CFPB Delay in Changes Anticipated

The Consumer Financial Protection Bureau (CFPB) has proposed delaying the effective date of the Know Before You Owe rule until October 1, 2015. The CFPB touted the change will help with families preparing for the new school year but is more likely due to an administrative error meeting timeline requirements of federal law.  The Consumer Financial Protection Bureau (CFPB) helps consumers take more control over their economic lives by creating and enforcing rules for consumer financial markets.

The Know Before You Owe rule impacts residential loans initiated after October 1, 2015 if the change is approved.  When applying for a new loan, the lender will provide a three page Loan Estimate form to the borrower.  This will replace two forms; the Good Faith Estimate and the Initial Truth in Lending Act Disclosure form.  The Closing Disclosure form is five pages and replaces the HUD-1 Settlement Statement and the final Truth in Lending Act form.  The Closing Disclosure form must be provided to the consumer three business days prior to closing.  With mailing and documentation requirements, it works out more like 8 calendar days from mailing to signing of closing documents.  The final Closing Disclosure and the initial Loan Estimate can not differ more than a fraction from each other.  If the Closing Disclosure is changed, another 8 day period starts.

The impact of the new rule is that some home purchases will take a little longer but the loan documentation in the beginning of the process will be more understandable and transparent to the consumer and allow the consumer to comparison shop to get their best deal.

The great news is that the REALTORS® at Gulf Shores Realty are fully trained and prepared for the changes.   Visit us at http://gulfshoresrealty.com/ or call 941-488-6644 for your real estate needs to make sure your transaction is smooth.