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CFPB

TILA-RESPA Integrated Disclosure Rule

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 The CFPB has set a date of August 1, 2015 for implementation of the TILA-RESPA Integrated Disclosure Rule. This sets new Loan Estimate and Closing Disclosure rules with the aim to make mortgage disclosure easier for borrowers to understand and use. The biggest changes that borrowers will see will be in the requirements for lenders to get certain information to the borrower within a certain amount of time after the application is made and before the loan is closed.

The new rule also puts lenders in a position of ultimate responsibility. Lenders will not only be responsible for their disclosures, but also the actions of all third party vendors that are used in closing the loan, notably title companies. In some cases this will affect who the borrower will be getting their information from and how they will be receiving it.

The HUD-1 Settlement Statement will now be called the Closing Disclosure and will be a 5 page document combining the HUD, Truth in Lending statement and Good Faith Estimate. Lenders will use a new Loan Estimate form to give borrowers an idea of the terms of their proposed loan.

In the coming months this site will continue to update the changes that are being made. In the meantime you can check out the CFPB website for the TILA-RESPA Integrated Disclosure Rule for more information.

Purchase Agreement

Hurricane addendum

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hurricaneThe standard purchase agreement does not contain a Force Majeure (more commonly known as an “Act of God”) clause which provides for an extension of the closing date should a hurricane or other natural disaster prohibit the parties from closing on time.

During hurricane season you should consider adding the following language to your purchase agreement:

“Should a hurricane or tropical disturbance in the Gulf of Mexico prevent the timely closing of a sale or the binding of insurance, all parties agree to and here by extend the act of sale to a date within ______ days after insurance can be bound and closing services are available, provided said date does not exceed 14 days.”

We recommend a time frame of 5 – 7 days for the blank.

Remember that insurance companies may not bind insurance when there is a named storm in the Gulf of Mexico. The “box” starts at 20° North Latitude and 80° West Longitude.

Communication is critical during a hurricane threat. Remind your buyers to speak with their lender and insurance agent about any impacts an approaching storm will have on their closing and what their options are.

If you have any questions, please don’t hesitate to call or email.

Jason