September 2015 is the last month for the Good Faith Estimate.
Beginning October 3, 2015, the Loan Estimate (LE) replaces the GFE, per federal law.
There will be no more HUD-1 Settlement Statement. That is being replaced by the Closing Disclosure (CD).
Why? The Consumer Finance Protection Bureau has determined that the GFE they designed in 2010 is confusing borrowers. It has taken the committee more than four years to come up with a new form — but finally it is ready to roll out. The LE and CD will be mandatory for all mortgage lenders, including banks, brokers, direct lenders, and credit unions.
Along with the improved LE and CD, come new regulations (commonly called TRID).
Important rules to be aware of are the following:
- A lender may not close your loan until you have had at least seven days to review the Loan Estimate.
- If you do not respond with an Intent to Proceed within 10 days, the lender has the right to change their lender fees.
- You are not allowed to sign your final loan documents until you have had at least three days to review the Closing Disclosure.
- You do not have the right to waive these waiting periods unless there is a genuine emergency. The fact that your rate lock is expiring or that the seller refuses to extend the closing date because he has a better back-up offer is not considered an emergency, according to the feds.
- If you change your loan program or loan amount, you are required to start over with the waiting period. Ditto if your credit score or credit quality changes.
- You will need to tell your loan officer whether or not you shopped for the title company and settlement company (escrow or attorney), because it impacts the tolerance for their fee accuracy.
If you’d like to read the condensed “Reader’s Digest” version of the new law, the CFPB has released 91 pages here.
Stay tuned for more information about the ever-changing world of getting a mortgage. I will post updated information as we get closer to October 3rd.