Florida is a great place to live, especially for its low tax burden. Until recently, it didn’t matter which Florida real estate attorney you hired to do your closing, because they were all familiar with the old closing process. That was when the U.S. Department of Housing and Urban Development (HUD) was overseeing the residential mortgage industry in the United States.
Now, the U.S. Consumer Financial Protection Bureau (CFPB) is in charge, and several alterations have been made to the closing process. The change of oversight was made in response to the housing market crash when millions of buyers signed complicated loan contracts they didn’t understand and consequently lost their homes in foreclosures or short sales. Now more than ever, you need to be picky about which real estate attorney you hire. You need to make sure you hire someone who is knowledgeable about the new regime that took effect in October 2015.
The changes that were made mostly affect the paperwork involved in closing. The old closing process included filing the “HUD-1” form, a Truth in Lending Act (TILA) disclosure, and a Good Faith Estimate (GFE). Those forms have now been replaced. After October 3, 2015, if you apply for a home loan, you will need to use the new federally-mandated TILA-RESPA Integrated Disclosure (“TRID”) forms. The TRID forms are an offspring of the TRID rule, also known as the Know Before You Owe mortgage disclosure rule, that is now part of the CFPB’s Know Before You Owe mortgage initiative.
The TRID forms include a Loan Estimate and a Closing Disclosure. According to the CFPB, a Loan Estimate is a three-page form that a buyer receives after applying for a mortgage. It tells you important details about the loan requested, including the estimated interest rate, monthly payment, and total closing costs for the loan. The lender must provide you this document within three business days of receiving the loan application.
A Closing Disclosure is a five-page form that provides final details about the mortgage loan you’ve selected, including the loan terms, projected monthly payments, and total closing costs (how much you will pay in fees and other costs to get the mortgage). The lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage loan.
On the one hand, the new changes are good because they allow the buyer time to become fully aware of the final terms and costs of the purchase and to also ask the lender questions before closing.
On the other hand, the changes mean that the closing process is now much longer. It’s now about 45 days, up from the 30 days it used to be. This is partly because during the 3-day waiting period. If there is a change of as little as 0.25 points, the entire process must start over. The process also takes more work. You not only need to locate and sign all the new forms, but you also must know exactly what these documents mean.
Signing these documents will have lasting financial implications on your life.
It’s in a buyer’s and seller’s best interest to hire an attorney who is already familiar with the new forms and the new process who can fully explain to you what you’re signing. Even though the lender now controls the transaction, hiring an attorney as your closing agent will still save time and money, and decrease the risk of not fully complying with the new rules and deadlines.
Many attorneys are still struggling with the closing process. Whether you’re a domestic or foreign seller or buyer, for your next closing, hire a real estate attorney who always keeps up with the latest changes and knows how to comply with the new requirements.