The National Association of REALTORS and its industry allies have asked the Consumer Financial Protection Bureau to implement a grace period for compliance with new rules for loan closing procedures and settlement documents. The Real Estate Settlement Procedures Act and Truth in Lending Act integrated disclosure rule is set to take effect August 1.
When the rule takes effect there will no longer be a Good Faith Estimate or Truth in Lending disclosure; those two forms will be combined into a single Loan Estimate, which must be given to consumers within three business days of applying for a loan. At the same time, the HUD-1 Settlement Statement and the final Truth in Lending disclosure will be replaced by the Closing Disclosure form. This form must be given to consumers at least three business days before closing, and any significant changes to the loan terms could reset a new three-day waiting period and delay closing.
The implementation date comes in the midst of the busy summer home buying and selling season. Even if only 10 percent of transactions experience closing issues that’s as many as 40,000 transactions a month, according to NAR home sales data. A grace period through the end of 2015 would delay enforcement to the slower winter months when fewer consumers would be negatively impacted.
NAR President Chris Polychron testified in front of the U.S. Financial Services Subcommittee and said a trial period with restrained enforcement and liability would allow the industry and CFPB to address implementation issues and minimize costly home closing delays for consumers. Colorado REALTORS, who were in Washington recently for NAR legislative meetings, also asked their members of Congress to support the request. So far the CFPB has not indicated if it will comply.