New mortgage rules change the closing process. Here’s how to win with them!

Ever since the crash of 2008, mortgage lending rules have evolved in order to protect the consumer. On October 3, 2015, another set of rules were enacted concerning the mortgage process (TILA-RESPA).

What it is: TILA-RESPA is designed to protect homebuyers. The new law eliminates a lot of confusing documents and replaces them with new easy-to-use ones: The Loan Estimate (when shopping for a mortgage) and the Closing Disclosure (replacing the HUD before closing). The law also gives consumers 3 business days to review disclosures and terms before signing.

What it does: The new law will make it easier for clients to compare rates when shopping for a mortgage. (great!) The law requires 3 business days before the closing to give consumers time to understand where their money is going. As a Realtor, I like the new law : an informed consumer is one I want as a client. Unfortunately, in many instances, the law will delay the closing process and when the client can get into their new home. I also believe 3 business days is too long as a nationwide law (not so great).

As an example: with a Monday holiday (Labor Day, Memorial Day, MLK Day, etc), the loan would need to be complete on Tuesday in order to close the following Tuesday. I believe 24-48 hours seems to be a reasonable time frame to understand the loan and ask questions. Example: receive the Closing Disclosure Tuesday morning and close Thursday morning. If there is a major last-minute dispute, the 3-business day window restarts. In an ideal world, this would be reduced to 24 hours.

What it means: The traditional 30-day closing in our market is likely gone; it will be replaced by a 35, 40, or 45-day window. Some technology-challenged lenders may need 60 days to close! My job is to help clients understand these changes in our first meeting and work together to shorten the closing window.

My goal is and will always be to get clients into their new home as quickly as possible. If clients are prepared with personal and financial information as soon as their offer is accepted, the process can be streamlined and delays minimized. Understanding the law and having a plan are important when buying a home – this new law just adds a step to that process.

Read more: How the mortgage process has changed (consumerfinance.gov)

Contact Ryan Monceaux