Over the course of the last year, those in the real estate industry have been getting used to a whole new disclosure program designed by the Consumer Financial Protection Bureau (“CFPB”) which was designed to disclose more information to borrowers in a more convenient document. Chances are, if you haven’t bought a home or refinanced recently, these new documents will look completely foreign to you.
We can all argue over whether the new Closing Disclosure Form (“CDF”) is actually more or less cumbersome to the consumer that the old HUD-1 and TIL; and while I’ve been critical of these cumbersome changes, there is one feature that is GREAT for the consumer, the three day rule which requires CDFs to be given to borrowers (and the closing agents) in advance of closing. In the bad old days, we would often not see an approved HUD until minutes before a closing. Finally that hassle has been resolved.
But now an interesting question has been raised. Under the new guidelines, under certain circumstances, changes to the CDF will require the issuance of a new form to the borrower and reset the 3 day period to close. Some banks are requiring that ANY change (i.e. repair costs, seller credits, etc.) will trigger the three day rule. Real estate professionals are questioning whether this is right, as the CFPB rules allow for certain tolerance changes without triggering the rule.
While many banks have their own policies, the rules are that a new CDF only has to be issued (triggering the 3 day rule) under one of the following:
- The APR increases by MORE than 1/8 of a point for a fixed rate or MORE that ¼ of a point for ARMs;
- A prepayment penalty is added; or
- The basic loan product changes (i.e. switching from a Fixed APR to an ARM).
If you have any questions, about how the new CDF/TRID works, or any rules under the CFPB, please call the trusted real estate law firm of The Law Office of Dennis J. DiSabato, Jr., LLC. We are here to help.
The Law Office of Dennis J. DiSabato, Jr., LLC
3888 Renee Drive, Suite 201
Myrtle Beach, SC 29579