Real Estate Agents need to review and become familiar with the Closing Disclosure in order to answer buyer and seller questions
By Jeff Sorg, OnlineEd Blog
(December 23, 2015) – Every real estate agent should get familiar with the TILA-RESPA integrated disclosure forms. These new Loan Estimate and Closing Disclosure forms are required for most mortgage loan applications. While it is the job of the lender or settlement agent to complete the forms, these are the top ten things real estate agents should know about the TILA-RESPA Integrated Disclosures:
- A closing statement form called the Closing Disclosure (CD) is used for most mortgage loan applications. In most cases, the lender, not the settlement agent, will prepare and deliver the CD.
- The CD must be delivered to the consumer at least three business days before the scheduled closing date.
- The settlement agent should send settlement information to the lender 10 to 14 days before the closing date for the lender to prepare of the CD and meet its delivery requirements. Real estate agents should also communicate all buyer paid charges to the settlement agent 14 days before the closing date.
- The settlement agent will need to include on the CD the real estate agent’s company license number and the agent’s real estate license number. Consider including these numbers as part of your email signatures and on your letterheads.
- The CD sent to the consumer will not include the seller’s side of the transaction. The settlement agent will be responsible for completing and delivering the seller’s side of the CD.
- If the real estate agent wants a copy of the CD it will need to be obtained from the consumer; the settlement agent is not allowed to send a copy of the CD to the real estate agent.
- Changes to the CD after delivery to the consumer might trigger a new three-day waiting period, if changes cause the Annual Percentage Rate to be inaccurate, the buyer changes loan products or a prepayment penalty is added to the loan. Under the Equal Credit Opportunity Act (ECOA), changes and adjustments affecting property value might also trigger additional disclosure and review periods.
- In some circumstances, the CD will refer to Owner’s Title Insurance as “optional.” The consumer should be advised to obtain appropriate advice for from their title insurance agent for the protections given to them by purchasing owner’s title insurance.
- TRID rules may affect the sale agreement terms that real estate agents negotiate for either the buyer or seller. For example, a closing 30 days out may no longer be realistic. The best advice is to communicate with the lender and the closing agent to determine a realistic time frame for closing every transaction.
- A system should be in place to communicate changes to the sale agreement after it is signed and sent to the lender. Buyers should also be advised to respond immediately to lender requests.
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