New HUD Disclosures Will Make Closing More Challenging after Aug 1

Real Estate Agent with RE/MAX Professionals, CT 203-206-0754 REB.0759001

New HUD Disclosures Will Make Closing More Challenging after Aug 1


The new CFPB rules regarding the buyer loan process will take effect on Aug 1, and there will be a lot of angst created because of them.  The purpose is to make the closings more buyer friendly and are intended to allow the Borrower, who will now be called the Consumer, to get a more competitive loan.

Waterbury CT Board of Realtors CFPB form breakfast


Our local Board hosted a breakfast this week with representatives from Fidelity Title to discuss the new rules and forms. A lawyer was also present, as all closings in CT are done through attorneys.


It should be mentioned first, that any loans started prior to Aug 1 can proceed under the old rules and forms. All loans initiated after Aug 1 must follow the new guidelines and use the new forms.




Loan Estimate:  New Consumers (Borrowers) are going to be encouraged to get 3 Loan Estimates from lenders prior to getting pre-qualified.  The presumption is that the Consumer would be able to determine the best loan product and rate for themselves.  The issue is that the lenders are not allowed to check credit scores while doing a loan estimate and are supposed to offer their products without knowing the issues a buyer may have, which is going to have Consumers telling  loan officer what they feel as appropriate and getting a value for purchase that is likely to be far from their actual ability.

The nature of the forms are also complex enough that most Consumers will likely  need the assistance of their RealtorÒ to interpret which would be the best loan for them. The Loan Estimate Form is replacing the Good Faith Estimate (GFE), which was normally issued within 3 days of making a loan application, which did cost the Consumer money. The purpose her is to allow the Consumer to make a determination of which lender to use without making a financial commitment.

Presumably the Consumer can now go out and seek homes with the values stated on the forms.  A wise Consumer, with the guidance of their agent will make a pick of lenders and allow their chosen lender to do a proper credit check and generate a pre-qualification letter with a more realistic purchase value so that time and money is not wasted by all.


Closing Disclosure:  The HUD-1 is being replaced by a Closing Disclosure, which will now be generated by the lender.  This disclosure must be delivered to the Consumer and/or their lawyer with 3 business days being allowed for this to happen.  The 3 day period is measured by work days, and not hours, and does not include Sundays or a Federal Holiday.  Disclosures will be allowed to be delivered electronically in compliance with e-signature requirements. The 3 day period is considered the amount of time needed for a document to be mailed through the US Postal Service and received by the Consumer.  As it is the most forgiving for the lenders, it will most assuredly be the chosen delivery means.

Any changed or corrections to the Closing Document will be required to go through the same 3 day period.  To minimize most of these delays, all adjustments should be entered as soon as possible, which means, walk throughs, etc will need to be scheduled enough in advance to over come the 3 day issue.

Damage issues created during the moving out period will also impact the new form and should be remedied as simply as possible to avoid further delays.


CFPB Closing Disclosure Addendum:  The process of contract, financial review, underwriting are supposed to remain the same.  One difference is that the dates we normally used as a guide to maintaining a flow to the purchase are going to have to be more flexible, particularly once the file is getting ready to close.  In anticipation of issues here with passed dates and potentially contract violations, the CT Bar Association has already started to work on an acceptable addendum to the contract that would satisfy the CFPB closing disclosure.  It will allow for more flexibility to the dates on the contract and removes all 'Time is of the Essence' and shows the closing date to be governed by the CFPB protocols. 

Simultaneous sell and buy by a home owner is not likely to occur on the same day as has been done in the past.  New addenda for possible post closing occupancy may well take over or storage costs and motel rentals will be more common.

As Connecticut is one of the few states where all closings are done by lawyers, these addenda become necessary and all are still at the will of the lender and their new closing requirements. 

It was facetiously asked by someone in attendance how the dates on the contract should be presented and many additional weeks was offered by both the title representative and the lawyer.

