “CFPB” intends to roll out new guidelines and requirements for consumer home loans that will be in effect beginning August 1st of this year. They have kicked off their “Know Before You Owe” campaign by releasing a new toolkit to guide consumers through the process of shopping for a mortgage and buying a home.

“The new mortgage disclosure forms coming in August will help consumers comparison shop for mortgages and avoid surprises at the closing table. We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules,” said CFPB Director Richard Cordray.

The toolkit, which can be found here, provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what “affordable” really means and search for their best mortgage.

The Shopping Tool Kit also features interactive worksheets and checklists, conversation starters for discussions between consumers and lenders, and research tips to help consumers seek out and find important information.

Before the CFPB rule, the law required lenders to deliver two different disclosures to borrowers within three business days of receiving their applications. However, new guidance from the CFPB will now severely restrict how much a final mortgage deal can vary from from the original loan estimate.

In an effort to ensure compliance, the ‘Know Before You Owe’ loan documentation will consist of two new forms: the Loan Estimate and the Closing Disclosure to ensure compliance.

“Taking out a mortgage is one of the biggest financial decisions a consumer will ever make. Our new ‘Know Before You Owe’ mortgage forms improve consumer understanding, aid comparison shopping, and help prevent closing table surprises for consumers,” said CFPB Director Richard Cordray. The CFPB states further that the new documentation is intended to help improve consumer understanding, compare loan offers and avoid closing costs at the table.

At Khani & Auerbach, we are doing our very best to remain at the forefront of these changes.  We will continue to educate ourselves, our clients and real estate professionals that we work with in an effort to make these transitions as seamless as possible.   Click here for the downloadable .pdf file.