Jeff Pearl Homes AR Blog

Know Before You Owe - CFPB Integration and Frustration

Whether you are a buyer, seller, agent, loan officer, title attorney, processor, or anyone involved in a real estate transaction, starting OCT 3rd 2015, a new way of doing business has begun.

 Many terms everyone used are being replaced. Many acronyms are being used. And many people are using both old and new terms, which can lead to confusion for all involved.

 For example, The Dodd-Frank Wall Street Reform ( aka Dodd-Frank Act) created the Consumer Financial Protection Bureau ( aka CFPB) to help " protect consumers from abusive financial service practices by carrying out Federal consumer financial laws." The CFPB is in charge of integrating and enforcing two different federal statutes. ( 1)The Truth in Lending Act ( aka TILA) which was under jurisdiction of the Federal Reserve Board ( aka FRB), and the Real Estate Settlement Practices Act of 1974 ( aka RESPA), formerly under jurisdiction of Housing and Urban Development (aka HUD). As a result of this integration CFPB merged TIL under Regulation Z, with RESPA ( namely HUD-1 Settlement Statement Under Regulation X for most real estate transactions).

 So now we have Loan Estimates (aka LE), Closing Disclosures (aka CD), Lenders are now called "Creditors", Borrowers are now called "Consumers", Settlement is now called "Consummation."

 Are you confused yet? Wait, there's more. You'll be hearing people used "TRID" which stands for TILA RESPA Integrated Disclosure. That now applies to Construction Only loans and vacant land including lots of 25 acres or more. But TRID doesn't apply to HELOC's, Cash Sales, Reverse Mortgages, Mobile homes, Creditors who make 5 or fewer loans per year, Commercial transactions.

 So, the GFE and TIL are now LE. HUD-1 and final TIL are now CD. EMD is still Earnest Money Deposit.

 And along with all these new terms come new delivery procedures. Some lenders ( aka Creditors) are investing thousands in new software in order to better communicate with title companies and borrowers (aka consumers). Consumers will be assigned a portal on the Creditors website where they can send and recieve documents, etc. Some consumers may not agree to that. Will the software be compatible with title companies software? Time will tell.

 By the way WTF still means What The _ _ _ _! And don't forget about ALTA!

  Buyers and Sellers need an agent more than ever, assuming the agent has been through enough trainings to understand all the new terms and procedures. There is more, but I think this provides a good idea of what to expect. I might need a drink sometime soon!

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Jeff Pearl | Lic in VA

Remax Distinctive | McLean VA

703-727-4876

Homes | Land | Farms | Historic

www.jeffpearlhomes.com

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Comment balloon 6 commentsJeff Pearl • October 06 2015 06:00AM
Know Before You Owe - CFPB Integration and Frustration
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Whether you are a buyer, seller, agent, loan officer, title attorney, processor, or anyone involved in a real estate transaction, starting OCT 3rd 2015, a new way of doing business has begun. Many terms everyone used are being replaced. Many… more