On October 3, 2015, the Consumer Financial Protection Bureau’s (CFPB) new mortgage disclosure law, also known as the TRID went into effect. TRID will help consumers be more informed regarding the closing cost.
Here are 11 things you should know about the new law:
1. Initial Good Faith Estimate (GFE) and Truth in Lending disclosure (TIL) are now combined into one new form called the Loan Estimate (LE).
2. Instead of the old forms such as the HUD-1 and Final TIL we now have the Closing Disclosure (CD). Most major lenders will prepare the CD for the borrower; some however may rely on settlement agents. The new form will describe the loan terms, projected loan payments, closing cost at closing, loan features such as assumption, escrow details, borrower’s liability at foreclosure and others. The Sellers will also have a CD statement.
3. The CD will be provided by the Lender to the consumer/borrower at least three days prior to the scheduled closing date but can be waived if consumer has a “bona fide emergency”.
4. The Lender will now provide the borrower with list of closing service providers so that they can shop for services.
5. If the following changes occur then a new CD must be issued with an additional 3 day waiting period:
APR changes 1/8 of a percent
Pre-payment penalty added to your Note
Loan is changed from fixed to variable, negative amortization
6. Closing fees subject to zero tolerance unless otherwise excepted.
10% tolerance for charges paid to third parties-charges cannot increase by more than 10%
no tolerance-charges can increase without limits if originally disclosed
0% tolerance- charges cannot increase at all
7. How do you determine what category you fall in?
Does lender allow borrower to shop for the third party services? If third party provider is on the bank list, there is a 10% tolerance, if not on the list there is no tolerance.
8. Fees that can’t increase:
fees to brokers or creditor
charges to an affiliate of broker or creditor
charges to an unaffiliated third party – if consumer not allowed to shop
transfer taxes
9. Any variation of the above must be refunded no later than 60 days after closing.
10. Seller will receive CD by or at closing. This will be prepared by the bank attorney in addition to the statement provided by the Seller’s lawyer.
11. TRID will not apply to: HELOCS, Reverse Mortgages, Commercial Loans and lenders who make 5 or less loans per year.
The Closing process will be more organized, with all the numbers worked out about a week prior to closing so there are no surprises on the closing day.
Buyers and sellers involved in a residential or commercial real estate transaction have different issues and goals. The real estate contract or purchase agreement is the single most important document in the transaction. A well drafted contract that accurately reflects your interests and addresses potential problems is critical to a successful real estate transaction. At the Law Office of Jeanne M. Reardon, we have more than 20 years of experience negotiating, drafting and reviewing contracts.
A strong, well drafted contract provides the protection you need by anticipating and minimizing the risks involved in buying and selling real estate. Jeanne M. Reardon has the knowledge and experience that it takes to negotiate and draft real estate contracts that aim to protect her clients' interests, their down payment and lessen their overall risks.
The standard New York real estate contract does not ordinarily include all the nuances of your particular transaction. Usually the real estate broker will submit the basic terms of the deal such as purchase price, down payment, financing terms and nothing more. Only an experienced real estate attorney will have the knowledge to anticipate all the issues at hand and ensure that they are properly addressed in the drafting and negotiating of the real estate contract.
Some issues that an experienced real estate attorney will anticipate and aim to have addressed in a contract include:
Additions or renovations to the property with missing certificates of occupancy
Willful or negligent loss of the down payment by the seller's attorney
Underground oil storage tanks
Death of the purchaser prior to the closing
Attorney Jeanne M. Reardon is licensed to practice in New York, and she has extensive experience in handling real estate contracts, including Fannie Mae REO contracts.
Contact a Skilled Long Island Real Estate Attorney
Whether you are buying or selling your home, please do not enter into a contract before contacting our office because no standard contract can adequately address all the special circumstances of your transaction.
Our services can help to protect your interests, and save you time and money.
We provide a free initial consultation to all of our potential clients. To discuss your real estate issue with an experienced Long Island real estate lawyer call 516-314-8433 or e-mail us.