New Rules That Give Buyers More Protection at Closing Is Effective July 30

If you are applying for a loan to purchase or refinance, you should be aware of new rules that will give buyers more protection at closing.  Although little publicized, this newest set of consumer protection rules will take effect just 10 days from now on July 30.

Key Changes Effective July 30

  • Lenders are required to give you initial disclosures of your mortage costs within three business days of your loan application.  If you do not get the disclosure you are not obligated to continue with that lender.
  • Lenders are prohibited from collecting any fees, except for a reasonable charge for collecting your credit, until you have been given the loan-cost disclosures.  This is a significant change from the past.
  • A seven day waiting period will be required  after applicants receive their early disclosures or the disclosures are mailed. You will have a week to think about the transaction and decide whether or not it is right for you.  Final truth-in -ending disclosures are due three business days before closing.
  • Lenders are required to deliver a copy of the real estate appraisal to the buyer three business days before the scheduled closing on the loan.  But, if a buyer decides that receiving the appraisal is not necessary, this rule can be waved.
  • If the APR on the early truth-in-lending disclosures increases by more than one-eighth of a percentage point (0.125), the lender is required to ‘redisclose‘ and provide a corrected version and allow an additional seven business days to consider the transaction.

The purpose of these rule changes is to give consumers better access to and more time to consider what for many is a major financial transaction.  But, as with any new regulations there are sure to be snafus and unexpected consequences. Be sure your Realtor  – and your lender – are up to date on these changes.  And if they aren’t?  Well, it may be time to go somewhere else.

For more information, call me at 703.927.4554 or email me at [email protected]

Michael