Consumer Protection Act

Happy Hump Day Houstonians!

Today I’m going to briefly discuss a new act that will be changing the real estate game.

Come August 1, 2015 lenders, escrow officers, realtors, buyers and sellers will need to be on their P’s & Q’s with time management. The Consumer Financial Protection Bureau will be passing the Consumer Protection Act by the end of summer 2015. Any real property financed by a mortgage lender will be subject to new disclosures and a three day waiting period, once the closing disclosure and loan estimates have been delivered to the buyer(s).

To start, there’s new terminology that will come into play with this Act…

Lender is now the Creditor

Buyer is now the Consumer

Truth in Lending & Good Faith Estimates are now the Loan Estimate

HUD1 and Final Truth in Lending is now The Closing Disclosures

Closing is now Consummation

How it Affects Buyers:

• Consumers must meet with their creditor in person prior to submitting an offer. At this time, all requested documentation is provided to the creditor (asset info, income verification, credit history, etc.). Once approved, the creditor will provide the consumer with a Conditional Approval Letter.

•Consumers must stop lender shopping once an offer has been accepted/executed.

•Once the creditor has final approval, the creditor will give title the closing instructions, preliminary closing disclosure and a final loan estimate.

•Once these documents are approved, they are delivered to the consumer and the 3 day waiting period begins the day of delivery. If no changes, amendments or terms have changed during this 3 day period consummation may occur. If for any reason the closing disclosure or final loan estimate is changed, the 3 day waiting period will start over and delay consummation.

How it Affects Seller’s:

•Seller’s must not accept any offers until the consumer has met with the creditor in person and has provided all the necessary documents prior to submitting an offer.

•If negotiated, all repairs must be completed and receipts delivered to the consumer 15 days prior to consummation.

•NO last minute negotiating or amendments….This WILL delay closing and cause friction between the consumer and seller.

•The consumer is NOT held liable for delays in the three day waiting period.

With these new changes at hand, it’s important that you have a well-educated team of experts behind you. Interview different creditors and realtors, make sure they are knowledgeable about current and future real estate guidelines. This will mean the difference between a smooth transaction and a nightmare!

-Brittany Barnes

REALTOR®