This new CFPB process is going to cause some big waves and create delays. The first few transactions we might have will certainly test our patience as well as that of the new Consumer.  The Seller will also be required to trust that the process will go smoothly.  All of this is part of the Dodd Frank legislation designed to give Consumers a more level field regarding home purchases and mortgaging.  Any buyer that has cash will now be looked at far more favorably as they bypass a lot of these issues.


I know I left this breakfast, which was to be a learning experience with a large knot in the stomach.

Forms offered at the Presentation:
 New CFPB Loan Estimate Form (Completed as an example, Replaces GFE)
 New Closing Disclosure Form  (Replaces HUD-1)
 New Closing Disclosure Form  (Completed as an example)
 Newe CFPB Closing Addendum  (Blank)


New HUD Disclosures Will Make Closing More Challenging after Aug 1

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Anna Banana Kruchten CRB, GRI, WLS
Phoenix Property Shoppe - Phoenix, AZ

Ed we're all going to have to adust to all the new rules and regs and the best way is to be educated.- like you already did.  I'm going to an instructor class this Friday on all the new changes - can't wait! Right!!

May 26, 2015 02:24 AM #1
Jerry Newman
Brown Realty, 210-789-4216, - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Ed, I just read a similar post by Dorie Dillard on the same topic. Our closings are done by escrow officers at our title companies, and not by lawyers as your state. We are all expecting longer closing times from the new changes.

May 26, 2015 02:54 AM #2
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

It should really be interesting to see how this all shakes out!  Thanks for the very informative post.

May 26, 2015 03:02 AM #3
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Ed last minute Closings will be a thing of the past come August 1st. 

Also no Lender in their right mind is going to issue a Loan Estimate which locks them into several of the costs and interest rate on the Loan Estimate without fully pre-qualifying the Borrower (which involves pulling credit), and having a property address.  

A Lender does not have to issue presently a GFE, and after August 1st a Loan Estimate unless they have the 6 pieces of information which triggers the issuance of this document.  A Social Security Number, and Property Address are two of those 6 pieces.

May 26, 2015 03:31 AM #4
Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Hi Ed: I am not too excited about this change. But hopefully, we will get accustomed to the change and figure out a way to avoid delays. Listing agents should be advising diligently the sellers to ensure that the walk throughs will go smoothly.

May 26, 2015 03:50 AM #5
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I've got to get to a class about these changes.  I've been too busy to attend one so far.

May 26, 2015 04:52 AM #6
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George Souto the title person and the lawyer were insistent that the loan estimates were to be done without a credit check, which would make the completely suspect.

I understand the intent, but the reality of what will happen is that consumers will go to a lender that they feel they can trust and want a good feeling of what they can afford and what it will cost them, regardless of what the CFPB is requiring they do.

May 26, 2015 09:19 AM #7
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

The world of real estate has always been a changing tapestry that must be adjusted to.  I'm forever hopeful that these changes will be for the better, rather than not.

May 26, 2015 09:22 AM #8
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty

It's the speeding locomotive coming at us that we can't stop. It's headed to a closing near you!

May 26, 2015 01:25 PM #9
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Ed. It will take a little getting used to, but we have managed all other changes, this will be no exception. Nice job with your post!

May 26, 2015 07:37 PM #10
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Ed.  So if a math error is discovered at the closing then another 3 day period is required to close?

May 26, 2015 09:01 PM #11
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Conrad Allen   it would depend on the amount of mistake.  If small enough, and between seller and buyer they suggested a cash tranasction.  If it's on the HUD-1 and affects the mortgages, etc, yes.

May 27, 2015 01:20 AM #12
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

So glad the government is here to help us

May 27, 2015 04:44 AM #13
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Ed, I think after August 1st we should take a LONG vacation, and hope the government changes their mind and goes back to the HUD. 

May 27, 2015 09:11 AM #14
Kristin Hamilton CA Realtor
Sun Lakes Realty - Banning, CA
(909) 557-6966- Specialize 55+ Communties Banning

Hi Ed Silva 

I do a lot of short sales and the banks always require HUDs. I guess it will be a learning experience for all involved.

May 30, 2015 03:16 PM #15
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