As a result of the financial crisis that began in 2007, major changes are coming to real estate transactions starting October 1, 2015. Any transaction involving a mortgage will use new documents created by the Consumer Financial Protection Bureau (“CFPB”) a federal watchdog group that was formed as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These changes were scheduled to be implemented August 1, 2015 but most settlement companies are not ready yet.
The new forms will replace the Good Faith Estimate, HUD-1 closing statement and the Truth in Lending Act disclosure, they will now be referred to as the Loan Estimate and the Closing Disclosure form, respectively. These new documents plus new timeline requirements are expected to slow down mortgage-backed closings.
When the sale is contingent on financing, closings will take a minimum of 45 days from the contract’s effective date to close.