Recent Changes for Residential Real Estate Transactions and Mortgage Loans

Residential real estate transactions can be complicated and overwhelming. The government through legislation is working to provide buyers and sellers with various consumer protections. Since 1974, the Real Estate Settlement Procedures Act (RESPA) has been the governing law of residential real estate transactions. Effective January 1, 2014 RESPA will no longer be governed by HUD but by Consumer Finance Protection Bureau (CFPB), a federal entity created pursuant to Dodd-Frank Wall Street Reform & Consumer Protection Act.

One of the results of the Dodd-Frank Act is a substantial overhaul of the rules and procedures governing consumer mortgage finance and the closing of residential real estate loans. There will be a complete departure from the current Truth-In-Lending, Good Faith Estimates and HUD-1 Settlement Statements you may have seen in your previous real estate transactions. Effective August 1, 2015, the HUD-1 Settlement Statement will be replaced with the Closing Disclosure Form. This form is required to be provided to the borrower at least three days prior to closing. In addition to the Closing Disclosure Form, other forms for buyers and sellers have been developed for better disclosure, transparency and understanding of the real estate transaction.

Realtors, mortgage companies and the title industry are working hard to interpret and follow these new rules and forms. The forms can be viewed at http:/www.consumerfinance.gov/knowbeforeyourowe. Please contact me if you have any questions regarding these changes. Please keep our team in mind for assistance on your next real estate transaction.