Don't Get Thrown by Doc Overhaul

Timely closings will require advance planning under new compliance rules.

August 1 will be a big day for real estate professionals because that's when two new closing forms—a Loan Estimate and a Closing Disclosure—will replace the three forms you're used to working with: the HUD-1 Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form.

The purpose of the new forms, which were created by the Consumer Financial Protection Bureau with input from consumers and industry groups, including the National Association of REALTORS®, is to consolidate information and make it simpler for consumers to compare how close their costs are to what was originally estimated by the lender. The first page of the new Loan Estimate and the new Closing Disclosure are formatted in exactly the same way, so you and your clients can easily compare costs and note any changes. Expect refinements to the forms after they are released as the CFPB sees how well they work in the real world.

Although the information required isn't much different, some of the compliance requirements are new. NAR analysts say the new procedures could prove challenging for two reasons.

First, the CFPB is requiring the closing disclosure to be given to the buyer three days before closing. That is to allow consumers time to look carefully at any deviations from the original estimates rather than make them consider the changes while the closing is underway. That is a positive change for consumers, but it means if you're used to getting everything done at the last minute, you'll have to do a better job of planning ahead to accommodate the new rules.