On October 3, 2015, new regulations affecting the residential mortgage process became effective. The new regulations issued by the Consumer Financial Protection Bureau (“CFPB”) are intended to combine the disclosures that consumers receive under the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”) to make the disclosures easier to understand. What do these new regulations mean for you? Most notably, the new regulations mean that you will be receiving new disclosures during the real estate closing process. Here is a brief overview of the new documents.
First, three days after submitting a loan application for a residential home loan, you will receive a document called a “Loan Estimate.” The Loan Estimate replaces what was previously known as the Good Faith Estimate and the initial Truth-in-Lending disclosure. Substantively, the Loan Estimate is intended to provide consumers clear information about the terms of the loan and the closing costs. The goal of the Loan Estimate is to give consumers the ability to understand the terms of their loan at the application stage and to give consumers the option to shop around.
Second, three days prior to the real estate closing, buyers will receive a Closing Disclosure. This document combines what had previously known as the HUD-1 and the final Truth-in-Lending Disclosure. The Closing Disclosure is intended to make the costs of the transactions more transparent to the buyers so they can be better informed at the closing table.
In addition to the new documents, parties to a real estate transaction will likely hear some new terminology. Under the new regulations, the real estate closing is now known as “consummation,” real estate purchasers are known as “consumers,” and mortgage lenders are known as “creditors.” While the terms may have changed, the procedure of buying real estate in New Jersey remains largely the same.
The real estate attorneys and paralegals at Meyerson, Fox, Mancinelli Conte & Bern, P.A. are fully educated about the updated CFPB Regulations and are ready to assist you with your real estate transaction.
About the author: John A. Conte, Jr. is a Partner with Meyerson, Fox, Mancinelli & Conte, P.A. in Montvale, New Jersey. Mr. Conte concentrates his practice in business law, commercial litigation, real estate and land use law and estate planning.
