The Consumer Financial Protection Bureau is cracking down on Marketing Service Agreements. If as a lender, settlement provider, or agent you are engaged in an MSA it is imperative that you know the rules surrounding it. It is also imperative that your MSA is a legitimate agreement and not a cover for payment for referral business, which to be frank most are and the CFPB is aware of this. More importantly it is 100% crucial that all MSAs are disclosed to clients. Failure to disclose the nature of an MSA to a client is the number one reason that agents and settlement partners are fined. The agents, lenders or title agents that sign the agreements will be held responsible for any violations of the agreements. The fines can be hefty for failure to comply, don't believe me check this out.
In other CFPB related news the TRID rule will become effective on August 1, 2015. There is a belief in the real estate industry that this is nothing more than a change in disclosure forms from lenders but nothing could be further from the truth. I won't get into all of the details on this blog but our company will be hosting workshops and lunch and learns regarding this new rule. The most impactful piece of the rule is the closing disclosure waiting period. This states that once a loan is clear to close the borrower must receive a disclosure with the final number 3 business days prior to signing. This waiting period CAN NOT be waived. Additionally there is an assumed delivery period making the actual waiting period 6 days unless the lender can prove that the disclosures were received by ALL BORROWERS prior to the 3 day assumed delivery period. Lenders that do not have their ducks in a row prior to August 1 will see delays in loan closings, especially on purchase loans. Some real estate brokerages that are aware of this change are advising their agents to expect 45 day closings when on transactions that previously would have closed in 30 days.
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