For Colorado Springs homebuyers who have been frustrated by all the numbers and descriptions on the Hud-1 and Truth-in-Lending Disclosure Statements, there is good news.
Starting October 3, 2015, lenders must issue new documents clearly delineating the costs associated with a home purchase: the Loan Estimate and the Closing Disclosure. Known as TILA/RESPA (for Truth-in-Lending/Real Estate Settlement Procedures Act), the new forms replace the old Truth-in-Lending Disclosure Statement and Good Faith Estimate, and the HUD-1 Settlement Statement. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011, the Consumer Finance Protection Bureau was established and mandated to replace the old forms with new, easier-to-understand forms. The completed documents must be delivered to the prospective buyer 3 full days before closing the transaction and will be used for the following:
- Purchase money loans
- Loans secured by 25 acres or less
- Loans secured by vacant land
- Construction-only loans
The new forms must be offered in both English and Spanish. The three day lead time gives homebuyers the opportunity to thoroughly review the costs and avoid any last minute “surprises” at the closing table.
Loans that are not covered by the new ruling are:
- Reverse Mortgages
- Home Equity Lines of Credit (HELOCs)
- Mobile Home-Only loans
- Creditors who originate less than 5 loans in a calendar year
This is a sea-change for both homebuyers and REALTORS®. To help them understand the new documents and the updated time frames for their distribution, REALTORS® have the opportunity to take classes for credit on the subject.
For more information about the new loan documentation procedures visit http://www.consumerfinance.gov.