Back in 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act created a new consumer protection agency called the Consumer Financial Protection Bureau (CFPB). Much of what they do isn’t readily apparent to the average consumer of financial services. However, there is one thing that came out of this act that drastically changed how real estate transactions are handled starting a couple of years ago.
One of the big complaints consumers had in the past was showing up at the closing table and being presented with radically different rate and terms than what they had been quoted when they applied for their loan. Lenders did have to provide a “Good Faith Estimate” of rate and terms, but the actual loan could vary widely from what was quoted earlier. The CFPB now requires that borrowers receive something called a “Closing Disclosure” (CD) at least 3 business days prior to being allowed to sign their loan documents. The CD continues the basic info about your loan, including the rate, the payment, closing costs, whether there is a prepayment penalty or balloon payment, etc. It’s printed in a standard way so it’s the same format for every borrower. If the actual rate and terms on your actual loan documents vary in a substantial way prior to the borrower signing, a new CD must be given and a new waiting period starts over.
This may be frustrating to you if you are trying to close escrow on a home purchase and your lender or title company representative tells you that you have to wait out the CD waiting period. But the point of this waiting period is to prevent an unscrupulous lender from jacking up your rate or throwing in extra fees or a prepayment penalty at the last second, and then counting on you being under time pressure and just signing the documents.
If you have questions about real estate, call me at (925) 240-MOVE (6683). Voted “Best of Brentwood” multiple times. To search the MLS for free, go to: www.SharpHomesOnline.com. Sharp Realty. #01245186