The Consumer Financial Protection Bureauwill institute new rules Aug. 1 regarding disclosures under the Truth in Lending Act andReal Estate Settlement Procedures Act that will affect all home builders, particularly those with a real estate lending arm.
Under the new procedures as a result of the Dodd Frank Act, four documents will be merged into two. The Good Faith Estimate and Truth in Lending disclosures will be eliminated and combined into a new single Loan Estimate form, or “LE.”
In addition, the final Truth in Lending Disclosure and HUD-1 Settlement Statement are being replaced by the Closing Disclosure, or “CD.”
What does this mean?
First, the Loan Estimate must be delivered to the prospective buyer no later than three business days after receiving the application.
Currently, the HUD-1 Settlement Statement can be presented to the buyer on the day of closing and any changes to the statement can take place during the loan closing.
Under the new rule, the biggest change is that the Closing Disclosure must be provided to the consumer a full three days prior to the closing, and if there are changes during that 72-hour period, the closing could be delayed.