Are you aware of changes coming to mortgage disclosures in October?

You may not know about words like CFPB, TILA, RESPA, and TRID — but Realtors do. And they have been spending a lot of time making sure they are up to speed on a number of changes coming this fall.

Rebecca Grossmann

Rebecca Grossmann

The upcoming changes are coming from the Consumer Financial Protection Bureau, which released changes to its disclosure documents and process that makes it easier for home buyers to understand the fees and rules associated with obtaining a mortgage.

The changes take effect on Oct. 3, and it is estimated that about 76 percent of home purchases in Maricopa County will be affected.

The “simplified and improved disclosure forms,” officially called the Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosures, or TRID for short, are a result of direction from Congress urging the CFPB to create new forms that help clarify the complex mortgage process.

The changes were originally scheduled to take place on Aug. 1, but were delayed after urging by Realtors and other industry groups, who insisted more time was needed to better understand the new rules and implement changes to help create a smooth transition for consumers and providers.

The new TRID forms replace the previously used HUD-1 Settlement Statement and Good Faith Estimate forms, as well as initial disclosure documents. There are two new forms: The Loan Estimate and the Closing Disclosure. Together, these two documents clarify for consumers the mortgage loan amount, interest rate, principal and interest payment, as well as other important facts, such as the estimated total monthly payment, including mortgage insurance and escrow payments.

The new forms can be previewed on the CFPB’s website, consumerfinance.gov.

So what does this mean to you as a home buyer? The biggest item that is affected by the new TRID rules and forms involves the timeline associated with issuing loan disclosure documents to the home buyer who is obtaining a mortgage. In order to comply with the new regulations, Realtors in Arizona have altered the standard residential real estate purchase contract (or purchase contract, for short) that is used by all Arizona Realtors when their client, the buyer, makes an offer to purchase a home.  The purchase contract was revised by hard-working volunteer Realtors after hours of research and collaboration with the CFPB to ensure it complies with the new timelines.

So what are these new timelines? One of them states that a home buyer’s lender must deliver the Loan Estimate form no later than three business days after receiving the buyer’s application for a mortgage loan. Another requires that the Closing Disclosure form must be given to the borrower three days before closing. While many of these specific regulations regarding timeline are the responsibility of your lender or mortgage originator, your Realtor can help educate you on these changes and what they mean to you as a home buyer.

With new rules and regulations, there usually comes a period of uncertainty and adjustment as businesses strive to understand and comply. However, be assured that Scottsdale Realtors have been working for many, many months to prepare for these changes. Realtors have been working with legislators to help clarify a number of issues in the new integrated disclosure documents and rules. By working with the CFPB and other real estate industry partners, Realtors are ensuring consumers only benefit from the new rules.

If you’re interested in purchasing a home this fall, be sure to talk to your Realtor about these changes. Your Realtor can also help put you in touch with qualified mortgage lenders to ensure your home buying and mortgage obtaining process is as smooth as possible.

Editor’s note: Ms. Grossman is president and CEO of the Scottsdale Area Association of Realtors

Ms. Grossmann is president and CEO of the Scottsdale Area Association of Realtors.

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