Real Estate Law Article

Integrated Disclosure Rule

By: Clark, Campbell, Lancaster & Munson, P.A.

Q: When closing on my home, I do not want to feel forced to sign documents without time to review and ask questions. Are there consumer protections for these transactions?

A: One measure is the new “Integrated Disclosure Rule”, which provides time for the borrower to review new Loan Estimate and Closing Disclosure forms. The Rule goes into effect for loan applications received by a lender on or after August 1.

The Loan Estimate will replace the current Good Faith Estimate (GFE) and initial Truth-in-Lending Disclosure (TIL), which are received by the borrower early in a real estate deal.  The Loan Estimate will be sent to the borrower within 3 business days of the loan application and, unless waived by the borrower, at least 7 business days before the borrower becomes contractually obligated to the lender (typically at closing).

The Closing Disclosure will replace the final TIL and Settlement Statement (HUD-1 or HUD-1A), which are often received by the borrower the day of closing and detail loan and closing costs, loan terms, title insurance coverage, and the balance due.  The Closing Disclosure must be received by the borrower at least 3 business days before closing.

These changes protect borrowers from pressure of reviewing a Settlement Statement at the last minute, without much opportunity to question differences between original estimates and final closing documents.

The Rule applies to most “closed-end” consumer real estate, construction-only, vacant land, and 25 acre (or more) mortgage loans.  It also applies to credit extended to certain trusts for tax or estate planning purposes.  Cash deals without a lender, “open-end” loans like home equity lines of credits (HELOCs), reverse mortgages, mobile home and unattached dwelling mortgages, and lenders making fewer than 5 mortgages a year are excluded.  Low-income housing assistance programs may be partially exempt.

An attorney is a wise decision in any real estate transaction to help you navigate through the purchase of your new home and to ensure your interests are protected.

The July 2nd edition of “The Law” will discuss the importance of distinctions between independent contractors and employees.

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