About the New Tila-Respa Integrated Disclosure rule
1. Effective October 3*, 2015, the new Tila-Respa Integrated Disclosure rule will take effect. The October 3 deadline is for when a borrower applies for a new loan (not when a closing occurs). It applies to new residential transactions with a mortgage and residential refinance transactions.
2. The rule creates 2 new disclosure forms, the 1) Loan Estimate (LE) form which replaces the Good Faith Estimate (GFE) and the initial Truth In Lending (TIL) form and; 2) the Closing Disclosure form (CD), which replaces the current HUD-1 and revised TIL disclosure.
3. Lenders or mortgage brokers must deliver the Loan Estimate to the buyer three business days after receipt of the mortgage loan application.
4. Buyers must receive the CD from the Lender at least three business days before the scheduled closing. To accomplish this, most Lenders will send the CD about 7 days prior to the scheduled closing. Real Estate agents will not receive a copy of the CD before it is delivered to the buyer. You will have to request a copy of the CD directly from the buyer.
5. Real estate agents will need to provide all of their buyer paid charges to the closing agent at least 2 weeks prior to closing so that the closing agent can send the information to the lender approximately 10-14 days prior to the scheduled closing date.
6. The CD sent to the buyer will not include the seller’s side of the transaction. The closing agent is responsible for completing and delivering the seller’s side of the CD, which must be delivered at or before closing.
7. Consider 2 “walk-throughs” (the first inspection 10 days prior to closing and the second inspection on the day of closing).
8. Changes to the CD may trigger a new three-day waiting period if the changes are substantial, like it causes the APR to be inaccurate, the loan product changes, adjustments affecting the value of the property, or prepayment penalty is added. Alert your closing agent immediately of any changes or issues that arise so that the closing agent will have time to inform the lender.
9. The lender will deliver the closing package to the closing agent on the day of closing. It will contain another CD. If there are no changes made, the CD will be the same as the one sent to the consumer 7 days in advance. If there have been changes, the closing package will contain a Revised Closing Disclosure.
10. The new disclosure rules may affect the contract terms that you negotiated for either the buyer or the seller. A 30 day closing date may no longer be realistic. Closing dates should be scheduled at least 45-60 days out.
*subject to change
For more information, please contact Giannell Title.