October 3, 2015 was the start date for mortgage lenders to begin using new, simpler forms created by the Consumer Financial Protection Bureau (CFPB). The idea was to make life easier for borrowers, so that they can more easily understand the financial responsibilities they're taking on when using a mortgage to buy a home or property. The banks or mortgage lenders must now provide borrowers with a new set of disclosures, called a “Loan Estimate” and a “Closing Disclosure.”
There's just one problem. According to a recent nationwide survey conducted by the National Association of Exclusive Buyer Agents (NAEBA, at www.naeba.org), some real estate closings are already being affected by the new rules; in fact, nearly 20% of the brokers surveyed stated they're already seeing issues, mostly delays in home closings.
The NAEBA quotes one survey respondent as saying, “Lenders are almost all asking for 45 days to closing vs. previous 30 days.” Another said, “We've been advised to prepare for further delays until everyone has more experience with the new CFPB/TRID Regulations.”
NAEBA President Dawn Rae warns, that home buyers taking out a mortgage should “be prepared for real estate transactions to take longer to close at least in the near future as lenders adjust to the new regulations . . . .”
This is a shame for prospective home buyers in hot real estate markets, because if you're competing against multiple bidders, offering a short closing period is one possible way to set your bid apart. (Price is of course the seller's chief concern, but with two similarly priced offers, a seller who wants to move or cash out of the house quickly might prefer the one with a quick closing.)
See Understanding New Know-Before-You-Owe Mortgage Forms for more on this new law and the new forms.