Empowering consumers with the information they need to make informed lending choices helps REALTORS® build trust with clients and more smoothly close home purchasing deals. To help real estate practitioners continue serving as a valued resource for their clients, the NATIONAL ASSOCIATION OF REALTORS® (NAR) has developed a strong collaborative relationship with the Consumer Financial Protection Bureau (CFPB) on its “Know Before You Owe” Mortgage initiative.
As part of the “Know Before You Owe” initiative, the CFPB created resources that will help real estate professionals better understand the new TILA-RESPA Integrated Disclosure (TRID) rule that is set to become effective on Oct. 3, 2015. Also included are resources that can help REALTORS® explain to their clients the new changes coming to the home buying process. The CFPB reached out to NAR for guidance and feedback on these resources including the new online “Real Estate Professionals Guide” toolkit.
The CFPB created its “Real Estate Professional’s Guide” as a one-stop location that explains its “Know Before You Owe” program. The first link, titled “Smooth and On time Closings,” provides five steps to help real estate professionals prepare their clients. This helpful guide offers the following advice:
1. Encourage your clients to think through mortgage choices first—make sure your clients feel comfortable they can afford the home and feel confident in their ability to receive a mortgage loan approval for the required amount. Encourage prospective homebuyers to review their credit reports early in the process. Through early review, they can find and correct errors to potentially raise their credit score and reduce their cost of borrowing.
2. Once a property has been identified, encourage your clients to apply for Loan Estimates from multiple lenders—clients who understand market rates are more likely to feel confident about their choices and work proactively and collaboratively with their lender.
3. Make sure your clients indicate their intent to proceed—your clients might request a Loan Estimate and then feel like they’re done—but Loan Estimates expire after ten business days. If your clients do not complete the steps required by the lender to express their intent to proceed, their applications could be closed as incomplete. If this happens, your clients will likely need to start over with a new application.
4. Be the source of accurate and timely information about the property and transaction— Make sure your clients have detailed information they can share with their lender about property taxes, homeowner’s association fees, condominium association fees, and the estimated cost for homeowners insurance. If anything about the transaction changes, communicate those changes promptly to everyone involved and confirm the information has been received. Your best strategy is to communicate any changes to your client and to confirm that the lender has received the information as well.
5. Find out who provides the Closing Disclosure—find out who will be preparing and providing the Closing Disclosure, when and how your client can expect to receive it, and how any last-minute changes are handled. Business practices can vary from lender to lender and state to state. Find out if the lender or the closing company has a required timeframe for any change requests. Keep in mind that no matter who prepares or provides the Closing Disclosure, the lender is accountable for its accuracy and approves the final version.
View NAR’s TRID materials, including a webinar to learn more about the changes to the closing process effective October 3 and visit www.realtors.org/respa for more information on NAR’s collaborative relationship with CFPB on the “Know Before You Owe” campaign. Real estate professionals can also visit the CFPB’s “Know Before You Owe” website for a full suite of resources that will help you best understand TRID regulations.