Communication and the New Closing Disclosure

Dear Member,

On February 17, 2015, Norwood Gay, Bob Rohan and I attended a forum in Miami sponsored by the American Land Title Association and the Mortgage Bankers Association. The forum was a day long exploration of various topics related to the new CFPB rules governing residential mortgage loan transactions. The presenters were twenty six professionals that included lenders, title attorneys, CFPB staff, real estate brokers and builders. I will be sharing what we learned at the forum over the next several months, but first I want to focus on one important topic today: Communication.

“You will hear the word ‘communicate’ about 1,000 times today” was said over and over as the speakers returned to the message that everyone involved in a transaction must communicate with each other from the very beginning to the very end. Real estate brokers need to know what to include in contracts, lenders and closing agents need to communicate about workflow and preparation of the CD, everyone needs to communicate about a realistic closing date, and buyers and sellers need to understand the logistical requirements of signing documents that meet the lender’s obligation to comply with the new rules. With so many changes happening, communication between all parties is crucial and should be a top priority.

Here at The Fund we are taking the business of communicating early and often very seriously. You have seen our efforts in this regard through the emails from my office, including the new video messages, my blog, the Readiness page we have built for your use and our urging that you attend Fund Assembly this year.

There are other important reasons to communicate what you learn about the new CFPB rules. It is essential that you educate the real estate agents on how the new rules will change the contract and closing process. They are often the first point of contact for a buyer or a seller. From negotiating the various time deadlines in a standard contract, handling inspections and dealing with the real life logistics of getting final closing documents signed, real estate agents are an essential part of the flow of information for the buyer and seller. And we are all familiar with “domino” closings – transactions (sometimes several) that rely on other deals to close by a certain date. Failure to meet the closing date in the first transaction could trigger the collapse of one or more other transactions. These other closings may be handled by different closing agents, which will necessitate the coordination between all of those parties. The new rules may complicate this process even further, and your real estate agent partners need to understand how to handle these situations.

The new requirement for the delivery of the Closing Disclosure to the buyer at least 3 business days prior to closing is going to require sending information to the Lender at least a week prior to closing. This requires that you work with the real estate agent to change the timing for them to provide you with the information that they have about the transaction – home warranty fees, inspection fees, HOA and COA contact information, etc. The Lender is required to use the best information available when they prepare the CD. While some changes to the CD after delivery to the buyer are permitted, all changes will probably undergo higher scrutiny under the new rules and this means that all charges, adjustments and fees that the real estate agent needs to provide to you should be finalized when the CD is originally prepared. No more last minute information will be permitted on inspection fees, WDO inspection fees, and home warranty costs, etc.

Real estate agents are not the only group of your business partners that should become educated on the new rules. Anyone affected by the new timing rules should be aware of them and understand how critical it is to meet these deadlines.

Don’t forget: The Fund offers you a variety of tools and resources to begin the learning and transition process. There is a webinar on the new Closing Disclosure that you can download and watch anytime. You can also visit The Fund’s Readiness Page for a wealth of information about the new rules, links to the CFPB website, and links to Fund Concept articles. It’s not too late to register for the Pre-Assembly Workshop on the Closing Disclosure or to register for our biggest event of the year: The Fund Assembly being held May 7th – 9th in Orlando. Affiliate Assembly is also another opportunity to continue the training process.

Thank you for all of the feedback you are giving us about our Readiness campaign. I invite you to continue providing us with your comments and suggestions. We take your input very seriously, and we always appreciate hearing from our Members.

Best Regards,

Melissa Jay Murphy
Senior Vice President
and General Counsel