Vision in 2016
Vision is not enough. It must be combined with venture. It is not enough to stare up the steps; we must also step up the stairs. Vaclac Havel.
This is my first article in what will become a daily opportunity to discuss all things interrelated with the real estate industry. My goal is to provide advice and equip you with tools to step out with vision in 2016. Having practiced in the industry for more than 15 years, I’ve compiled a war chest of stories and information about good deeds, bad deeds and everything in between. (That was a pun, get it?) During our journey, I hope to motivate you to your best, with important, relevant and noteworthy facts and tips sprinkled with a little bit of humor for good measure.
With the start of a New Year, it is typical that we look back with thoughts of how we might do better, be more productive, energetic, helpful and knowledgeable moving forward in the New Year. I suppose this is the vision. Getting up those steps is where the hard work begins. So without any delay, let’s get to it.
One of the biggest federal regulatory changes to the real estate industry occurred several months ago. Did you know that there is a tool kit issued by the Consumer Financial Protection Bureau or “CFPB” to help agents navigate the new TILA-RESPA Integrated Disclosure “TRID” rules? Although the new rules became effective in October, transactions are just now starting to close under the new rules. The website is Know Before You Owe: Information for real estate professionals > Consumer Financial Protection Bureau and has information directed specifically to the real estate professional.
First let’s talk about what mortgages the rules cover. Any closed end consumer credit transaction secured by real property and subject to RESPA is covered (which is most traditional purchase money mortgages). Not covered are home equity loans, reverse mortgages, loans on mobile homes or loans by a lender that makes less than 5 loans a year. Loans not covered by the new rules remain subject to existing rules.
In short, the TRID rules provide a mechanism for consumers to become more informed about their financing options and fees associated with purchasing a home. From a buyer’s agent’s perspective, there are 3 main segments to the new closing process. The first is working with the buyer to obtain the pre-approval (from more than one lender is preferable so the consumer can compare terms). Second, upon the selection of a home, is obtaining the loan commitment (or “Loan Estimate”). Tip: Make sure your client knows what they need to do to accept the Loan Estimate. The lender cannot begin processing the loan (i.e. charging the buyer fees) until the buyer accepts the Loan Estimate. Last, is to make sure the buyer has all of the transaction specifics for their lender: any concessions, property taxes, homeowner’s association fees, estimated cost for homeowners insurance and agent contact information.
The buyer must receive the Closing Disclosure no less than 3 business days before closing. The Closing Disclosure replaces the HUD-1 Settlement Statement and the TIL Statement. As changes to the Closing Disclosure may result in the need for it to be reissued (and thus a new 3 business day waiting period), it is critical that the lender have all of the financial information for the transaction at least 2 weeks prior to closing. Tip: The Closing Disclosure will only be delivered to the buyer, so you will have to obtain a copy from the buyer, not the lender or Title Company. Believe it or not, the same is true for any other professional assisting the buyer, even the buyer’s attorney.
The CFPB has recognized that implementation of these new rules will not be a quick and easy process. It is expected that in the coming months, revisions may be proposed to further streamline the process to the benefit of both consumers and members of the real estate industry. Demonstrating knowledge in the new rules will bolster your client’s confidence in your professional abilities.. a good first visionary step into 2016.
