The Hilton Head Area Association of Realtors is alerting its members and the public of changes to the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA). These changes will take effect Aug. 1, and will significantly affect the closing process.
On Nov. 20, 2013, the Consumer Financial Protection Bureau issued its final rule to integrate RESPA and TILA disclosures and regulations. The ruling integrates existing disclosures with new requirements from the Dodd-Frank Act to improve consumer understanding of the mortgage process, make it easier to comparison shop and help prevent surprises at closing.
Highlights of the new rule include:
- A new loan estimate document that replaces the Good Faith Estimate and the initial Truth in Lending disclosure.
- A new closing disclosure document that replaces and combines the HUD-1 and final Truth in Lending disclosures.
- A requirement that loan estimates must now be given to consumers within three business days of applying for the loan.
Under the changes, the types of loans now covered include most closed-end consumer mortgage loans. The new rule does not apply to home equity lines of credit, reverse mortgages, mortgages secured by mobile homes or by dwellings not attached to the property, and creditors who make five or fewer mortgage loans in one year.
The Hilton Head Area Association of Realtors suggests those who intend to buy or sell real estate after July should contact their law firms as soon as possible to discuss how the new federal laws, closing procedures and documents could affect closings. It is crucial that Realtors and consumers understand these new procedures so that there are no surprises at the closing table.
The Hilton Head Area Association of Realtors, the South Carolina Association of Realtors and the National Association of Realtors are offering members numerous opportunities to learn about the new rules, including online webinars and in-house training.
Jean Beck is the executive vice president of the Hilton Head Area Association of Realtors.