New Improved Closing Process in the Works

Filed under: Mortage Industry News

closing costsOne of the major problems home buyers face occurs when they are finalizing their mortgage. The Consumer Financial Protection Bureau (CFPB) got wind of this and surveyed consumers about the challenges home buyers face in dealing with the closing process.

The CFPB’s research indicated that home buyers felt they didn’t have ample time to review the closing costs documents, the paperwork was often overwhelming, including confusing documents (sometimes with errors), and home buyers were often frustrated with the lacking help they received from mortgage and real-estate professionals when it came to questions the home buyer had.

In response to this home buyer frustration, the (CFPB) will begin working to improve this particular situation. The CFPB is planning on making changes to the closing process by the summer of 2015, and in August of 2015, buyers will receive new closing disclosures at least three business days before closing.

These two easier-to-understand disclosures will allow the home buyer to better understand the documents by providing more time to ask questions and compare costs.

Senior loan officer and consumer advocate Scott Sheldon said that under these new compliance laws, lenders will not be able to change anything in the closing documents at the last-minute. Sheldon added, “Things don’t change at the 11th hour anymore. Those disclosures are very technical, in a sense, but…as long as [the buyers] know their purchase price, their interest rate, their terms, their monthly payment, their cash to close–they should be focused on those things.”

Sheldon also mentioned that consumers can actually help themselves by not only asking a lot of questions, but they should go into the home buying process being as prepared as possible. “Consumers are going to need to come up with their questions. Make the lender do the initial legwork upfront. A lot of lenders feel like the consumer knows what they’re doing, because it’s easy for us, we do this every day.”

In addition, the CFPB will also begin an eClosing pilot program, which is specifically designed to allow the CFPB to better understand the role that eClosings can play in looking carefully at the consumers’ points of frustration.

Personally, I have realized the challenge that borrowers have with their loan document years ago and make it a point to be present at every signing.

If you are possibly in the market to buy or sell your home, or if you have any questions about the mortgage industry, please give me a call.



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