Here’s a letter I sent to my clients last week to update them on changes happening in the home buying process.
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Essentially, across the nation the closing cycle will get longer than it has been, for all transactions where a lender is involved – cash deals won’t be affected.
Effective October 3, federal law will change regulations in the Truth in Lending Act affecting mortgage disclosures. This is intended to give borrowers more notice of the elements of their home purchase transaction.
The HUD-1 settlement sheet that shows the final disposition of all monies at closing is currently allowed to be issued as late as the day of closing itself. Under the revised law, this form must now be available to the borrower 3 days before closing.
This will mandate a certain change of culture in the various real estate professions involved in most home purchases. The “finalizing” energy that goes into closing once all the contingency hurdles have been cleared will have to adjust to an earlier deadline – essentially getting everything ready and then waiting 3 more days to formalize closure.
We’ll see 45-day to 60-day contracts to close now, instead of the more common 30-day contracts currently.
None of this need concern you especially. It requires increased management of the process for agents and all parties, and the leverage of a lender to stretch the timetable through missed deadlines will be greater now. But I’m sure we will all adjust.
