On Oct. 3, the Consumer Financial Protection Bureau’s “Know Before You Owe” rules will go into effect. This has made some real estate agents a little nervous. How can they avoid delays? How can they manage their clients expectations?
We wanted to get the low-down on how the new rules will affect closings, so we asked Brittany Washington, an experienced closer at Community National Title. Not only is Washington the beauty and brains behind the brand’s weekly “Title Tip Thursday” feature, but she was able to break down the issues real estate agents may encounter during closing in an easily digestible way.
Jump to find out how you can smooth out your closings after the new CFPB rules go into effect.
daltxrealestate.com: How much will the new CFPB rules delay closings?
Brittany Washington: TREC, TAR, and most lenders believe that the best estimate is that the new rules will add 15 – 20 days to the process. So, if a Realtor normally fills in Paragraph 9. A. (see below) by saying they want to close “on or before” 30 days from the trigger events, they will now want to say that they want to close on or before 45 or 50 (or maybe even 60) days from the triggering event.
CD: How can buyers and sellers prepare for any delays due to these changes?
Washington: Buyers and sellers and their Realtors can: 1) make sure that all the paperwork is filled out completely – no blanks left in the contract — and 2) not wait until the last minute to request changes or to decide on a home warranty company, etc. Because most of the time the lender will be preparing the CD form, they will also be the ones who will need to make any changes to the form. Therefore, the sooner all of the information necessary to complete the CD form is made available to the lender, the better. Last-minute changes or additions to fees will equate to possible delays in closing.
Really, people who haven’t been through a closing before aren’t going to know any different. Just like now, the Realtor will need to walk his or her client through the process so the buyer or seller will know what to expect. And, since it will be new to them, they won’t even know there are delays. And, hopefully, even repeat homebuyers won’t see that much of a delay if all parties communicate like they should throughout the entire process.
CD: What type of buyer will be affected by these changes the most? What can they do to mitigate problems during closing?
Washington: All buyers (except cash buyers, commercial transactions, and hard money financing) will be affected by these changes. I think the ones who will be affected by it most are the ones who like to either 1) wait till the last minute to get things done, or 2) rush, rush, rush and close tomorrow! The rushing to close will probably be a thing of the past. And, the waiting ‘til the last minute will be gone to. Bottom line is – to mitigate problems during closing, if everyone knows the timing ahead of time and gets all the costs to whoever is preparing the CD form as early as possible, everything should run smoothly.
Realtors and title companies simply need to transition new buyers into the “new” way of closing transactions after Oct. 3, and act like it’s the most natural thing in the world. If we don’t stress over how things are “so different,” the parties to the transaction shouldn’t stress either.
Have any more questions about closing? Email [email protected] and we’ll ask Brittany for even more title tips.
